Securities and Exchange Board of India (Sebi), in its board meeting on Friday, approved amendments to rules on Infrastructure Investment Trust (InvITs) and REITs. It also allowed mutual funds and portfolio management services (PMS) to trade and invest in commodity derivatives.
Sebi also raised the leverage limit for InvITs to 70 percent of assets from 49 percent earlier.
To make the IBC process easier, Sebi exempted open offer for acquisition or scheme of arrangement as ordered by a tribunal or a court.
It said, "In the context of corporate debt restructuring exemptions from preferential issue, obligation of making an open offer will be restricted to all SCBs and all India Financial Institutions," adding, "Such exemptions will not be available for acquisition of shares by persons other than aforesaid lenders by way of allotment by the target cos or purchase from lenders."
The regulator approved changes in its norms for open offer exemptions for corporates facing debt restructuring as also for debt instrument valuation by mutual funds to make these processes fairer.
The Sebi board, at the same time, approved easing of norms for raising of funds through instruments like real estate and infrastructure investment trusts.
Also, the regulator will amend its norms for valuation of money market and debt securities by mutual funds to make the process fairer and uniform across the industry to safeguard investors from default like scenarios as witnessed recently in the wake of IL&FS crisis and other defaults.
The proposal seeks to make the valuation practices more reflective of the realizable value of money market and debt securities with residual maturity up to 60 days.
Accordingly, the residual maturity limit for amortisation based valuation by mutual funds will be reduced from 60 days to 30 days. The threshold maintained between the reference price and valuation price would be plus or minus 0.025 per cent, while the reference price will be taken as security level price given by the valuation agencies.
The board also approved a proposal to bring uniformity and consistency across the mutual fund industry on the valuation of money market and debt securities rated below investment grade, Sebi said.
The valuation agencies appointed by the Association of Mutual Funds in India (AMFI) will provide the valuation of money market and debt securities rated below investment grade, the regulator added.As the Asset Management Companies are responsible for fair valuation, they may deviate from the valuation provided by the valuation agencies subject to recording of a detailed rationale for such deviations, appropriate reporting to the Board of AMC and Trustees and appropriate disclosures to investors, it noted.
On the changes in norms relating to corporate debt restructuring, Sebi said exemptions from applicability of conditions for preferential issue and from the obligation of making an open offer will be restricted to all scheduled commercial banks (excluding Regional Rural Banks) and all India Financial Institutions for acquisitions in their ordinary course of business.
Such exemptions will not be available for acquisition of shares by persons other than these lenders by way of allotment by the target company or purchase from lenders, Sebi said.
The board also noted that relevant exemptions, including open offer obligations, are available under the Sebi regulations for acquisition pursuant to a resolution plan approved under the Insolvency and Bankruptcy Code.
Further, Takeover Regulations provide for the exemption from the open offer for any acquisition pursuant to a scheme of arrangement or reconstruction pursuant to an order of a court or a tribunal or a competent authority under any law or regulation, Indian or foreign.
The Sebi board has now approved that the reference to approval by "Competent Authority" in the Takeover Regulations will be deleted.
(With inputs from PTI)