SEBI Redefines 'Fit and Proper' Framework: Clarity and Fairness for Market Intermediaries

In a major move, the Securities and Exchange Board of India (SEBI) has approved significant reforms to the 'fit and proper person' framework for market intermediaries. This overhaul seeks to introduce procedural clarity and fairness while removing automatic disqualification in cases where FIRs or complaints regarding economic offences are filed.

The changes maintain that disqualification is only applicable upon conviction for an economic offence or securities law violation. SEBI emphasizes creating an environment where only individuals with strong integrity and ethical values partake in the market while promoting a smoother business operation through these regulations. Noteworthy among these is the exemption of winding-up filings as a ground for disqualification.

For investments, SEBI has altered norms for Infrastructure Investment Trusts (InvITs) and Real Estate Investment Trusts (REITs), allowing them to invest in liquid mutual funds to mitigate risks and broaden investment options. Additionally, privately listed InvITs can invest in greenfield projects up to 10% of their asset values, adding a fresh dimension to how these entities operate within the market.