Consultation Paper on the Review of the Securities and Exchange Board of India (Informal Guidance) Scheme, 2003

SEBI introduced the “Securities and Exchange Board of India (Informal Guidance) Scheme, 2003” (the “Scheme”) to offer informal guidance to market participants, including intermediaries, listed companies, mutual fund trustees, and others, on matters concerning securities market regulations. The purpose of the Scheme is to make the landscape of securities market regulations more accessible, transparent, and orderly.

The Scheme was introduced on June 24, 2003, to streamline the process of issuing clarifications sought by market participants. It was amended in 2004 and 2023 to include additional categories of entities eligible for the scheme and to mandate digital payment of application fees.

The Scheme is a mechanism provided by SEBI to offer interpretations and guidance on specific regulatory provisions in the context of proposed transactions or specific factual situations. This helps market participants understand how SEBI would view certain actions or transactions under the existing regulatory framework.

• Expanding Eligibility Criteria

The proposal includes expanding eligibility to:

• • Market infrastructure institutions (MIIs) like stock exchanges, clearing corporations, and depositories
  • Managers of pooled investment vehicles such as Alternate Investment Funds, Real Estate Investment Trusts, Infrastructure Investment Trusts, and Collective Investment Schemes
• Rationalization of Fees

The current fee of INR 25,000 (plus GST) is proposed to be increased to INR 75,000 (plus GST). The non-refundable processing fee for rejected applications is proposed to be increased from INR 5,000 to INR 15,000.

• Updating Obsolete Provisions

References to obsolete regulations, such as the Securities and Exchange Board of India (Central Listing Authority) Regulations, 2003, and the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997, will be updated.

• Centralized Processing and Nodal Coordination Cell

A nodal coordination cell with a centralized email address will be established to streamline the application process. Applications will be received only through online mode.

• Interface with the Applicant

The use of electronic mail for communication will be mandated. Applicants will have up to 15 days to respond to SEBI’s clarifications, failing which the application may be rejected. This 15-day period will be excluded from the overall 60-day response timeline.

SEBI has proposed expanding the scope of the Scheme to extend its benefits to a broader range of market participants, including MIIs. If implemented, it will provide market participants with more specific guidance on various regulatory provisions of securities law.

Public comments are sought on the aforesaid recommendations and any further changes required in the draft Securities and Exchange Board of India (Informal Guidance) Scheme 2024. The comments can be submitted latest by September 15, 2024, to SEBI vide the link as provided on SEBI’s website.

We hope you have found this information useful. For any queries/clarifications please write to us at insights@elp-in.com  or write to our authors:

KC Jacob, Counsel, Email – kcjacob@elp-in.com

Shourya Tanay, Senior Associate – Email – shouryatanay@elp-in.com