INSITE - India - Sep 2024

TIMELINE EXTENDED FOR SUBMISSION OF PAYMENT OBLIGATION STATUS BY COMMERCIAL PAPER ISSUERS TO STOCK EXCHANGES

Summary: The Securities and Exchange Board of India (SEBI) has updated the reporting timeline for entities with listed Commercial Paper. Issuers must submit payment obligation confirmations within one working day, instead of the previous two-day requirement. This change is effective immediately and aligns the timeline with that of other non-convertible securities, aiming to improve reporting efficiency and consistency. The revised guideline underscores SEBI’s focus on timely updates and robust market regulations.

In Detail: The SEBI has updated the rules for companies that have issued listed Commercial Paper. Previously, these companies had to submit a certificate confirming that they met their payment obligations within two days after the payment was due. Now, SEBI requires this confirmation to be submitted within just one working day, which brings the timeline in line with other non-convertible securities. This change is intended to improve the speed and consistency of reporting to stock exchanges, helping to ensure that investors receive timely and accurate information. The new rule is effective immediately and reflects SEBI’s ongoing efforts to strengthen market regulations and protect investors.

Key Links: SEBI | Modification in the timeline for submission of status regarding payment obligations to the stock exchanges by entities that have listed commercial paper

REPORTING BY FOREIGN VENTURE CAPITAL INVESTORS

Summary: The SEBI has revised the quarterly reporting format for Foreign Venture Capital Investors (FVCIs), starting with the quarter ending on September 30, 2024. This circular aims to boost investor protection and market transparency.

In Detail: SEBI has updated the quarterly reporting requirements for FVCIs, starting with the quarter ending September 30, 2024. FVCIs must submit reports every quarter, even if no investments were made, as required by SEBI regulations. The new format includes details about the FVCI, funds raised, and industry-specific investments. Custodians must ensure these reports are submitted on time. For the quarters ending September and December 2024, reports are due by mid-November 2024 and mid-January 2025, in Excel via email. From March 2025 onwards, reports must be submitted through SEBI’s portal within 15 days of each quarter's end. This update is aimed at protecting investors and ensuring transparency in the market.

Key Links: SEBI | Reporting by Foreign Venture Capital Investors

MODIFICATION IN FRAMEWORK FOR VALUATION OF INVESTMENT PORTFOLIO OF AIFS

Summary: The SEBI has updated valuation rules for Alternative Investment Funds (AIFs) to improve consistency and transparency. Effective immediately, AIFs must follow industry-endorsed guidelines for valuing securities. SEBI extended the reporting deadline to seven months and set a March 2025 deadline for harmonizing rules for less-traded securities. While changes in valuation methods aren't considered "Material Changes," investor disclosure is required. New guidelines also ensure valuations are handled by qualified independent valuers to protect investors.

In Detail: SEBI has revised the valuation framework for AIFs under the SEBI (Alternative Investment Funds) Regulations, 2012, to improve both transparency and consistency in the valuation of AIF portfolios. These changes take effect immediately.

Under the new framework, securities not covered by specific regulations must be valued according to guidelines approved by an AIF industry association that represents at least 33% of registered AIFs. These guidelines are based on recommendations from SEBI’s Alternative Investment Policy Advisory Committee (AIPAC).

SEBI has also extended the deadline for AIFs to submit valuation reports based on the audited accounts of their investee companies, moving the reporting period from six months to seven months. Additionally, SEBI aims to standardize valuation rules for thinly traded and non-traded securities by March 31, 2025.

The circular also clarifies that changes to valuation methods or approaches will not be treated as "Material Changes," though investors must still be informed to maintain transparency. New guidelines require that independent valuers, who oversee the valuation process, must be authorized and hold relevant credentials. These revisions are intended to strengthen regulatory control and safeguard investor interests.

Key Links: SEBI | Modification in framework for valuation of investment portfolio of AIFs