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Sebi ushers in corporate governance reforms; slashes mutual fund costs

Mumbai: Ushering in a range of reforms, market regulator Sebi on Wednesday accepted most of the Uday Kotak panel's recommendations on corporate governance as well as decided to reduce mutual fund costs, strengthen algo trading framework and amend norms for companies undergoing insolvency proceedings.
Besides, the markets regulator would bring in amendments to norms for angel funds, buyback of shares, takeovers, registrars and bankers to issues apart from boosting the framework for equity derivatives segment.
To put in place stricter framework for capital markets, the watchdog would revise listing regulations that would allow stock exchanges to freeze promoter holdings, suspend trading and initiate other strong measures against non-compliant companies. Sebi Chairman Ajay Tyagi said it has partly accepted the 80-odd recommendations of the panel. Of these, 40 were accepted without modification, 15 with certain modifications and eight have been referred to the government and other departments.
According to him, around 18 recommendations, including those related to sharing of information with promoters and significant shareholders, have been rejected. Among other recommendations, the separation of CEO/MD and chairperson positions has been accepted. This would come into effect initially from April 1, 2020 for the top 500 listed entities in terms of market capitalisation.
Besides, the firms should have at least one woman independent director by April 1, 2019. The rule will be applicable for top 1,000 listed entities by April 1, 2020.
In a bid to reduce cost for investors, the additional expense on mutual funds would be reduced to 5 basis points from the current 20 basis points of assets under management, Tyagi said. Amid concerns over high frequency or algo trading, Sebi approved a number of measures to boost the framework in this regard by mandating the exchanges to offer shared co-location facilities and providing some services for free.
The board also gave its nod for providing tick-by-tick data feed free of charge to all trading members. The regulator has decided to amend regulations related to minimum public shareholding and other provisions as well as put in place additional disclosure requirements for listed firms undergoing insolvency resolution process.
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