SEBI’s 209th Board Meeting: Key Decisions and What They Mean for Investors
SEBI’s 209th Board Meeting: Key Decisions & Impact on Indian Capital Markets
The Securities and Exchange Board of India (SEBI) is the cornerstone of India’s financial markets, ensuring transparency, investor protection, and market integrity. Its board meetings are critical events in which decisions influence investors, companies, and market intermediaries. Held on March 24, 2025, in Mumbai, the 209th SEBI Board Meeting introduced several regulatory updates to balance ease of business with robust oversight. From changes in foreign investment thresholds to governance enhancements, here’s everything you need to know about the key takeaways.
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1. Higher Disclosure Threshold for Foreign Portfolio Investors (FPIs)
SEBI has revised the threshold for additional disclosures required from Foreign Portfolio Investors (FPIs), reflecting the evolving dynamics of India’s equity markets.
What’s Changed?
- Previously, FPIs with equity assets under management (AUM) exceeding INR 25,000 crore had to disclose detailed ownership, economic interest, and control information under a circular dated August 24, 2023.
- With cash equity trading volumes doubling since FY 2022-23, SEBI has increased this threshold to INR 50,000 crore.
- FPIs holding over 50% of their equity AUM in a single corporate group must still comply with additional disclosure norms to prevent circumvention of Minimum Public Shareholding (MPS) and Takeover (SAST) regulations.
Why It Matters:
This adjustment reduces the compliance burden for smaller FPIs while maintaining transparency for larger players who could influence market stability. All FPIs, regardless of size, must continue adhering to PMLA norms.
2. Easing Rules for Category II Alternative Investment Funds (AIFs)
Category II AIFs, which focus on unlisted securities, faced challenges due to recent regulatory shifts mandating the listing of certain debt securities.
What’s Changed?
- Under the SEBI (AIF) Regulations, 2012, Category II AIFs must hold a majority of their investments in unlisted securities.
- New rules under SEBI’s Listing Obligations and Disclosure Requirements (LODR) require fresh debt issuances to be listed, reducing the pool of unlisted debt securities.
- SEBI now allows listed debt securities rated ‘A’ or below to be treated as unlisted securities for compliance purposes.
Why It Matters:
This change offers flexibility to AIFs, ensuring they can meet investment norms while potentially boosting the issuance and trading of lower-rated debt securities, enhancing liquidity in this segment.
3. Governance Boost for Market Infrastructure Institutions (MIIs)
Market Infrastructure Institutions (MIIs)—such as stock exchanges and clearing corporations—are vital to India’s financial ecosystem. SEBI has introduced measures to strengthen its governance.
What’s Changed?
- Public Interest Directors (PIDs):
- The existing appointment process (requiring SEBI approval, not shareholder consent) remains unchanged.
- If an MII opts not to reappoint a PID after their first term, it must justify the decision to SEBI.
- Cooling-Off Periods:
- SEBI will no longer mandate cooling-off periods for PIDs transitioning between MIIs.
- MIIs can set their own cooling-off rules for Key Management Personnel (KMPs) and directors to avoid conflicts of interest.
- KMP Appointments:
- Appointments of critical KMPs (e.g., Compliance Officer, Chief Risk Officer, Chief Technology Officer, and Chief Information Security Officer) now require approval from the MII’s Governing Board, shifting from the Nomination and Remuneration Committee.
Why It Matters:
These updates enhance accountability and technological resilience in MIIs, ensuring they prioritize market integrity over commercial interests.
4. Flexible Fee Structures for Investment Advisers (IAs) and Research Analysts (RAs)
SEBI has relaxed restrictions on fee collection for IAs and RAs to address industry concerns.
What’s Changed?
- Previously, IAs could charge advance fees for up to two quarters, and RAs for one quarter.
- Now, both can charge fees in advance for up to one year, with client consent.
- Fee-related rules (limits, refunds, etc.) apply only to individual and HUF clients who aren’t accredited investors. For others (e.g., institutional investors), fees will be governed by bilateral agreements.
Why It Matters:
This provides greater operational flexibility for IAs and RAs, fostering longer-term client relationships while protecting less sophisticated investors.
5. Deferred Amendments for Merchant Bankers, Debenture Trustees, and Custodians
SEBI revisited a prior decision from its December 18, 2024, meeting regarding operational restructuring.
What’s Changed?
- The earlier mandate required Merchant Bankers, Debenture Trustees, and Custodians to separate regulated activities into distinct legal entities within two years.
- SEBI has deferred this implementation, opting to review alternative approaches for a level playing field.
Why It Matters:
Market participants gain a temporary reprieve from restructuring, with revised proposals expected in future meetings.
6. High-Level Committee to Tackle Conflict of Interest
SEBI is taking proactive steps to enhance its internal governance framework.
What’s Changed?
- A High-Level Committee (HLC) will be formed to review conflicts of interest, disclosures, and related policies for SEBI members and officials.
- Comprising experts from government, private sectors, and academia, the HLC will submit recommendations within three months.
Why It Matters:
This move reinforces SEBI’s commitment to transparency and ethical conduct, potentially leading to stricter disclosure norms for its leadership.
Conclusion: Navigating SEBI’s Regulatory Updates
SEBI Board Meeting 2025|SEBI Regulations for FPIs|Alternative Investment Funds (AIFs) SEBI|SEBI Investment Advisor Fee Rules|Market Governance SEBI|SEBI Compliance and Risk Management|SEBI Transparency and Conflict of Interest
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