SEBI Notifies Changes To RPTs, AIF, Portfolio Managers Regulations: ELP Analysis

ELP Update

Certain regulatory changes to the framework for related party transactions (RPTs) and co-investment by investors of Alternative Investment Funds (AIFs) through portfolio management route have been notified by Securities and Exchange Board of India.

Amendment to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Key changes include following:

• Change in definition of related party - Scope expanded

• Amendment to the definition of ‘related party transaction’

• Revised threshold for materiality of RPT

• Prior approval of the audit committee for RPTs and subsequent material modifications. Expanded scope of role of the audit committee

• Prior shareholders’ approval for RPTs and subsequent material modifications

• Exemption from the requirement of prior approval of the audit committee and shareholders for RPTs between two WOS;

• Disclosure of RPTs

• Amended role of the audit committee.

Amendment to the SEBI (Alternative Investment Funds) Regulations, 2012 and SEBI (Portfolio Managers) Regulations, 2020: Key changes include following:

• Insertion of the definition of ‘co-investment’ and general investment conditions for co-investment

• Investment conditions for category III AIFs for investment in listed equities of companies

• Restriction on advisory services by manager; and

• Changes to the portfolio managers regulations

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