On Oct. 14, IND SEBI wrote re market infrastructure institutions.
IND SEBI issued circular regarding monitoring shareholding of market infrastructure institutions (MIIs), includes stock exchanges, depositories, and clearing corporations.
Follows IND SEBI Oct. 2023 issued master circular for stock exchanges, see #188261.
Also follows IND SEBI Oct. 2023 issued new master circular for depositories, #97698.
Follows IND SEBI Aug. 2023 issued master circular for commodity, see #110052.
Monitoring Framework
Framework will apply to both listed, unlisted MIIs; MIIs must disclose shareholding patterns as per SEBI (listing obligations and disclosure requirements) regulations.
Every MII must appoint designated depository (DD) to monitor shareholding limits; and if an MII's ISIN is frozen, the MII must monitor its own limits without a DD.
DD monitors shareholding thresholds, such as 5% or 15% for individual shareholders and 49% for foreign entities, and takes appropriate actions when breached.
Trading members, associates cannot exceed 49% of exchange’s paid-up equity share capital; caution limit of 45% must be monitored, alerts are to be sent for breaches.
In addition, at least 51% of a clearing corporation's share capital must be held by recognized stock exchanges, with no single stock exchange holding more than 15%.
All shareholders must be fit and proper, and MIIs must ensure this for those holding 2% or more equity, notifying the public and SEBI of non-compliant shareholders.
Breach of shareholding limits or failure to meet the fit and proper criteria will result in the freezing of voting rights and corporate benefits associated with the excess shares.
MIIs are advised to take specified actions i.e. necessary steps, put in place necessary systems for implementing prescribed matters referred to in this circular (of Oct. 14).
Effectiveness
The circular will take effect 90 days from issuance, i.e. Jan. 12, 2025.
