Important Guidelines for Issue of Capital Intermediaries /Market infrastructure institutions

In India, the Securities and Exchange Board of India (SEBI) is responsible for regulating the securities market and overseeing the issuance of capital intermediaries and market infrastructure institutions. SEBI has issued various guidelines and regulations to govern the issuance of such entities, with the aim of promoting investor protection, market transparency, and fairness.

Guidelines for Issue of Shares by Companies

SEBI has issued guidelines for the issue of shares by companies to ensure that the process of issuance is transparent and fair to all investors. These guidelines require companies to disclose all relevant information to investors and ensure that the issue price is determined based on objective criteria. SEBI also mandates that companies issue shares only through the electronic mode and use the services of a registrar and transfer agent for handling share transfer requests.

Guidelines for Issue of Mutual Funds

SEBI regulates the issuance of mutual funds in India and has issued guidelines to ensure that these funds are managed in the best interests of investors. These guidelines require mutual funds to disclose all relevant information to investors, such as the investment objectives, investment strategy, and performance history. SEBI also mandates that mutual funds appoint an independent trustee to oversee the fund’s activities and protect the interests of investors.

Guidelines for Issue of Debentures

SEBI has issued guidelines for the issuance of debentures to ensure that investors are protected from fraudulent or unfair practices. These guidelines require issuers to disclose all relevant information to investors, such as the terms and conditions of the debenture issue, the risks involved, and the credit rating of the issuer. SEBI also mandates that issuers appoint a debenture trustee to oversee the issue and protect the interests of investors.

Guidelines for Issue of Depository Receipts

SEBI regulates the issuance of depository receipts in India and has issued guidelines to ensure that the process is transparent and fair to all investors. These guidelines require issuers to disclose all relevant information to investors, such as the terms and conditions of the depository receipt issue, the risks involved, and the credit rating of the issuer. SEBI also mandates that issuers appoint a custodian to hold the underlying securities and protect the interests of investors.

Guidelines for Issue of Infrastructure Investment Trusts

SEBI has issued guidelines for the issuance of infrastructure investment trusts (InvITs) to promote investment in infrastructure projects in India. These guidelines require InvITs to disclose all relevant information to investors, such as the investment objectives, investment strategy, and performance history. SEBI also mandates that InvITs appoint an independent trustee to oversee the fund’s activities and protect the interests of investors.

Guidelines for Issue of Real Estate Investment Trusts

SEBI regulates the issuance of real estate investment trusts (REITs) in India and has issued guidelines to ensure that these trusts are managed in the best interests of investors. These guidelines require REITs to disclose all relevant information to investors, such as the investment objectives, investment strategy, and performance history. SEBI also mandates that REITs appoint an independent trustee to oversee the trust’s activities and protect the interests of investors.

Guidelines for Issue of Securities by Foreign Entities

SEBI has issued guidelines for the issuance of securities by foreign entities to ensure that the process is transparent and fair to all investors. These guidelines require foreign entities to comply with Indian securities laws and regulations, and disclose all relevant information to investors, such as the risks involved and the credit rating of the issuer. SEBI also mandates that foreign entities appoint a custodian to hold the underlying securities and protect the interests of investors.

Disclosure requirements:

The intermediaries and market infrastructure institutions must comply with disclosure requirements as specified by SEBI. The disclosure requirements mandate the intermediaries to disclose information about their financials, operations, and other material information that can impact the investors.

Guidelines for KYC norms:

The intermediaries and market infrastructure institutions are required to follow the Know Your Customer (KYC) guidelines issued by SEBI. The KYC guidelines require the intermediaries to obtain certain information about their clients, including their identity, address, and other relevant details, before conducting any transaction.

Guidelines for Investor Protection Fund (IPF):

The intermediaries and market infrastructure institutions are required to contribute to the Investor Protection Fund (IPF) as specified by SEBI. The IPF is a corpus created by SEBI to provide financial assistance to investors who suffer losses due to the default of an intermediary or market infrastructure institution.

• Guidelines for Investor Grievance Redressal: The intermediaries and market infrastructure institutions are required to establish a robust investor grievance redressal mechanism as specified by SEBI. The mechanism should ensure that the investors’ grievances are resolved in a timely and efficient manner.
• Guidelines for Risk Management: The intermediaries and market infrastructure institutions are required to establish and implement a comprehensive risk management framework as specified by SEBI. The risk management framework should identify, assess, monitor, and manage the various risks associated with their operations.

Guidelines for Market Infrastructure Institution

Market Infrastructure Institutions (MIIs) in India are regulated by the Securities and Exchange Board of India (SEBI) and are responsible for providing services related to securities trading, clearing, and settlement. SEBI has issued several guidelines to ensure that MIIs operate in a transparent, fair, and efficient manner.

The guidelines for MIIs issued by SEBI include the following:

• Eligibility criteria for recognition as an MII.
• Requirements for the issuance of capital and ownership norms.
• Guidelines for risk management, including margining and collateral requirements.
• Guidelines for settlement and clearing processes.
• Disclosure and reporting requirements.
• Investor protection and grievance redressal mechanisms.
• Guidelines for monitoring and enforcement of regulations.

These guidelines ensure that MIIs operate in a robust and transparent manner, and provide a stable and reliable framework for market participants. Compliance with these guidelines is essential for maintaining investor confidence in the Indian capital markets.