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Suspect corporate fraud? Inform SEBI and earn Rs 1 crore

SEBI has simplified operational constraints and compliance requirements for foreign portfolio investors (FPIs). Market watchdog has also allowed credit rating agencies to obtain details of borrowings and defaults by companies.

twitter-logo BusinessToday.In   New Delhi     Last Updated: August 21, 2019  | 19:39 IST
Suspect corporate fraud? Inform SEBI and earn Rs 1 crore
The SEBI board also approved the proposals regarding buy-back of securities

Market regulator Securities and Exchange Board of India (SEBI) on Wednesday announced whistleblowers will get monetary reward of up to Rs 1 crore amid growing number of scams in corporate India.

In a board meeting today, the regulator approved monetary reward for cases in which the whistleblower's information leads to a disgorgement of at least Rs 1 crore. The total amount of monetary reward will be 10 per cent of the monies collected, or a maximum of Rs 1 crore, SEBI said.

"An interim reward not exceeding Rs 10 lakh may be given at the stage of issuance of the final order by the SEBI against the person directed to disgorge," SEBI said in a press release.

The proposed amendments to the SEBI (Prohibition of Insider Trading) Regulations, 2015 will provide "near absolute confidentiality along with appropriate safeguards", and help in strengthening the mechanism for early detection of insider trading and better enforceability, according to the regulator.

Among other major announcement, market watchdog simplified operational constraints and compliance requirements for foreign portfolio investors (FPIs). This development has come at a time when foreign investors has turned net seller in the Indian capital markets. As per the latest depositories data, FPIs pulled out a net Rs 3,758 crore from the Indian capital markets in July on account of multiple headwinds, including the super-rich tax announced in Budget 2019-20.

Foreign investors had gone on a selling spree in the Indian stock market after Finance Minister Nirmala Sitharaman in her maiden Budget 2019 speech proposed a hike in surcharge for the super-rich (non-corporate) from 15 per cent to 25 per cent for incomes between Rs 2 crore and Rs 5 crore, and from 15 per cent to 37 per cent for higher incomes.

Sebi has removed the broad-based eligibility criteria for FPIs, simplified and expedited documentation requirements for know your customer (KYC) and reduced the eligibility categories for FPIs to I and 2, instead of the present requirement of three categories.

The SEBI board also approved the proposals regarding buy-back of securities, continuing with the current approach of allowing buybacks if post buy-back debt to equity ratio is not more than 2:1 (except for companies for which higher debt to equity has been notified under the Companies Act, 2013) based on both standalone and consolidated basis.

In order to enable credit rating agencies to have timely information on the default of an entity, SEBI has allowed them to obtain details of borrowings and defaults by companies.

Edited by Chitranjan Kumar

Also Read: P Chidambaram faces arrest in INX Media case, but what did he do wrong?

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