Sebi for greater transparency by market entities, promoters

Mumbai, Feb 7 (PTI) In its last major decisions under C B
Bhave's leadership, Sebi on Monday tightened noose around
erring market players, promoters and investors, while
streamlining the public offer bidding process and grant of
licences.
But a decision was elusive at a Securities and Exchange
Board of India (Sebi) board meeting on revising rules for
company takeovers as also for new regulations for the way
stock exchanges are owned and did business.
The regulator decided to bring in a greater oversight on
brokers, mutual funds, bankers and other market entities by
limiting their initial licence to five years and said it would
be renewed into a permanent one based on their track record.
The move would also save the market intermediaries the
pain of seeking renewals every year.
The decisions were taken at the Sebi board meeting under
chairmanship of Bhave, whose term ends on February 17.
He would be succeeded by U K Sinha, head of fund house UTI AMC
and chairman of mutual fund industry body Amfi.
Sebi also decided to suggest to the government to put in
place checks to avoid incidents like Satyam scandal being
repeated.
In this regard, Sebi said that it would suggest the
Ministry of Corporate Affairs to put in place a clause in the
new Companies Bill to bar any investors, including promoters,
from voting on any matters where they have an interest.
In Satyam case, the board members, including the nominees
of promoters, had decided to acquire two companies -- Maytas
Infra and Maytas Properties -- promoted by the family members
of Raju family, the promoters of the IT firm.
Taking a cue from Satyam case, it was decided that
suggestion would be made to MCA that for passing resolutions
where one of the investor has conflict of interest, the
interested investor should not be allowed to vote, Bhave said.
In another decision, Sebi made it less expensive for
investors to buy shares in public offers and also rights
issues, where shares are sold to existing shareholders.
Sebi decided to make it mandatory for non-retail investors
to bid through ASBA -- a facility under which the money gets
debited from investors' account only after share allotment.
The ASBA (Application Supported by Blocked Amounts)
facility shall be mandatory for non-retail investors making
applications in public/rights issues with effect from May 1,
2011," Bhave said.
The move to grant licences initially for five years is
said to have been aimed to keep brokers, mutual funds,
bankers, portfolio managers, depository participants and other
market intermediaries under check for any possible
wrongdoings.
The Sebi board also decided that the currency derivative
segment would have self-clearing members and they would be
required to have networth of Rs 5 crore.
The two proposals -- one on the new Takeover Code and the
second on governance and ownership of stock exchanges and
other market infrastructure institutions -- were aimed at
brining in sweeping changes in the way the takeovers are
conducted and the bourses are owned, respectively.
Bhave said that the government was still in consultations
on the new Takeover Code and Sebi would take a decision once
it hears the final word from the Centre on this issue.
But, the regulator sought more time for new norms for
takeover of companies, as also for ownership and governance
issues of stock exchanges, clearing corporations and
depositories.
While the Sebi is awaiting some more clarity from the
government on the Takeover Code, the regulator was collating
the feedback received on Jalan panel recommendations.
The Takeover Code has been awaiting a clearance for many
months now and has been discussed in at least three
meetings of the Sebi board, which has representations from the
government also, so far without any final decision.
While Bhave did not specify any reasons for delay
in decisions on these two major issues, sources close to the
development said that the government is of the view that these
matters could be best taken up by the next Sebi chief.
Asked about the end of his tenure, the outgoing Sebi
chief said it was the institution that was supreme and not the
person heading it.
"Sebi in an institution. Chairmen come and go, but Sebi
remains there," Bhave said, adding that he enjoyed his tenure.
"It's been pleasure intreracting with you
people (as Sebi Chairman)," he said, but refused to take any
further personal questions.
Bhave took charge as Sebi chairman on February 18, 2008
on a three-year term.
His tenure as the most powerful person in the capital
market was marked with many significant developments,
including some steps lauded as highly pro-investor, as also
some decisions that angered a host of entities including
insurance regulator Irda and corporate houses like Sahara and
FTIL-MCX group.