SEBI TO FIX THE PRINCIPLES FOR THE LISTING OF NEW BUSINESSES | Swastika Blog - Share Market Updates, Latest News and Expert's Tips | Swastika Investmart Ltd (Swastika Investmart) Swastika
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SEBI TO FIX THE PRINCIPLES FOR THE LISTING OF NEW BUSINESSES

The Ministry of Company Affairs (MCA) has asked market controller SEBI to fix the principles for the listing of new businesses. It has requested SEBI to pull out some of the concessions given in the listing to new companies.

SEBI has proposed to diminish this cutoff from 70% to 40 per cent. However, if the startup is not making a profit, it can also be listed on the mainboard, provided the institutional investors hold a 75 per cent stake in the company. However, many startups have been seeking relief in the institutional investors’ stake of 75 per cent. 

However, the MCA became more lenient and made the limit to be up to 50 per cent, to which SEBI agreed. There was no reaction to messages shipped off SEBI and MCA in regards to this matter.

 

SEBI HAS DECIDED TO FORCE ASSET ALLOCATION BY CONSIDERING EMPLOYEES 20% SALARY AS FUND UNITS

 

What is a Mutual Fund Scheme??

If you invest 20 thousand rupees in a scheme of a mutual fund. Its NAV is 200 rupees. In this case, you will get 100 units.

How 20,000 divided by 200 gives you 100. these units are a result of investing in the scheme. Now suppose that in a year the NAV rises from Rs 200 to Rs 300 and you decide to sell it. Now you will get 30,000 rupees.

What has SEBI decided??

MMC i.e. Asset Management Companies (mutual fund houses that run schemes) will now have to pay 20% of their fund managers’ salaries in units of the same scheme.

Of which he is the fund manager. In such a situation, the funds of the fund managers would also be invested in those schemes. So the performance of the schemes can be improved. The salary of all the employees of the fund house will be paid similarly. 

These units will be secured for a base time of three years and workers would not have the option to redeem such units. On account of infringement of a set of principles, misrepresentation, and gross carelessness, the units will be mauled back, and the redeemed sum will be credited to the plan.

What Role Does the Fund Manager Play In It??

The fund manager ensures that the investors keep getting good returns from the fund. The fund manager is also responsible for making the wrong decisions.

The fund manager trying to get higher returns by breaking the benchmark of its fund Suppose last year you got a return of 10 per cent, then the next year there is an attempt of 13 per cent. Also, the returns of the benchmark index i.e. Sensex-Nifty, Midcap, and Small-cap are compared with the returns of the fund.

Why has SEBI made this decision??

SEBI has taken this choice. On the off chance that in a fiduciary business when senior staff has their investments it makes them oversee cash all the more capably. If something has turned out badly, it solidly falls on the shoulders of these folks so the fund managers who have the cash ought to oversee it with the full obligation. 

In such a situation, the expectation of getting more investors will increase.

Positives

  • Results in benefit for the investors.
  • Transparency in the investing field as directors would now contribute more.
  • The interest of key supervisors and unitholders of Mutual Fund plans will be on a similar balance.
  • There will be an increase in the confidence of the Mutual fund investors in the AMCs and thus help raise the securities market.
  • Fund managers will work efficiently after taking money from investors in the way of expense as they will now have ownership to the fund managers.

Negatives

  • Forcing individuals is never a smart thought. The subtleties are prohibitive on somebody’s personal asset allocation and personal savings.it is up to individuals and their different risk appetites as to what is their portfolio.
  • It depends on the sum that people are saving. It depends on CTC thus it is not a small percentage of bonus. It is not a percentage of investments
  • There is No connection between employees and performance. Making managers perpetual insiders is certainly not a smart thought. it will not guarantee performance 
  • Lastly, it resembles convincing corporate administration to purchase just their organization stock.

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