SEBI Board Meeting-Introduction of Section 9A in Income Tax Act 1961 and Amendments to the SEBI (Real Estate Investment Trusts) Regulations, 2014
PR No. 116/2016
SEBI Board Meeting
The SEBI Board met in Mumbai today and took the following decisions:
A. Consultation Paper for “Amendments to the SEBI (Portfolio Managers) Regulations, 1993 pursuant to introduction of Section 9A in the Income Tax Act, 1961”
Pursuant to the announcement by Hon’ble Finance Minister in Union Budget 2015-16, Income Tax Act, 1961 has been amended by inserting Section 9A in the Act (popularly known as ‘Safe Harbour Norms’). This section inter-alia provides that fund management activity carried out through an Eligible Fund Manager located in India acting on behalf of an Eligible Investment Fund (overseas fund) shall not constitute business connection in India of such fund subject to the fund and the fund manager meeting certain specified conditions mentioned therein, including registration of the Eligible Fund Manager with SEBI as a portfolio manager or investment adviser. With a view to laying down an enabling framework for Eligible Fund Managers, SEBI Board has approved bringing out a consultation paper proposing certain changes in the Portfolio Managers Regulations on the following points:
1) Insertion of a separate Chapter II-A “Eligible Fund Managers” which will apply to Eligible Fund Managers exclusively pertaining to their activities as portfolio managers to Eligible Investment Funds.
2) Procedure for an existing SEBI registered Portfolio Manager to function as an Eligible Fund Manager
3) Procedure for registration of an existing foreign based fund manager desirous of relocating to India or a fresh applicant to function as an Eligible Fund Manager
4) Obligations and Responsibilities of Eligible Fund Managers
5) Non applicability of certain provision of Portfolio Managers Regulations on Eligible Fund Managers, such as:
a. High Water Mark Principle regarding calculation of fees, disclosure of fees;
b. Obligation to act in a fiduciary capacity;
c. Audit of overseas fund;
d. Entering into agreement between the portfolio manager and overseas fund;
e. Reporting requirements in respect of overseas fund;
f. Minimum investment requirements (i.e. INR 25 Lakhs), etc.
The consultation paper will be placed on SEBI website seeking public comments.
B. Consultation Paper for “Amendments to the SEBI (Real Estate Investment Trusts) Regulations, 2014”
SEBI notified the SEBI (Real Estate Investment Trusts) Regulations, 2014 on September 26, 2014. With a view to smoothen the process of registration of REIT with SEBI and also the process of launching of the offer, SEBI Board has approved bringing out a consultation paper proposing certain changes and providing some clarification in the REIT Regulations on the following points:
1) Removing the restriction on the SPV (only in case of such SPV being a Holding Company) to invest in other SPVs holding the assets
2) Change in the number of sponsors
3) Rationalization of compliance with respect to Related Party Transactions (RPTs) requirements
4) Aligning minimum public holding requirement with SCRR
5) Allowing REITs to invest up to 20%, in under construction assets
6) Responsibilities of trustee and its associates
The consultation paper will be placed on SEBI website seeking public comments.
C. SEBI Annual Report 2015-16
The Board considered and approved the SEBI Annual Report 2015-16. In compliance with Section 18(2) of SEBI Act, 1992, the same Annual Report would be submitted to the Central Government.
Mumbai
June 17, 2016
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