Sebi to put in place framework to prevent frauds by stock brokers

The Securities and Exchange Board of India (Sebi) on Wednesday a slew of proposals, including ending the practice of individuals holding permanent directorship at boards of listed companies and putting in place a framework to prevent frauds by stock brokers.

The proposals were cleared by the board of the Securities and Exchange Board of India (Sebi) during its meeting here on Wednesday.

The watchdog has approved a regulatory framework to allow private equity funds to become sponsors of mutual funds, a move that will help further deepen the mutual fund industry.

Besides, the regulator has given its nod for norms for Environmental, Social and Governance (ESG) disclosures by listed companies.
 

To strengthen corporate governance norms, Sebi decided to end the practice of individuals having permanent seats on boards of listed companies.

Sebi said that it would introduce a fund-blocking facility for secondary market transactions like being done for initial public offerings (IPOs). This facility will be like Applications Supported by Blocked Amount (ASBA). This ASBA-like facility for secondary markets will enable customers earn interest on blocked funds till debit.

Sebi asked that the top 100 companies listed on its stock exchanges confirm or deny market rumors that impact share prices, in a bid to bring more transparency and ensure timely disclosure of "material events".

The requirement will kick in from Oct.1, 2023 for top 100 companies by market capitalization, and from April 1, 2024 for the top 250, Sebi said in a press release following a board meeting.

The regulator said that it intends to put in place quantitative benchmarks to determine whether an event is material but did not immediately say what those metrics would be.

The Sebi also said that material events or disclosures emerging from a board of directors meeting must be disclosed to exchanges within 30 minutes.

(With inputs from PTI)