The Securities and Exchange Board of India (Sebi) relaxed some rules to hasten the resolution of stressed assets in bank balance sheets. The regulator has exempted buyers of shares in distressed companies from the requirement of making an open offer even if the purchase triggers such an event under the takeover code. Sebi had come across cases where lenders acquired shares in a distressed company but could not sell the stake to a new investor because the takeover norms proved restrictive and reduced the funds available for investment in the stressed firm. This has triggered the need for additional relaxation, which is at present available only to financial creditors under the Reserve Bank of India’s (RBI’s) strategic debt restructuring (SDR) scheme. These exemptions, however, will need to be approved by a special resolution (at least 75% shareholders voting in favour). Secondly, the shares bought by the new investor will also be locked in for at least three years. Secondly, the regulator also relaxed laws which will make it easier for private equity-backed firms to raise funds through new share sales. A third set of announcements were related to proposals that will allow foreign portfolio investors (FPIs) easier access. However, the regulator continued to be tough on investments through participatory notes (P-notes). The regulator is also in the process of reviewing norms for the equity derivatives market and plans to release a discussion paper. Separately, in a circular, Sebi said it has allowed hedge funds to trade in the commodity derivatives market, subject to certain safeguards.

(Live Mint)