Introduction
While SEBI’s Listing Obligations (LODR) and Insider Trading Regulations often take center stage, there’s a broader regulatory landscape that corporates, intermediaries, and investors must navigate. SEBI, as India’s capital market watchdog, enforces several other crucial regulations that govern mutual funds, portfolio managers, investment advisors, credit rating agencies, and more.
Understanding these frameworks ensures robust compliance, minimizes legal risks, and promotes ethical market practices. Here’s a look at some essential yet often overlooked SEBI regulations.
1. SEBI (Mutual Funds) Regulations, 1996
These regulations govern the formation, registration, and operation of mutual funds in India. Key provisions include:
Minimum net worth requirements for asset management companies (AMCs)
Disclosure norms and investment restrictions
Valuation, accounting, and reporting guidelines
Investor protection mechanisms, including redressal of complaints
2. SEBI (Portfolio Managers) Regulations, 2020
This framework regulates entities offering portfolio management services (PMS), including:
Eligibility criteria and registration process
Disclosure of performance, fees, and investment strategies
Maintenance of segregated accounts
Investor suitability assessments
3. SEBI (Investment Advisers) Regulations, 2013
SEBI mandates registration for all investment advisers and sets strict rules on:
Qualification and certification requirements
Fee models (only fixed-fee or AUM-based models allowed)
Prohibition on conflict of interest
Separation of advisory and distribution services
4. SEBI (Alternative Investment Funds) Regulations, 2012
AIFs such as venture capital funds, private equity funds, and hedge funds are governed under this regulation. Key highlights include:
Classification of AIFs into Category I, II, and III
Disclosure norms and fund raising requirements
Investment concentration limits
Sponsor commitment and compliance obligations
5. SEBI (Credit Rating Agencies) Regulations, 1999
These regulations ensure that rating agencies operate with integrity and transparency by:
Setting eligibility norms for registration
Monitoring methodologies and disclosures
Preventing conflict of interest in ratings
Establishing internal compliance functions
6. SEBI (Prohibition of Fraudulent and Unfair Trade Practices – PFUTP) Regulations, 2003
This regulation is crucial in ensuring fairness in the securities market. It prohibits:
Market manipulation
Misleading statements or omissions
Pump-and-dump schemes
Circular trading and insider collusion
Why These Regulations Matter
Each of these regulations plays a role in:
Investor Protection: Reducing asymmetry of information and ensuring ethical practices.
Market Integrity: Preventing manipulation and promoting transparency.
Corporate Governance: Enhancing accountability among intermediaries and listed entities.
Ease of Doing Business: Building investor confidence in Indian capital markets.
Conclusion
SEBI’s regulatory framework extends far beyond LODR and insider trading. Businesses, advisors, and market participants must stay updated on these varied but interconnected regulations to ensure seamless compliance and avoid penalties. With the capital markets evolving rapidly, proactive governance and continuous learning are key to staying ahead.
