SEBI enjoyable service provider banking norms could enhance their profitability

“In view of the attainable dangers related to unregulated actions being carried out by SEBI registered entity, the board in its assembly held in December 2024 had permitted that the non-regulated actions be hived off to a separate authorized entity. However, put up inside overview and suggestions obtained from market contributors, the board has now relaxed the requirement of hiving off,” SEBI mentioned in its board assembly on June 18.

In the December 2024 meet, the SEBI had directed MBs to ‘hive-off’ or set up a separate authorized entity to hold out these actions. MBs can now undertake the actions that don’t come beneath every other monetary sector regulation with out setting it up as a separate entity. Similar relaxations have been made for each debenture trustees and custodians.

“In the present market atmosphere, the position of service provider bankers has virtually diminished for lots of the company actions involving listed corporations reminiscent of delistings, buybacks, rights points and follow-on public choices. In the backdrop of above, SEBI enjoyable the requirement of hiving off the service provider banking entity and likewise letting them perform actions not regulated by SEBI is a welcome transfer, and can be a further income / fee-based earnings for service provider bankers from non-fund based mostly actions,” mentioned Yogesh Chande, a lawyer specialising in Securities Laws and a Partner with Shardul Amarchand Mangaldas.

These amendments are a welcome transfer as they improve investor safety and be sure that solely credible and ‘effectively ruled’ entities are allowed to behave as intermediaries, mentioned Sonam Chandwani, Managing Partner at KS Legal & Associates.