New changes: Mr C.B. Bhave, Chairman, SEBI

Our Bureau

Mumbai, Aug. 13 The much-debated issuance of Participatory Notes by foreign institutional investors was taken up by the SEBI board on Wednesday, but there was nothing by way of any decision from the regulator although a section of the market expected changes.

The board reviewed the data on P-Notes but did not arrive at any decision, the SEBI Chairman, Mr C.S. Bhave, said at a news conference after the meeting. He declined to elaborate on the data discussed.

PNs are offshore derivative instruments that allow foreign investors to invest in the country’s stock markets without disclosing their identity.

In October last year, the capital markets regulator had imposed restrictions on issue of P-Notes in the wake of mounting FII inflows. The Reserve Bank of India had also been seeking a ban on P-Notes as an investment instrument.

The situation has changed dramatically since then and FII flows have dropped substantially.

That the board took up the P-Notes issue is seen by stock market analysts as significant: “It appears that the stage has been set for a review of the restrictions,” said one of them.

How far away that will be is another matter. Responding to a question whether there will be another review on P-Notes soon, Mr Bhave just said, “Our next board meeting will be after two months”.

The SEBI board tweaked some norms on the time duration for rights issues and also modified Clause 41 of the listing agreement.

The board has decided to reduce the “timeline” taken for rights issues to 43 days from 109 days currently.

The notice period for a board meeting will be reduced to two working days from seven days . The record date notice period will be reduced from 15-30 days to seven working days while the issue period will be reduced from the minimum 30 days to a minimum of 15 days.

The Clause 41 amendment would allow companies submitting consolidated financials to take two months from the close of a fiscal quarter to report their results, from the current period of one month. A listed entity opting to submit consolidated financial results in addition to standalone results to the stock exchange shall be required to publish consolidated financials only.

“This would reduce the market risk faced by investors and issuers and would ensure faster turnaround of money for investors,” said Mr Bhave.

The pricing norms for QIPs (qualified institutional placements) and for preferential allotment will now be based on the last two weeks’ average price. Earlier, it was the last six months’ average price or the last two weeks, whichever was higher. The board has also crunched the time period for mutual funds for dispatching annual reports to investors to 4 months from 6 months with effect from the current fiscal.

A new western regional office of SEBI has been approved. This would be based in Ahmedabad and would have territorial jurisdiction over Gujarat and Rajasthan to start with. It would become operational during the current fiscal.

SEBI had received three applications for launching currency futures; they are from NSE, BSE and a subsidiary set up by MCX, said Mr Bhave.

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