SEBI News Updates - April 2025

SEBI Prescribes Standardized Format for System and Network Audit Reports by Market Infrastructure Institutions (MIIs)

Date: April 04, 2025

Overview:

The circular issued by SEBI introduces a standardized format that all Market Infrastructure Institutions (MIIs) must follow for preparing and submitting system and network audit reports. Recognizing the critical role of robust IT systems and cybersecurity frameworks in maintaining market integrity, SEBI has mandated this new format to ensure consistency, transparency, and comparability across audit reports.

Key Provisions:

·       Uniform Reporting Structure: All MIIs are required to conduct System and Network audit asper the aforesaid framework and each MII had adopted different template for System and Network audit report. The current circular outlines specific sections that must be included in each audit report. MIIs are required to detail their audit scope, methodologies, and significant findings, with a focus on identifying key risk areas within their IT and network systems.

·       Standardization of Format: To facilitate easier analysis and monitoring by regulators, the circular insists on the use of standardized format to increase the data quality, capture of relevant information as per regulatory requirements in a streamlined and standardized manner across MIIs. This ensures that comparisons across different MIIs are accurate and that any vulnerabilities are highlighted in a uniform manner.

·       Regulatory Oversight and Compliance: The new format is expected to improve the oversight capabilities of SEBI and enable more effective regulatory interventions.

This circular represents a strategic move by SEBI to enhance the quality and reliability of audit information in the financial sector. By requiring MIIs to adhere to a standardized audit format, SEBI aims to foster higher levels of accountability, streamline the risk assessment process, and ultimately, safeguard investor interests. It is expected to drive improvements in cybersecurity practices and risk management across the market infrastructure, ensuring that regulatory actions are both proactive and data-driven. In a rapidly evolving digital environment, such standardization is a crucial step towards reinforcing market resilience and maintaining confidence in the financial system.

SEBI Amends Threshold for Additional Disclosures by FPIs

Date: April 09, 2025

Overview:

The Securities Exchange Board of India (SEBI) has revised its requirements for additional disclosures by Foreign Portfolio Investors (FPIs). Previously, under the FPI Master Circular issued on May 30, 2024, FPIs that individually, or along with their investor group (in terms of Regulation 22(3) of the FPI Regulations) with exceeding INR 25,000 crores of equity Assets Under Management were mandated to provide additional disclosures. This update, issued through Circular No. SEBI/HO/AFD/AFD-POD-3/P/CIR/2025/52, alters that threshold.

Key Amendments:

·       Threshold Revision: The size-criteria threshold has been raised from INR 25,000 crores to INR 50,000 crores.

·       Revised Provisions: Specific sub-paragraphs in Part C and Part D of the FPI Master Circular have been amended so that all references now reflect the INR 50,000 crores figure.

·       Immediate Effect: The updated requirements come into force immediately upon publication.

This change aims to reduce the reporting burden for smaller FPIs while ensuring that only those with substantial exposure to Indian markets remain under tighter regulatory oversight. The move underscores SEBI’s commitment to balancing market oversight with investor convenience by focusing on entities with significant market presence.

SEBI provides clarification on Regulatory framework for Specialized Investment Funds (‘SIF’)

Date: April 09, 2025

Overview:

In a bid to increase consistency and transparency in regulatory reporting, SEBI has issued clarifications impacting the framework for Specialized Investment Funds (SIFs). The update revisits provisions issued in the SIF Circular dated February 27, 2025, which established robust guidelines for innovative investment strategies while safeguarding investor interests.

Specific Amendments:

The maturity provisions concerning interval schemes under the existing Master Circular (dated June 27, 2024) have been exempted from applying to newly introduced Interval Investment Strategies.

There has been a revision in the minimum investment threshold—now mandating that the cumulative investment by an investor (across all strategies under the SIF framework) should not drop below INR 10 lakh at the PAN level.

Immediate Effect: The updated requirements come into force immediately upon publication.

Stakeholder Considerations: The amendments respond to industry queries and representations, including from the Association of Mutual Funds in India (AMFI).

M/s Bodhraj Construction v. Snehanshu Sinha

In a notable decision concerning the Jharkhand Apartment (Flat) Ownership Act, 2011, the court dealt with the issue of whether ongoing proceedings before the Competent Authority under the Jharkhand Apartment (Flat) Ownership Act, 2011, bar the court from appointing an arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996. It clarified that the “competent authority” under Section 3(I) of the Jharkhand Apartment (Flat) Ownership Act, 2011, does not qualify as a quasi-judicial nor a judicial authority. This determination has significant implications for disputes arising under the Act, particularly those concerning the ownership and regulation of apartment flats. The court held that the pendency of proceedings before this designated competent authority does not obstruct or affect an application made under Section 11(6), Arbitration and Conciliation Act, 1996. In essence, even if issues remain unresolved at the level of the competent authority, applicants can still avail themselves of the statutory remedy provided under Section 11(6), Arbitration and Conciliation Act, 1996.

The ruling delineates the boundaries between administrative and judicial functions within the framework of the Act. The emphasis is on ensuring that the statutory provisions aimed at protecting the interests of flat owners are not hindered by delays inherent in administrative processes. The court’s decision confirms that the presence of unresolved matters before the competent authority does not delay or impede the commencement of judicial intervention under Section 11(6), Arbitration and Conciliation Act, 1996. This interpretation reinforces a mechanism for expeditiously addressing ownership disputes while underscoring that the statutory role of the competent authority is administrative rather than judicial.

Looking ahead, this decision is expected to streamline the dispute resolution process under the Act. It provides clarity for practitioners and stakeholders by confirming that administrative delays will not serve as a barrier to judicial applications, thereby safeguarding the rights of apartment flat owners and promoting timely redressal of disputes.