The Securities and Exchange Board of India (SEBI) has announced a comprehensive set of reforms designed to improve the ease of doing business and boost overall market efficiency. Approved at its board meeting on June 19, these nine key decisions are poised to significantly impact investors, companies, mutual funds, and alternative investment funds (AIFs).
SEBI Chairman Tuhin Kanta Pandey highlighted the regulator's focus on striking a balance between streamlining operations for market participants and ensuring robust investor protection. The measures range from simplifying securities transfers for legal heirs to reintroducing open-market share buybacks.
Key Reforms Approved by SEBI:
1. Simplified Securities Transmission
SEBI has streamlined the process for legal heirs and claimants to transfer securities of deceased investors. A new Quick Transmission Processing (QTP) category allows for minimal documentation for claims up to ₹10,000 for physical holdings and ₹30,000 for demat holdings. The simplified documentation limits have also been doubled to ₹10 lakh for physical holdings and ₹30 lakh for demat holdings. Notably, the requirement for PAN and mandatory probate of wills has been removed for these processes.
2. Reintroduction of Open-Market Share Buybacks
Companies can once again repurchase their shares through open-market routes on stock exchanges, effective August 1. This mechanism, previously phased out, offers greater flexibility for companies to return surplus cash to shareholders, improve earnings per share, and signal confidence. Under the revised framework, such buybacks must be completed within 60 days.
3. Optional Merchant Banker Appointment for Buybacks
To reduce compliance costs, SEBI has made the appointment of merchant bankers discretionary for buybacks. Their traditional responsibilities can now be distributed among the companies themselves, auditors, and stock exchanges.
4. Enhanced Borrowing Flexibility for Mutual Funds
Mutual funds are now permitted to avail intraday borrowings to manage temporary liquidity mismatches, such as those arising from settlements, forex transactions, or derivative obligations. These borrowings are strictly for liquidity management and must be repaid by the end of the day, preventing their use for leverage.
5. Faster Launch of Alternative Investment Funds (AIFs)
The regulator introduced the GARUDA mechanism, which slashes the launch timeline for regular AIF schemes to just 10 working days. Angel Funds and Accredited Investor-only schemes can now be launched immediately after registration or filing, significantly speeding up their market entry.
6. Boost for the Social Stock Exchange
SEBI approved the transfer of the Social Stock Exchange's Capacity Building Fund from NABARD to the newly established Social Stock Exchange-Capacity Building Foundation, aiming to further strengthen this unique market segment.
7. Promoting the Securitisation Market
Amendments were approved to align securitised debt instrument regulations with Reserve Bank of India (RBI) norms. This move is intended to foster the growth and development of the listed securitisation market in India.
8. Encouraging Retail Participation in Municipal Bonds
Several measures have been introduced to boost retail investor involvement in municipal bonds. These include incentives like additional interest or discounts specifically for categories such as senior citizens, women, and general retail investors.
9. Review of SME Fundraising Framework
SEBI has slated the capital-raising framework for Small and Medium Enterprises (SMEs) for an evidence-based review in the upcoming fiscal year (FY27). Additionally, a new Code of Conduct for SEBI members was approved. These collective decisions underscore SEBI's commitment to reducing market friction while enhancing investor safeguards.