Sebi stand on "associate company" sees independent directors off MF boards
Mumbai: Big names in corporate India who have become directors on the boards of several mutual funds, may quit their board positions in these funds in a big way.

The reason for this lies in a recent decision by the Securities & Exchange Board of India (Sebi), which has decided to treat all companies, where independent directors of the mutual fund trustee company have a board berth, as associates of the mutual fund.

As a result of this interpretation, any deficiency letter issued to the fund for however minor a lapse has to be reproduced in the offer document of the company where such a person is a director when it comes out with any public/rights issues.

According to industry sources, since trustee companies are by and large run on a ‘no-profit-no-loss’ basis, and given the fact that such trustees are remunerated only Rs. 5,000 per board meeting, treating their other companies as associate companies imposes a huge liability on the companies.

They further state that, since these independent trustees have not personally committed any irregularity, it would be wrong to "crucifying" such trustees for any slippages on the part of the mutual fund operations.

Besides, with the absence of any share-holding between the mutual fund and the other companies where independent trustees hold a board berth, legal experts are unable to fathom the validity of terming just the existence of a common pool directors as associates.
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Sebi moulds norms for Net investing for book-built issues
Mumbai: The Securities and Exchange Board of India (Sebi) is said to be putting together norms for allowing brokers to receive bids from investors via internet in a book-built issue through the internet.

The issue will be discussed at a forthcoming meeting of the standing committee on internet trading. The internet is proposed to be married to the current book-building through the secondary market route module.

The Sebi note on the subject states that brokers who have established order routing systems for trading, can use the same system for allowing clients to enter bids directly for book-built issues.

Interfacing details may be standardised and informed to software vendors in a similar manner as for secondary market trading applications. Exchanges would have to provide application interface details to software developers for direct transmission of orders from the internet to the exchange trading system.

Sebi’s internet trading committee is going to announce the second round of reforms which apart from on-line issuance of shares could also involve on-line filing by companies and setting safety standards for WAP-enabled trading.
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