Mumbai: Seeking to broaden access to capital markets, regulator Sebi will come out with new guidelines for start-ups to raise funds through IPOs while a fresh set of norms will be soon put in place for setting up the country's first International Financial Services Centre (IFSC).
At the same time, the regulator will come down heavily on those found to be non-compliant with good governance practices including for appointment of women directors on boards of all listed companies.
Sebi Chairman U K Sinha today described as "very shameful" the failure of listed companies to appoint at least one woman director on their boards. All listed companies need to have at least one woman director on their respective boards before April 1, as per the new regulations announced last year.
Sinha said that the companies would have to face "serious consequences" and penalties if they fail to comply.
"I find it very shameful that in this country, about 8,000 or 9,000 listed companies can't find even one woman who is competent enough to be on their board. This is a very shameful thing," the Sebi chief said.
He also expressed concern over exorbitant commissions being paid by the mutual funds to their agents, while he promised to look into measures to boost the newly created Real Estate Investment Trust (REIT) category of raising funds.
Speaking at a Sebi-organised conference on REITs, Sinha said many large groups are preparing to launch such funds, but some of them have raised certain taxation-related issues, which Sebi has referred to the government.
Sinha, who also talked about a plethora of other issues on the sidelines of the event, said the guidelines for establishing the country's first IFSC in Gujarat's GIFT City would be in place before April 1 and discussions are continuing in this regard with RBI and the Finance Ministry.
Finance Minister Arun Jaitley had announced in the Budget that India's first IFSC would be set up in GIFT City in Gujarat. Jaitley will be addressing the boards of both Sebi and RBI separately on Sunday, March 22, wherein he is expected to talk about various proposals made by him in the Budget that concerns the jurisdictions of the respective regulators.
About another Budget proposal, Sinha said the procedure for merger of commodities watchdog FMC with Sebi was on track and the two regulators are coordinating with Finance Ministry to ensure a smooth transition.
Many of these issues are likely to be discussed during the two board meetings this Sunday.
On start-up IPOs, Sinha said that final guidelines should be ready in 3-4 months, after a public consultation process that would be launched soon.
The regulator has discussed the issue of IPO by start-ups and e-commerce firms and it is of the view that such companies should be listed in India, Sinha said, while adding that Sebi would be holding a meeting with start-ups on March 27.
"We want our companies to list in India rather than being forced to list outside India....It appears that a certain set of rules will have to be carved out for them because they have a very specific business model," Sinha said.
There have been reports that the country's largest e-commerce firm Flipkart is looking to list in the US.
On REITs, Sinha said it took a long time even in the US for this business structure to take off.
"I find that even after regulations have come through, there is very little enthusiasm in the market for REITs.
"I hope that we discover, we analyse and we find out why it is so. I'm not discouraged, because even if I look at data from US, first few years were areas of learning. The growth started happening only after 5-6 years," he said.
The market watchdog, last year, had put in place a separate regulatory regime for REITs, while Finance Minister Arun Jaitley announced a tax-friendly regime for these investment instruments in the Budget last month.
Sinha said there is a need to look into whether there was something that was missing and assured the industry and investors "if there is an informed advice that Sebi needs to do something, we'll be more than willing".
With regard to mutual funds, Sinha suggested that industry players need to look at capping the amount of commissions paid to mutual fund agents.
As per industry data, some banks are getting over 50 percent of their brokerage commissions from single MFs, indicating a special focus on selective fund houses, which mostly happen to be their own group entities.
On suggestions to stop secondary market trading when shares are sold through Offer For Sale, Sinha said the matter needs to be understood properly.
"The problem is that we have to understand what is a secondary market transaction and what is a primary market transaction. However, we are in dialogue with the Ministry and we'll jointly come to a solution," he said.
