‘Skin in the game’ refers to a situation in which people in high positions running a company invest their money in the shares of the company. This increases the confidence of other investors.
Sebi changed the rules
SEBI on Tuesday tightened norms related to independent directors and reduced the minimum amount of applications for REITs and InvITs, as part of efforts to strengthen governance in companies as well as attract more investors to the market. The capital markets regulator also approved several other proposals, including a decision to introduce a new framework for accredited investors.
In order to ensure easy access for investors to participate in the Public/Rights issue through various payment channels, SEBI has permitted banks, other than scheduled banks, to be registered as bankers to the issue.
These provisions also got approval
SEBI’s board of directors in its meeting held in Mumbai has also approved amendments to mutual fund rules and regulations for resident Indian fund managers to become part of foreign portfolio investors, among other proposals. Under these, a provision has been made for minimum investment in the schemes of asset management companies (AMCs) in the form of ‘skin in the game’ based on the risks associated with them.
What is skin in the game
‘Skin in the game’ refers to a situation in which people in high positions running a company invest their money in the shares of the company. This increases the confidence of other investors. At present, MMCs bringing out these schemes are required to invest 1% of the amount raised or Rs 50 lakh, whichever is less, in the new fund offering.
New rules will be applicable from February
The new rules will come into effect from January 1, 2022. Under the proposed changes, the listed company will have to disclose the resignation letter of an independent director and there will be a one-year pause period for an independent director to become a whole-time director in the same company or subsidiary or subsidiary or any other company of the promoter group. . Apart from this, changes have been approved in the investment regulations for infrastructure investment trusts (InvITs) and real estate investment trusts (REITs) to make them more comprehensive. Their minimum application value and trading lot size have been reduced. The minimum application value will be between Rs 10,000 to Rs 15,000 and the trading lot for both will be of one unit.
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