Sebi board clears Investor Charter; amends AIF, portfolio manager rules

Markets regulator Sebi's board on Tuesday approved an 'Investor Charter' for investors in the securities market, a move that will bring in more transparency in the investment process.

The 'Investor Charter' includes the vision statement of Sebi for investors, mission statement, rights and responsibilities of investors, dos and don'ts for investors in the securities market, among others, Sebi said in a press conference after the board meeting.

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In addition, the regulator has developed the Investor Charters of Sebi-recognised market infrastructure institutions (MIIs), registered intermediaries and regulated entities in consultation with various entities.

These Investor Charters will help the investors in securities markets to get the relevant information at one place -- what rights they have, various services provided by entities to the investors, timelines related to various services provided to investors, and investor grievance redressal mechanism, etc.

Sebi Investor Charter and the Investor Charters of various intermediaries/ entities will be displayed on the Sebi website and also on the websites of the respective intermediary or entity.

With an objective to provide protection to the investors, Finance Minister Nirmala Sitharaman in the Union Budget 2021-22 had proposed to introduce an investor charter as a right of all financial investors across all financial products.

Among others, Sebi board has also made certain amendments in the regulatory framework for alternative investment funds (AIFs) and portfolio manager.

The board has decided to allow resident Indians, other than individuals, to become constituents of foreign portfolio investors (FPIs) that are registered as AIFs in IFSCs.

This will facilitate investment in Indian securities markets through the FPI route by AIFs set up in the international financial services centres (IFSCs).

"Such resident Indians shall be sponsor/ manager of the FPI, and their contribution in the FPI shall be subject to conditions as specified by the board," the statement said.

The regulator has given its nod to allow Category-III AIFs (alternative investment funds) to calculate concentration norms based on net asset value of the fund instead of investable funds for investment in listed equities of investee companies.

Further, the regulator has approved amendments to the portfolio management rules to facilitate co-investment by investors of AIF through portfolio the management route.

The portfolio manager providing co-investment services to investors of AIFs will invest 100 per cent of the assets under their management in unlisted securities and will be exempted from certain requirements under portfolio managers rules, including minimum investment amount, and minimum networth, among others, Sebi said.

The regulator has also approved authorising practising cost accountants to carry out share capital reconciliation audit of issuer companies. This would be in addition to qualified chartered accountants or practising company secretaries.