The mutual fund industry, which has been stuck with illiquid debt instruments following the recent debt crises and the IL&FS fiasco, can now heave a sigh of relief with SEBI allowing domestic funds to segregate the bad assets. Announcing the move on Wednesday, Ajay Tyagi, Chairman of SEBI, said the facility — known as side-pocketing — will be available to mutual funds based on credit events.

The development should soothe the nerves of industry players who were worried over the fact that the illiquid bad assets were overshadowing the returns generated by their liquid portfolio.

To give a boost to start-ups, the market regulator has also made the listing process less cumbersome and has renamed the Institutional Trading Platform as Innovators Growth Platform. Under the new regulations, a firm seeking listing should be engaged in the intensive use of new-age technologies, and 25 per cent of its pre-issue capital should be held by qualified institutional buyers or family trusts with over ₹500 crore net worth or a Category III foreign portfolio investor or a pooled investment fund with minimum assets of $150 million or an accredited investor with gross income of at least ₹50 lakh annually.

Expanding OFS mechanism

The SEBI board has also approved a proposal to expand the offer-for-sale (OFS) mechanism to cover more listed companies wherein shareholders may want to sell their stake.

The OFS will be available for companies with a market-cap of more than ₹1,000 crore. The threshold of market capitalisation will be computed as the average of daily reading for six months prior to the month in which the offer opens.

If a seller fails to get enough demand from non-retail investors at or above the floor price, there will be an option to cancel the offer, even after bidding on the same day.

Further, SEBI has allowed clubbing of foreign portfolio investment limits, which will be on the basis of common ownership of more than 50 per cent stake or common control.

The board has decided that clubbing of the investment limit should not be done on the basis of same set of beneficial owners as per the Prevention of Money Laundering Act. The move is based on the recommendations of a SEBI working group under HR Khan.