Seeking to put in place a stricter regulatory framework for collective investment schemes, markets watchdog Sebi has decided to enhance the net worth criteria and track record requirements for entities managing such schemes. The regulator has also approved changes to listing obligations and disclosure requirement regulations for simplification of procedure for transmission of securities.
It also gave the nod to amend regulations to enable Sebi-registered custodians to provide custodial services in respect of silver or silver-related instruments held by silver ETFs of mutual funds. These decisions were taken at a board meeting of Sebi held on Tuesday.
Amid instances of investors getting defrauded by fraudulent money pooling schemes, the regulator would also restrict a Collective Investment Management Company (CIMC) and its group/associates/shareholders' shareholding in a scheme at 10 per cent or representation on the board of another CIMC to avoid conflict of interest. Besides, the mandatory investment of CIMC and its designated employees in the Collective Investment Schemes (CIS) have to align their interests with that of the CIS.
Sebi said the net worth criteria would be enhanced and a requirement of having a track record in a relevant field as an eligibility requirement for registration as a CIMC would be put in place. Among others, there would be a "mandatory requirement of a minimum number of investors, maximum holding of a single investor and minimum subscription amount at CIS level," Sebi said.