Securities and Exchange Board of India relaxed foreign investor settlement norms, allowing net trade settlement to cut costs amid heavy outflows. It also introduced simplified IPO prospectus summaries, QR access, and approved stricter conflict-of-interest disclosure rules for officials to improve transparency and investor confidence.

Sebi eases FPI settlement norms, simplifies IPO disclosure framework

Markets regulator Securities and Exchange Board of India (Sebi) on Monday relaxed rules for foreign investors, including the settlement ‌of ⁠transactions, ⁠in a move to shore up sentiment at a time when equities market have ⁠logged the ‌heaviest outflows in two ⁠decades.

The Securities and Exchange Board of India (SEBI) said that large foreign institutional investors (FIIs) can settle trades on a ‌net basis instead of the current requirement to ⁠settle each transaction separately, reducing their funding requirements and overall trading costs, Reuters reported.

Foreign Institutional Investors (FIIs) sold Indian equities worth Rs 1,07,077 crore as of March 23, according to NSDL data. They have been net sellers at Rs 93,730 crore in March so far.

The decision was taken in a Sebi board meeting today.

IPO disclosure norms

In another major development, Sebi introduced a concise and standardised summary of offer documents in the form of a draft abridged prospectus, a move aimed at making IPO disclosures more accessible and investor-friendly, a PTI report said. IPO-bound companies will now be required to submit this abridged prospectus alongside their detailed offer documents.

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The report cited the regulator saying the document will present key information including the company's business model, financials, promoters, risks, and key performance indicators in a simplified and easy-to-understand format.

"Draft abridged prospectus ... shall be submitted along with the updated draft red herring prospectus-I, and shall be hosted on the websites of the issuer, the Board, stock exchanges where specified securities are proposed to be listed and lead manager(s) associated with the issue," Sebi said in a notification dated March 16.

The abridged prospectus will be made available on the websites of issuers, stock exchanges, and lead managers to ensure easier access for investors.

The changes are part of Sebi's move to enhance disclosure standards and streamline information available during public offerings.

In addition, the Securities and Exchange Board of India (Sebi) said that issuers are required to provide QR codes and links in application forms and public advertisements to allow investors easy access to the red herring prospectus, abridged prospectus, and price band details.

Recommendations on conflict of interest

Additionally, the board approved several recommendations of the high-level committee on "conflict of interest" and disclosures concerning Sebi officials.

The committee was chaired by former Chief Vigilance Commissioner Pratyush Sinha.

The panel was constituted to undertake a comprehensive review of the existing provisions related to conflict of interest and disclosures of property, investments, liabilities, and other related matters by Sebi members and officials.

REITs/InvITs

The board also approved ease-of-doing-business proposals related to real estate investment trusts (REITs), infrastructure investment trusts (InvITs) and alternative investment funds (AIFs). It cleared a proposal to provide flexibility to AIFs in winding up a scheme.

Also, it proposed an overhaul of the 'fit and proper person' criteria for market intermediaries, which includes removing automatic disqualification triggered by the filing of FIRs, complaints, or charge sheets in economic offence cases.

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