What is SEBI?
Securities and Exchange Board of India (SEBI) is a statutory regulatory body which is owned by Government of India. Its main objective is to ensure that whether the Indian capital market is working in a systematic manner by providing investors a transparent environment for their investment in business.
The primary reason for setting up SEBI is to prevent malpractices in the capital market of India and to enhance its development in 2020. SEBI has already enacted certain protocols based on the circulars and notifications.
Here is a glimpse into the future, based on the circulars and notifications already passed by SEBI. Prepare to comply with the following direction of SEBI which will be effective in 2020:
Phase wise implementation of Kotak Committee recommendation through SEBI LODR w.e.f 01 April 2020
The following class of listed companies shall comply with additional corporate Governance requirements which will come into effect from 01 April 2020, emanating from Kotak Committee recommendations:
|Category||Types of Listed Companies||New Requirement|
|Independent Director||Top 1000 listed entities||The Board shall have atleast one independent woman director|
|Board Composition||Top 2000 listed entities||Board shall comprise of not less than six directors|
|Quorum||Top 2000 listed entities||Quorum for every Board meeting shall be:
a. 1/3 total strength or
b. 3 directors, whichever is higher, including at least one independent director.
|Maximum number of directorship||All Listed entities||A person shall not be a director/ Independent director in more than 7 listed entities|
Annual Business Responsibility Report – for top 1000 listed Cos in 2020
The Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) (Fifth Amendment) Regulations, 2019 by making it mandatory for top 1,000 listed companies to prepare Annual Business Responsibility report, covering their activities related to environment and stakeholder relationship, on 26th December 2019. It was mandatory only for top 500 listed entities to submit their Annual report. This shall be complied on the annual reports submitted from 2020 onwards.
Draft Placement memorandum of Units by Infrastructure Investment Trusts w.e.f 15 January 2020
The Securities and Exchange Board of India vide Circular dated 24th December 2019 has issued guidelines for filing of draft placement memorandum of units by an InvIT and this Circular shall be effective from 15th January 2020.
Asset management Company and Association of Mutual Funds to publish list of group companies w.e.f 1 January 2020
SEBI circular dated 10th December 2019 has mandated that Asset management companies shall publish a list of their group companies and those of their sponsor on their respective websites. Similarly, Association of Mutual Funds in India shall publish a list of all group companies along with names and identifiers of the respective group which is considered for calculation of group exposure by mutual fund schemes on its website. The Above two disclosures on the website shall be made on 1st working day of each calendar quarter starting from January 1, 2020.
Cut off time for collection of margins by commodities traders w.e.f. April 01, 2020
The Securities Exchange Board of India in its Notification dated 29th November 2019 has issued circular on cut-off time for the collection of margins from commodities traders that are traded beyond banking hours. The directive will be effective from April 1, 2020.
The collection of current report margins from the clients in case of clearing corporations which was till the End of Day (EOD), the cut-off time for the purpose of determining minimum threshold of margins to be collected by members from their clients has been made up to 5:00 pm. Further for commodity derivative contracts having trading till 5:00 PM, margin collection from clients shall be on EOD basis.
New Penalty Structure for short-collection or non-collection of margins w.e.f. 01 April 2020
The Securities and Exchange Board of India on 19th November 2019, has issued a circular on collection and reporting of margins by trade members/clearing members in cash segment. The circular has also mentioned the penalty structure that would also be in place to deal with instances of short-collection or non-collection of margins as well as for false or incorrect reporting of margin collection from the client by TMs and CMs. The provisions of the penalty structure shall come into force with effect from April 01, 2020.