Sebi allows mutual funds to invest in REITs and InvITs, but with strict riders

The Securities and Exchange Board of India (Sebi) allowed mutual funds to invest in hybrid instruments such as real estate investment trusts (REITs) and infrastructure investment trusts (InvITs). However, mutual funds cannot invest more than 10 per cent of their net asset value in units of REITs and InvITs.

Short-term debt funds better placed post CRR move: Fund managers

Simultaneously, under all its schemes, no mutual fund can own more than 1 per cent of units issued by a single issuer of REITs and InvITs.

Further, Sebi reviewed ad guidelines for mutual funds and allowed celebrity endorsements at an industry level; however, not for endorsing a particular scheme of a mutual fund or as a branding exercise of a mutual fund house.

In its board meeting held on Saturday (January 14) in Jaipur,  Sebi took a slew of measures looking to implement a new set of regulations in case of a merger of an unlisted company with a listed entity, the holding of the unlisted company in the "merged" company will not be less than 25 per cent. The market regulator said on Saturday that it aimed to have wider public shareholding and prevent a very large unlisted company to get listed by merging with a very small company. 

Additionally, an unlisted company would be allowed to be merged with a listed company only if it is listed on a stock exchange having nationwide trading terminals. 

Sebi also clarified that in order to prevent issue of shares to a select group of shareholders instead of all shareholders pursuant to the scheme, the pricing formula specified under the Issue of Capital and Disclosure Requirements (ICDR) Regulations shall be applicable in such cases. 

The regulator also extended the requirement to obtain shareholders' approval through e-voting to the following cases: 

a)  The schemes involving a merger of an unlisted company resulting in the reduction in the voting share percentage of pre-scheme public shareholders by more than 5 per cent of total capital of merged entity.

b)  Schemes involving a transfer of whole or substantially the whole of the undertaking of a listed company and consideration for such transfer is not in the form of listed equity shares.

c)  Schemes involving a merger of an unlisted subsidiary with listed holding company where the shares of the unlisted subsidiary have been acquired by the holding company directly or indirectly from the promoters/promoter group. 

In order to revise and streamline the regulatory framework governing schemes of mergers and demergers, the companies would be required to submit compliance report confirming compliance with the circular and accounting standards duly certified by the company secretary, CFO and managing director. 

The board decided to reduce the fees payable by broker by 25 per cent, i.e., from Rs 20 per crore of turnover to Rs 15 per crore of turnover.