Sebi okays up to Rs 1 cr reward for corporate whistle blowers

NEW DLEHI: Sebi on Wednesday provided more teeth to rating agencies by allowing them to obtain details of borrowings and defaults by companies. The markets regulator also announced rewards for whistle blowers and approved changes in norms prohibiting insider trading.

Companies will now have to give consent to rating agencies for bank loan details, Sebi said. Besides, whistle blowers in a company fraud will be rewarded 10 per cent of the recovery, or a maximum of Rs 1 crore.

Sebi said it was still mulling the impact of increasing the minimum public shareholding to 35 per cent as proposed in the July 5 Budget. The markets regulator is also still examining the issue of inter-creditor pacts by mutual funds.

In a major move, Sebi on Wednesday eased operational constraints and compliance requirements for foreign portfolio investors (FPIs). This has come at a time when the domestic market has been witnessing a steady outflow of FPI investments, which exceeded Rs 21,000 crore in July and August.

Sebi has done away with the broadbased eligibility criteria for FPIs, simplified documentation requirements for KYC and reduced the eligibility categories for FPIs to 2 from 3 at present.

FPIs will also be permitted to carry out off-market transfer of unlisted securities to a domestic of foreign investor. Offshore funds floated by Indian mutual funds will now be permitted to invest in India after obtaining FPI registration. The requirements for issuance and subscription of offshore derivative instruments (ODIs) have been rationalised.