The Securities and Exchange Board of India has approved comprehensive reforms to existing framework to facilitate quicker transmission of securities to legal heirs or claimants of deceased investors.

Separately on June 19, the market regulator approved regulations to re-introduce open market buybacks through stock exchanges. A new mechanism to enable faster efficient capital deployment by alternative investment funds (AIFs) and amendments to existing regulations to develop the municipal bond market were also among the decisions taken by the Sebi board.

Simplified and standardized framework for transfer of securities:

A key decision taken in this board meeting was aimed at simplifying the transfer of securities to the legal heirs.

Under this move, a new category of Quick Transmission Processing for small-value claims up to Rs 10,000 for physical holdings and up to Rs 30,000 for dematerialised holdings has been introduced to facilitate efficient processing of such claims with minimal documentation. 

Additionally, limits for simplified documentation have been doubled from Rs 5 lakh to Rs 10 lakh for physical holdings per listed company and from Rs 15 lakh to Rs 30 lakh for dematerialised holdings per beneficial owner.

Importantly, existing requirement of submission of PAN (permanent account number) has been removed considering that PAN is already available for opening demat accounts. Mandatory requirement of probate of will has also been done away with, in line with recent amendments to succession laws.

In addition to original or attested copy of death certificate, copy of death certificate with QR Code has been added as eligible document in view of ease of verification using the QR code, and if death certificates were issued in foreign jurisdictions, additional modes for verification from overseas branches of Indian banks or any foreign bank with whom Indian banks have correspondent banking relationship will be required. 

"The approved measures are expected to facilitate easier and faster transmission of securities and reduce costs and procedural hardship for claimants," Sebi said. 

Re-Introduction of Open Market buyback

The Sebi board has approved amendments to its regulations to re-introduce open market buybacks through stock exchanges, a move it said followed the revision in taxation framework and the suggestions received from stakeholders with the objective of providing greater flexibility in undertaking buy-backs. 

This will be re-introduced from August 01, 2026. 

"Due to changes in the taxation framework applicable for buy-back and the fact that promoters are not allowed to take part in open market buy-back, now open market buy-back through stock exchanges will be treated as normal trading transaction. Therefore, requirement of a separate trading window and display of the company's identity as purchaser on the trading screen is being dispensed with," Sebi pointed. 

A thing to note is that the open market buy-back through stock exchanges will have to be completed within 66 working days from the opening of buy-back, and at least 40 per cent of funds earmarked will have to be utilised during first half of the buy-back period.

The appointment of merchant banker has been made discretionary on part of the company for undertaking buy-back, with the regulator looking to reduce cost to the company and ease the process. 

According to Makarand Joshi, founder partner of MMJC and Associate, the move to reintroduce open market buybacks and discretion in appointment of merchant bankers for buybacks shifts responsibility to the company, stock exchanges, and statutory auditors. "This would raise the bar on board-level and auditor accountability," he said. 

Green Channel for AIF Rollout

Sebi is taking more initiatives to reduce the timelines for launch of schemes, which will enable faster and more efficient deployment of capital by alternative investment funds (AIF). Under this, a new GARUDA (Green Channel AIF rollout upon document acknowledgement) mechanism has been introduced. 

So, for non-accredited investor schemes, which excludes LVF (large value funds), AI (accredited investor) only scheme and angel funds, the timeline to launch new AIF schemes has been reduced to 10 working days. 

"Considering the level of sophistication of AIs, AI only schemes and angel funds (which comprises of only AIs) have been exempted from filing private placement memorandum through merchant banker and permitted to launch immediately upon grant of Sebi registration or filing of PPM with Sebi," the regulator notified. 

Development of Municipal Bond Market

Over the years, the number of municipal bodies raising funds via the bond market has steadily increased. But, it remains significantly lower when compared with developed markets. 

The Sebi board has now approved amendments to regulations related to listing of municipal debt to develop this market further. 

Municipalities will now be able to raise funds for re-financing of existing debt of specific projects.

Currently, the framework has an enabling provision for raising of funds by two or more municipalities through a pooled finance vehicle.

Sebi said specific disclosures required to be made in the offer document, while raising funds through a pooled finance vehicle, shall be specified. Furthermore, agreement between the pooled vehicle and the constituent municipalities and the escrow account mechanism, shall also be specified for clarity regarding the pooled finance arrangement and the repayment mechanism.

The regulator also wants to encourage retail participation in the municipal bond market and therefore is now allowing incentives for the same. 

Issuers will now be permitted to offer additional interest or a discount to the issue price to certain category of investors, like senior citizens, women, serving and retired defence personnel, widows and widowers of defence personnel and retail individual investors. 

The trading lot for municipal debt securities issued on private placement basis has been specified as Rs 1 Lakh or Rs 10,000. Municipal debt security issued at a face value of Rs 10,000 shall have a fixed maturity and be without any structured obligations, Sebi said. 

The regulator has also relaxed the timelines for financial results as it said the complexity and diversity of operations of municipalities, compiling accurate and comprehensive financial and operational data within the prescribed timelines is a significant challenge.

Intraday borrowing by Mutual Funds

The Sebi board also approved the amendment to its mutual funds regulations, to facilitate intraday borrowings availed by mutual funds for managing liquidity mismatches during the day.

The amendment allows mutual funds to avail intraday borrowing for bridging difference arising out of pay-in or pay-out settlement timings within asset classes, foreign exchange settlements, payments for mark-to-market (MTM) of derivative positions etc., subject to certain safeguards. 

Asset Management Companies will be responsible for repaying intraday borrowings by end of the day and any intraday borrowing converted to overnight borrowing will have to be within the regulatory limits. Importantly, intraday borrowings cannot be used as a source of leverage. 

Among the other major decisions taken by the Sebi board today, proposals were approved to align the regulatory framework governing listed securitisation transactions with the Reserve Bank of India's framework on securitisation.