Stock markets regulator SEBI's chairperson Madhabi Puri Buch has said that while the regulator had been tinkering with the idea of banning permanent board seats in listed companies for past few weeks, it has finally decided to go ahead with the decision.
During a press conference on Wednesday evening, Buch said there will be no permanent board seats in listed companies.
Market regulator has decided to start a fund named Corporate Debt Market Development Fund (CDMDF) to act as a backstop facility to purchase investment grade corporate debt securities in time of stress.
CDMDF will raise funds to purchase corporate debt during market stress or price dislocations in investment grade bonds. The fund will be based on a guarantee to be provided by National Credit Guarantee Trust Company. As per the balance sheet of SEBI, the market regulator holds over ₹4,200 crore on its book.
SEBI chief also said private equity funds will be allowed as mutual fund sponsors. She made it clear that diverse entities can become mutual fund sponsors.
In India there are less than 50 mutual fund houses, whereas, in the U.S. more than 4,000 mutual fund companies are in operation. Financial market experts have frequently expressed that more asset management companies will deepen the financial market in a country where demat accounts are still less than 10% of the country's population.
Sebi chairperson Madhabi Puri Buch says that board of asset management companies are liable for protection of unitholders' interests. In recent times, many fund managers from various mutual fund houses were found indulging in illegal activities like front-running and selectively leaking trading decisions of mutual funds houses to a few brokers and traders.
SEBI also tightened timelines for disclosing board decisions. Buch said listed companies must disclose important agreements to shareholders. SEBI chief also exhorts that listed companies must fill Director, CEO, CFO vacancy within three months to maintain a continuity and transparency in the functioning of the company.
She also said that SEBI will soon specify valuation framework for alternate investment funds.
After the success of Application Supported by Blocked Amount (ASBA) in IPO process, SEBI also introduced ASBA-like facility for secondary market trading, she said.