On December 19, 2024, the SEBI conducting 208th meeting of the SEBI Board in Mumbai. Here is the part of summary which is applicable on Merchant Bankers, Debenture Trustees, Market Infrastructure Institutions and Registered Intermediaries.
1. Review of SEBI (Merchant Bankers) Regulations, 1992
The main features of the amendment, are as under:
- Merchant Bankers (MBs) other than Banks, Public Financial Institution and their subsidiaries, shall undertake only specified permitted activities.
- MBs may carry out other regulated activities as a separate business unit after obtaining registration / confirmation from the respective regulatory authority.
- A separate legal entity shall carry out activities other than permissible entities by sharing the resources with the MB without any legal liability on the on the MB.
- MBs shall not undertake fresh valuation activities without the rgistration within nine months.
- There will be two categories of MBs based on net worth and activities: –
- Category 1 – Net worth > Rs. 50 crores allowed to undertake all permitted activities.
- Category 2 – Net worth < Rs. 10 crores allowed to undertake all permitted activities except managing equity issues on the Main Board.
- Liquid net worth to be maintained- At least 25% of the minimum net worth requirement, at all times.
- Revenue: –
- Category 1 – At least Rs. 25 crores, on a cumulative basis, in three immediately preceding financial years.
- Category 2 – At least Rs. 5 crores, on a cumulative basis, in three immediately preceding financial years.
- Exemptions – MBs managing only the issue of listed / to be listed Debt and Hybrid securities. 3.4
- Underwriting limit – As 20 times of liquid net worth.
2. Measures for Reforms to Debenture Trustees Regulations including towards Ease of Doing Business
- Rights and obligations are issued under SEBI Regulations.
- Standardisation of model DT Deeds that can be utilized by issuers according to industry standards forum and SEBI.
- Activity based framework – Non-regulated activities to be hived off to a separate entity within two years.
3. Assigning responsibility for the use of Artificial Intelligence (AI) tools by Market Infrastructure Institutions, Registered Intermediaries and other persons regulated by SEBI
- SEBI has amended its regulations to require all regulated entities, including MIIs, intermediaries, AMCs, and investment managers, to assume full responsibility for the use of AI tools, whether developed internally or sourced externally. This aims to ensure accountability in their operations involving AI technologies.
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