SEBI is changing the rules for collective investment schemes


The Securities and Exchange Board of India (SEBI) at its board meeting on Tuesday in Mumbai, among others, approved an amendment to the SEBI (Collective Investment Schemes) Regulations 1999 to strengthen the regulatory framework for undertakings for collective investment (CIS) in accordance with mutual fund rules to eliminate regulatory arbitrage.

Key changes included improving the criteria for assets and requiring a track record in the relevant field as an eligibility requirement for registration as a collective investment management company (CIMC).

In addition, CIMC and its group/affiliates/shareholders will be limited to a 10% ownership interest or representation on the board of another CIMC to avoid conflicts of interest.

There will be a mandatory investment by CIMC and its designated employees in the Collective Investment Schemes (CIS) to align their interests with those of the CIS.

There will also be a mandatory requirement of a minimum number of investors, a maximum holding of any single investor and a minimum subscription amount at the CIS level.

As per the change, fees and expenses charged to the system have been streamlined. In addition, the deadlines for the offer period of the program, the allocation of shares and the return of funds to investors have been shortened.

The Board also approved a proposal to amend the Securities and Exchange Board of India (SEBI) Regulations (Listing Obligations and Disclosure Requirements) 2015 to simplify the process for the transfer of securities.

The existing threshold limit for simplified documents has been revised from ₹2 lakh to ₹5 lakh for physically held securities per listed issuer and 5 lakh to ₹15 lakh for securities held dematerialized for each beneficiary account.

“The statutory certificate of inheritance or equivalent certificate issued by the appropriate government agency is an acceptable document for the transfer of securities,” SEBI said.

“The aim is to ensure that the registrars of an RTA/listed company follow consistent processes, which would further simplify the submission process for investors,” the regulator added.

The Board also considered the proposal and approved the 1996 amendments to the SEBI (Custodian) Regulations to allow SEBI-registered custodians to provide custodial services in respect of silver or silver-related instruments held by mutual fund silver ETFs.

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