Sebi frames rules to regulate fund pooling, indemnify investors
- Malaysian airlines might have disintegrated mid-air
- Out of the 50,000 homes for the poor, not even 50 constructed in Gujarat by Modi: Kejriwal
- BJP complains to EC against Rahul over RSS remarks, seeks derecognition of Congress
- Varanasi seat row: RSS worried but believes BJP will solve it
- Subrata Roy arrest row: The not-so-beautiful story
Taking off from the powers conferred upon it through the Securities Laws (Amendment) Ordinance, 2013, the board of the Securities and Exchange Board of India in its meeting on Tuesday gave nod to a framework to regulate any pooling of fund amounting to at least Rs 100 crore and also approved an amendment that enables the regulator to indemnify investors from the disgorged amount.
While the Securities Laws (Amendment) Bill awaits the Parliament's approval, Sebi got the powers through the Ordinance that was promulgated by the President twice this year. It is likely to get promulgated a third time since the Parliament could not take up the bill in the winter session.
In another major development, Sebi said that the government has decided to extend the tax treatment available to the FII to the Foreign Portfolio Investors (FPIs) too and has thereby removed the ambiguity on tax treatment of FPI's.
"The communication from the Department of Economic Affairs to the CBDT and to Sebi, conveying the decision that all three categories of FPIs would be given similar tax treatment as available to FIIs presently," said Sebi said in its statement.
As per the tax regulations FIIs and sub-accounts do not have to pay any long-term capital gains tax if the shares are held for more than a year while the short-term capital gains are taxed at 15 per cent. While the interest earned on bonds are taxed at 20 per cent, the interest on government bonds and certain prescribed corporate debt attract tax of only 5 per cent instead of 20 per cent.
Sebi now has a framework to regulate all pooling of funds (Rs 100 crore and above) the board also approved amendment to Sebi (IPEF) Regulations, 2009 enabling, "Utilisation of such amounts primarily for restitution to investors and in case of failure of identification of investors, for the credit of amounts disgorged .....to the Investor Protection and Education Fund of Sebi," said Sebi in its statement.