Mumbai: In his last press conference as chairman of the Securities & Exchange Board of India, C B Bhave extended the scope of some market reforms he initiated when entering office three years ago.
Asba, or applications supported by blocked amount, has been made mandatory for qualified institutional buyers and high net-worth investors when applying for public or rights issues. Bhave had introduced Asba in the second board meet that he chaired in May 2008 after assuming office in February that year.
“After taking into account the feedback received from market participants, it has been decided that Asba will be mandatory for the non-retail segment from May 1 onwards,” said Bhave while addressing the media here on Monday.
Under Asba, an applicant can submit a bid, even as the money remains in the bank account. The money is debited only at the time shares are allotted. This eliminates delays related to refunds, speeding up the whole process. While the facility was initially available only for retail applicants, it was extended to institutional investors in April 2010.
When asked if Asba would be made mandatory for retail investors, too, Bhave said, “A decision would be taken based on a review of the current change.”
Expectedly, the media interaction after the Sebi board meeting on Mon day started off on a nostalgic note. “All of us must remember that Sebi is an institution. Chairmen come and chairmen go. Sebi as an institution has only progressed since 1992, when it was first formed. This is a journey of the institution,” said the seventh chairman of the market regulator. Bhave is due to retire on February 17.
Sebi does not want interested shareholders, including promoters, to vote on special resolutions and will forward this recommendation to the ministry of company affairs. The recommendation, which has its roots in the Satyam fraud, calls for amending Clause 166 of the Companies Bill, 2009.
“You may recall, during the talks of amalgamation of Maytas and Satyam, questions were raised on whether Satyam shareholders, who are interested in this transaction, should be allowed to vote or not. That amalgamation never took place, but this point was definitely raised,” explained Bhave.
“This will protect small and diversified shareholders in listed companies from abusive related-party transactions. This view was taken based on the learning from the investigation into the matter of Satyam,” said a Sebi release.
Sebi has also decided to bring in uniformity in the period of initial registration granted to market participants. The initial registration will be for a period of five years.
Thereafter, based on a performance assessment, permanent registration will be granted. “(Intermediaries) should not be required to come time and again,” said Bhave, while explaining the rationale.
Sebi has also decided the currency derivatives segment would have self-clearing members that have a net worth of Rs 5 crore.
The Sebi board decided to defer a final decision on the proposed Takeover Code, as the government is still in the process of talking to industry participants on some recommendations. The Takeover Code was sent to Sebi in July 2010.
The board also did not take up the pending issue of the Bimal Jalan report, as Sebi is still not through analysing feedback from market participants. “Comments have come to us. These comments are being collated by the department. That issue was not taken at this meeting at all,” he said.
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