The board meeting of SEBI on Wednesday is likely to discuss its recent proposal on compensation agreements between promoters and private equity (PE) funds as part of its efforts to impose strict corporate governance to order to safeguard the interests of minority shareholders.

In a discussion paper on October 4, the markets regulator had proposed that such agreements should have prior approval of the company’s board as well as shareholders through an ordinary resolution. It also provided for continuation of such existing arrangements on dissemination of information to stock exchanges, besides seeking shareholder nod at the following general meeting. All such agreements would have to be discontinued if shareholders did not agree to the agreement.

Commenting on the issue UK Sinha, Chairman, SEBI, had then said: “We came across an instance... if the price goes up beyond a certain level then the managing director would be given an incentive.... it was like a private benefit in a listed company. That we plan to attack. We are concerned about such kind of agreements. We will come out with a discussion paper soon."

Angel funds

Easing the procedures for angel investment in India is also likely to come up. This will include relaxation of lock-in period of investment to one year from three years, increasing the maximum age of investee companies to five years from three.

There are plans to amend the upper limit of the number of angel investors in a scheme to 200. Currently, the upper limit is 49.

FPIs: unlisted securities

The regulator may allow angel funds to make overseas investments of up to 25 per cent of their investible corpus, in line with other Alternative Investment Funds (AIFs).

The move will help such funds spread their risk by investing across geographies.

Rules governing FPI investment in unlisted securities are also likely to be discussed at the SEBI meet. It may be recalled that SEBI, at its board meeting in September, had allowed FPIs to directly trade in corporate bonds, without going through any broker or other intermediary.

Norms for portfolio managers

Also on the anvil are additional disclosures in scheme-related documents, such as the scheme’s top holdings, tenure of the fund manager managing the concerned scheme, portfolio turnover ratio of the scheme and investments by key personnel in concerned schemes by the fund house.

AMCs might also have to provide performance and other important details of each scheme on their AMC website in dashboard format.

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