SEBI's investor protection project may get an overhaul in board meeting today

New Delhi: SEBI chief UK Sinha's pet project, investor protection, is all set to get a fillip. Following the recommendations of the Justice RS Sodhi panel and public comments received last December, the SEBI board will overhaul existing norms, beginning with the tweaking of the very definition of an insider.

Sources say the market regulator may define a connected person as anyone "who is or has, during the six months prior to the concerned act, been associated with a company, directly or indirectly, in any capacity including by reason of frequent communication with its officers or being in any contractual, fiduciary or employment relationship that allows such person access to unpublished price sensitive information".

The definition of a connected person is also expected to include immediate family, that is- spouse, children, parents and siblings.

SEBI may not specifically use the term public servant, as had been recommended earlier by the Justice Sodhi panel.

The other big item on SEBI's agenda is simplifying de-listing guidelines.

SEBI may half the de-listing timeline by half to 76 days from current 137, and drop some of the amendments proposed in its discussion paper in May 2015.

The most important change, being proposed is to align the mandatory open offer regulations with the de-listing regulations.

SEBI will also modify the existing reverse book building method for de-listing, allowing the discovered price to be the price at which the promoter shareholding-- after including the tendered shares of the public-- reaches 90 percent.

SEBI is also likely to discuss imposing restrictions on wilful defaulters. So, even though the Reserve Bank of India has made bank financing very difficult for wilful defaulters, current rules don't ban them from accessing the capital markets via rights issues and public issues. SEBI may discuss the pros and cons and decide to invite public comments.

The market regulator may also decide to put up for discussion the reclassification of promoter stake as public stake and vice versa. Sources say SEBI is proposing a policy framework to this effect and wants to introduce conditions for reclassification of promoter stake.