The Securities and Exchange Board of India has barred mutual fund schemes from participating in pre-IPO placements of equity shares and related instruments, allowing them to invest only in the anchor investor portion or the public issue of an IPO, according to a Moneycontrol report on Friday. In a letter to AMFI, SEBI cited Clause 11 of the Seventh Schedule of the Sebi (Mutual Funds) Regulations, 1996, which mandates that all investments by mutual fund schemes in equity shares and equity-related instruments must be made only in securities that are listed or to be listed.

The regulator said the clarification was issued after receiving several queries on whether mutual funds could participate in pre-IPO placements before the opening of the anchor or public issue. It warned that allowing such participation could result in mutual funds holding unlisted shares if an IPO were delayed or cancelled—something that would breach regulatory norms.

“If the schemes of the Mutual Funds are allowed to participate in pre-IPO placements, they may end up holding unlisted equity shares in case the issue or listing cannot be concluded for any reason, which would not be in compliance with the said clause,” Sebi said. 

New process for transferring PMS biz Sebi has introduced a streamlined process for transferring Portfolio Management Services (PMS) business from one portfolio manager to another, aimed at enhancing ease of doing business. Under the new framework, a portfolio manager can transfer its PMS business only after obtaining prior approval from the Sebi. 

Uniform rules for unclaimed amounts soon

The market regulator has proposed changes to align regulations for entities issuing non-convertible securities, standardising the process for handling unclaimed amounts by allowing their transfer only after seven years from maturity.  Sebi has invited public comments on the proposal until November 14.