ArdorComm Media Group

Contact Us
logo
Menu
logo
ArdorComm ArdorComm ArdorComm

SEBI

SEBI Launches RPT Portal to Enhance Corporate Transparency and Governance

Leave a Comment / / Governance Community

The Securities and Exchange Board of India (SEBI) has launched a Related Party Transaction (RPT) portal to strengthen corporate governance and increase transparency in boardroom dealings. At the launch event, SEBI Whole Time Member Ashwani Bhatia likened the initiative to sunlight exposing hidden dealings, emphasizing its role in ensuring fair corporate transactions. RPTs, while capable of creating synergies, often face scrutiny due to unfair pricing and potential conflicts of interest. The portal will enable mutual funds and investors to track such transactions and demand better governance from companies. SEBI Chairperson Madhabi Puri Buch reaffirmed the regulator’s strong focus on RPTs, calling them a core governance concern. SEBI’s disclosure-based framework mandates that listed companies provide complete transparency in financial dealings to prevent unfair advantages. Looking ahead, SEBI plans to integrate supply chain data into the portal for a more comprehensive oversight of corporate transactions. The RPT portal is expected to boost investor confidence, reinforce corporate accountability, and ensure fair play in India’s financial markets. Source: CNBC

SEBI Launches RPT Portal to Enhance Corporate Transparency and Governance Read More »

SEBI Proposes Stricter Governance Norms for Listed Firms, Seeks Public Feedback

Leave a Comment / / Blogs

The Securities and Exchange Board of India (SEBI) has issued a consultation paper seeking public feedback on proposed regulatory changes aimed at strengthening corporate governance in listed companies. The proposals focus on enhancing compliance requirements, tightening auditor eligibility norms, improving disclosure practices, and setting clearer rules for related party transactions (RPTs). The move is expected to improve transparency, reduce financial risks, and increase investor confidence in the market. SEBI has invited stakeholders to submit their feedback by February 28, 2025. Key Proposals and Their Impact: Strengthened Compliance Reporting: SEBI has proposed refining the Annual Secretarial Compliance Report (ASCR) to ensure clearer confirmations of compliance with securities laws. The proposal includes making ASCR a mandatory part of the annual report and streamlining exemptions related to corporate governance certifications and secretarial auditor reports. These changes aim to enhance accountability and ensure companies adhere strictly to regulatory guidelines. Tighter Auditor Eligibility Rules: To improve financial oversight, SEBI has recommended introducing eligibility criteria for appointing statutory auditors in accordance with the Companies (Audit and Auditors) Rules, 2014. The new criteria will ensure that auditors’ qualifications and experience align with the size, operations, and complexity of listed entities. Additionally, SEBI has proposed that companies disclose key details about the appointment or reappointment of statutory and secretarial auditors to the audit committee, board of directors, and shareholders. A standardized disclosure format is also being considered to further improve transparency. This is expected to enhance trust in financial reporting and strengthen enforcement mechanisms. Stricter Rules for Related Party Transactions (RPTs): SEBI has suggested introducing monetary thresholds for RPT approvals to ensure better scrutiny of transactions conducted by subsidiaries of listed companies. Under the new guidelines: For subsidiaries with an established financial history, the approval threshold will be the lower of 10% of turnover or a monetary limit—₹1,000 crore for main-board listed firms and ₹50 crore for SME-listed subsidiaries. For subsidiaries without a financial track record, the threshold will be 10% of standalone net worth, certified by a chartered accountant, or the prescribed monetary limits. In cases where subsidiaries have a negative net worth, share capital plus securities premium may be considered instead of 10% of net worth. These changes aim to bring consistency in financial disclosures and prevent possible misuse of related party transactions for financial manipulation. Why These Reforms Matter: With these proposed amendments, SEBI aims to enhance corporate accountability, protect investor interests, and create a more transparent and well-regulated financial ecosystem. The tightening of audit regulations will help mitigate financial risks, while clearer RPT rules will prevent conflicts of interest. As corporate governance standards evolve, these measures are expected to improve the overall trust in India’s financial markets. Investors, companies, and financial professionals are encouraged to review the proposals and provide their feedback before the deadline. Source: CNBCTV

SEBI Proposes Stricter Governance Norms for Listed Firms, Seeks Public Feedback Read More »

 SEBI Levels Playing Field for FVCIs with New Governance Norms

Leave a Comment / / Governance Community

The Securities and Exchange Board of India (SEBI) has issued new norms that bring foreign venture capital investors (FVCIs) under the same regulatory framework as foreign portfolio investors (FPIs). This move marks a significant overhaul of the registration and governance framework for FVCIs, aiming to establish greater parity between the two investor categories. Under the updated norms, effective from January 1, 2025, FVCIs will be required to delegate their registration and governance processes to designated depository participants (DDPs), aligning with the current requirements for FPIs. The amendments also mandate FVCIs to disclose details of beneficial ownership under the Prevention of Money Laundering Act, enhancing transparency and compliance. Key changes include revisions to registration and eligibility criteria, application requirements, the rationalization of registration costs, and the introduction of a renewal fee. Previously, SEBI managed the registration and due diligence processes directly, but these responsibilities will now be handed over to DDPs. This change reflects SEBI’s broader strategy to reduce its direct involvement in the day-to-day operations of intermediaries, allowing the regulator to concentrate more on policy-making and regulatory oversight. Gazal Rawal, Partner at Cyril Amarchand Mangaldas, noted that while the changes may increase compliance burdens for DDPs amid ongoing regulatory adjustments, they will ultimately enhance governance and transparency. She added that the application process for FVCIs is expected to be streamlined in the future, similar to FPIs, with registration, PAN allotment, and KYC for bank and dematerialized accounts to be managed through a common form. Legal experts see these reforms as an effort to replicate SEBI’s success in delegating responsibilities to DDPs for FPIs. “New concepts like notifying the DDP of material changes, renewal of registration, and the imposition of late fees for renewal have been introduced for FVCIs. This move aligns SEBI’s approach to reduce its direct operational involvement with intermediaries,” said Ritul Sarraf of Nishith Desai Associates. Interestingly, restrictions under Press Note 3 on foreign direct investment from land-bordering countries and additional disclosure requirements for FPIs do not appear to apply to FVCIs, signaling nuanced regulatory considerations. The updated norms come after a year-long consultative process, providing stakeholders ample time to adapt. In 2023-24, 28 new FVCIs were registered, bringing the total to 279 as of March 2024, with investments increasing by 12% year-on-year to Rs 53,922 crore, predominantly in the information technology sector. SEBI’s revamped framework is expected to streamline processes, enhance transparency, and bring FVCIs and FPIs onto an equal regulatory footing, reinforcing India’s commitment to a robust and transparent investment ecosystem. Source: Business Standard  

 SEBI Levels Playing Field for FVCIs with New Governance Norms Read More »

India Inc’s Board Sizes Decrease Amid Heightened Governance Scrutiny

Leave a Comment / / Governance Community

Amid increasing scrutiny on governance issues, corporate boards in India are witnessing a reduction in size, according to a report by Excellence Enablers, backed by former SEBI Chairman M Damodaran. In fiscal years FY’18 and FY’19, the range of board members varied from 4 to 22. However, the maximum board size has contracted to 16 by FY23. The report underscores the importance of ensuring adequate board membership to effectively constitute mandatory board committees. With five required board committees, sufficient members are needed to prevent overlap among committee memberships. Highlighting the essence of good corporate governance, the report emphasizes the significance of voluntary adherence to governance best practices. Entities that proactively adopt governance measures often influence regulatory standards for the broader business community. Under the Companies Act, 2013, public companies must have a minimum of three directors, while private companies require at least two directors. The maximum limit for board size is fifteen directors. SEBI mandates that listed public companies appoint one-third of their board as independent directors, except for Public Sector Undertakings (PSUs). Additionally, if the chairperson is a non-executive director, one-third of the board must comprise independent directors. In cases where there’s no regular non-executive chairperson, at least half of the board should consist of independent directors. As of March-end 2023, six companies were found to be non-compliant with independent director norms. The report stresses the importance of maintaining a balanced mix of executive and non-executive directors on boards to leverage diverse perspectives and experience. It cautions against combining the roles of Chairman and MD/CEO, highlighting the potential conflict of interest and the adverse impact on corporate governance. Moreover, the report recommends making the appointment of a lead independent director mandatory for boards chaired by executives to ensure effective governance oversight.

India Inc’s Board Sizes Decrease Amid Heightened Governance Scrutiny Read More »

Sony Board to Decide on $10-Billion Merger with Zee Entertainment Amid Leadership Dispute

Leave a Comment / / Media Entertainment & Art Community

Sony Group has convened a board meeting on January 19 to determine the fate of the proposed $10-billion merger with Zee Entertainment Enterprises. The decision, expected to be communicated to the Tokyo Stock Exchange next week, may indicate a potential discontinuation of the merger plan. The key point of contention revolves around the leadership of the merged entity, particularly the role of Punit Goenka, Zee’s current CEO and son of its founder Subhash Chandra. Despite the 2021 agreement designating Goenka as the CEO of the merged company, Sony has shifted its stance and is reluctant to have him lead the entity. This change is exacerbated by an ongoing regulatory investigation, with the Securities and Exchange Board of India (SEBI) alleging deceptive practices by Zee, including false claims about loan recovery and misuse of positions by Chandra and Goenka. The protracted stalemate over leadership has raised concerns within Sony about proceeding with the deal. Even after Goenka’s voluntary decision to relinquish the CEO position following the merger, uncertainties persist. Zee Entertainment’s request to extend the deadline for completing the deal, originally set for December 21, 2023, indicates unresolved issues, including the leadership role of Goenka, requiring additional time for negotiations. Insiders at Sony suggest that even if Goenka agrees to step down, meticulous scrutiny of condition precedent pacts and financial adjustments must occur before finalizing the merger. Zee’s financial performance has seen a significant decline since the merger announcement, with net profit plummeting from Rs 956 crore in FY22 to Rs 48 crore in FY23. The outcome of the board meeting carries significant implications for the future of the merger, as insiders indicate that for the deal to progress, Goenka may need to step down on the day the new merged company is established. The decision will shed light on whether Sony and Zee can overcome the leadership dispute and move forward with the high-profile merger.

Sony Board to Decide on $10-Billion Merger with Zee Entertainment Amid Leadership Dispute Read More »