News

Published: August 8, 2023
Updated: August 8, 2023

SEBI's Ambitious Reform Agenda Aims for Transparent and Secure Markets

Sebi's Vision for FY24: Enhancing Transparency and Safeguarding Investors

The Securities and Exchange Board of India (SEBI) has unveiled its comprehensive reform roadmap for the ongoing financial year. This ambitious agenda encompasses critical areas such as digital assurance for financial statements, accessible e-voting, risk mitigation in derivatives, innovative pricing discovery for delisting, and augmented disclosures for unlisted companies within conglomerates.

Transparency and Investor Protection:
SEBI's Annual Report Highlights Strategic Steps

SEBI's recently released annual report for financial year 2022-23 sheds light on both the accomplishments and forthcoming initiatives. The primary objectives of these efforts include fostering transparency, elevating disclosure standards, strengthening enforcement mechanisms, and bolstering investor protection.

Addressing Governance Lapses:
Serious Concerns Surrounding Listed Firms

SEBI Chairperson Madhabi Puri Buch drew attention to governance lapses within listed companies, specifically revolving around related-party transactions (RPTs). Recognizing the potential misalignment of interests and the risks associated with such transactions, Buch stressed the need for better disclosures, engagement with stakeholders, and improved governance practices.

Balancing Regulation and Industry Concerns:
Navigating the Regulatory Landscape

Amidst industry concerns about over-regulation, SEBI has engaged with industry bodies to address implementation challenges. The regulator acknowledges the need for a balanced approach while implementing recent changes in Listing Obligations and Disclosure Requirement (LODR) norms, along with enhancing disclosure of agreements involving shareholders, promoters, and related parties.

Empowering Retail Investors:
Facilitating Convenient Voting Channels

SEBI proposes expanding voting avenues for retail investors by enabling voting through broker websites and apps. This initiative aims to enhance participation in voting on motions proposed by listed companies, offering a more accessible and user-friendly experience. Currently, eVoting primarily occurs through depositories.

Mitigating Price Risks and Fraud:
Framework to Safeguard Derivative Markets

SEBI is actively working on a framework to mitigate the impact of price risk within derivative segments. This includes formulating price bands for scrips and derivative contracts, with a focus on curbing speculative trading. Additionally, the eligibility criteria for introducing and continuing stocks in the derivatives segment are under review.

Digital Assurance for Financial Statements:
Enhancing Auditing Practices

SEBI explores the possibility of mandating digital assurances for financial statements of listed companies. This initiative seeks to empower auditors by allowing them to rely on external information sources during routine audits. The Institute of Chartered Accountants of India (ICAI) has already issued guidelines for digital assurances.

Challenges in Recovery:
Dealing with Unrecoverable Dues

SEBI's annual report reveals a significant challenge in recovering outstanding dues. Approximately Rs. 73,000 crore out of Rs. 1.02 trillion has been classified as "difficult to recover." This refers to dues that remain unrecovered despite exhaustive efforts. A substantial portion of these dues is associated with collective investment schemes (CIS) cases.

Progress and Commitment:
Sebi's Impact and Agenda for the Future

SEBI's report highlights its diligent efforts to deliberate on crucial agenda items and decisions. A majority of these deliberations have been translated into actions, reflecting SEBI's commitment to steering the market towards transparency and security. Moreover, the regulator has already embarked on initiatives related to ESG frameworks, corporate governance, and reshaping mutual fund expenses.

Ushering in a New Era of Market Integrity

SEBI's holistic reform agenda signifies a pivotal phase in India's financial landscape. By addressing critical areas of concern, implementing innovative solutions, and ensuring comprehensive disclosures, SEBI is poised to usher in an era of market integrity, where transparency and investor protection take centre stage.