In three days, your IPO investment will now go public.
In three days, your IPO investment will now go public.
Now, particular categories of foreign portfolio investors (FPIs) will be expected to provide specific information regarding their ownership and economic interests. The action is being made with the intention of preventing the possible circumvention of public shareholding requirements and the potential misuse of the FPI route in order to protect Indian enterprises from being acquired for opportunistic reasons.
The period of time between an initial public offering and its listing has been cut down to three days by the markets regulator Sebi. In addition, the regulators increased the disclosure rules for certain categories of foreign portfolio investors and the investor grievance management process during the board meeting that took place on Wednesday.
The conference also approved giving unitholders of REITs and InvITs special rights to nominate representatives to serve on the boards of directors of such entities. A number of different choices have been made, including the approval of revisions to standards on non-convertible securities and steps to deepen the bond market.
Common investors will receive a boost as a result of a reduction in the amount of time it takes for a company’s shares to be listed after an initial public offering (IPO) from six days to three days. This timetable will be optional until issues that open between September 1 and November 30, and it will then become mandatory. Beginning on December 1st, compliance is going to be required.
After the meeting, the Chairperson of the Sebi noted that the shortened listing time is a “global first,” and that it will be glitch-free since all market participants have tested its applicability.
Another significant choice that was made was the degree of openness surrounding FPI funding. Now, particular categories of foreign portfolio investors (FPIs) will be expected to provide specific information regarding their ownership and economic interests. FPIs that concentrate their interests in a single corporate group will be subject to the new regulations once they are implemented.
The action is being made with the intention of preventing the possible circumvention of public shareholding requirements and the potential misuse of the FPI route in order to protect Indian enterprises from being acquired for opportunistic reasons.
The meeting also approved revisions to the regulations to offer nomination rights to unitholders owning 10 percent or more of the total outstanding units of the InvIT/REIT, either individually or collectively, on the board of directors of the investment manager/manager. These rights can be exercised by the unitholders either individually or collectively.
The Securities and Exchange Board of India (SEBI), the regulatory authority overseeing capital markets in India, acknowledges that the current regulatory framework does not clearly define the role of unitholders in influencing the decisions made by investment managers of InvITs and REITs. This means that the unitholders, who are the investors in these funds, may not have direct control or influence over the choices made by the investment managers.
The primary responsibility of the investment managers is to manage the assets of the InvITs and REITs and make investment decisions on behalf of the unitholders. However, the lack of a clear framework regarding unitholder participation can lead to a perceived gap in governance and transparency.
SEBI recognizes the importance of addressing this issue to ensure investor protection and enhance the overall governance structure of InvITs and REITs. The regulator aims to strike a balance between the interests of unitholders and the responsibilities of investment managers. By clarifying the role and rights of unitholders, SEBI seeks to provide them with a mechanism to voice their opinions, participate in decision-making, and exercise their rights as investors.
SEBI has been actively working on reviewing and refining the regulatory framework for InvITs and REITs. The objective is to introduce measures that promote transparency, accountability, and unitholder participation. This may include introducing amendments to existing regulations or issuing new guidelines that clearly define the rights and responsibilities of unitholders.
The involvement of unitholders in decision-making processes can enhance investor confidence and strengthen the governance structure of InvITs and REITs. It allows investors to have a say in matters such as asset acquisitions, financial decisions, and the overall management of the funds. This increased participation can help align the interests of unitholders and investment managers, ensuring that the decisions made are in the best interest of the investors.
Conclusion
In conclusion, the growing interest of retail investors in InvITs and REITs has prompted SEBI to review the regulatory framework and address the issue of unitholder participation. By providing clarity on the role and rights of unitholders, SEBI aims to enhance governance, transparency, and investor protection in these investment vehicles. This move is expected to further boost retail investor confidence and support the continued growth of InvITs and REITs in India’s capital markets.
