November 22 2019
SEBI eases norms for share buy-backs, IPOs
22 June 2018

Companies also get more time to raise an open offer’s price

As part of its attempts to rationalise stock market regulations, the Securities and Exchange Board of India (SEBI) has amended the rules related to public issues, takeovers and buy-backs based on feedback received from various market participants.

The board of the capital markets regulator, which met on Thursday, decided to give companies more time for the upward revision of open offer price and announcing the price band for an initial public offer (IPO).

"The aim was to remove redundancies, simplify language and factor in the changes in the Companies Act and also the circulars/FAQs issued by SEBI," SEBI chairman Ajay Tyagi told reporters at a media briefing.

While raising funds through an IPO, a company can now announce the price band just two days before the opening day of the issue instead of the earlier requirement of five days.

Further, financial disclosures now need to be mentioned only for three years instead of five. Also, companies making a rights issue have to submit a draft document only if the issue size is more than ₹10 crore. Currently, the threshold limit in such cases is ₹50 lakh.

Meanwhile, disclosure requirements related to group companies have been made more specific in the SEBI (Issue of Capital and Disclosure Requirements) Regulations.

IPOs by SMEs

In what would be welcome news for the SME IPO segment, the minimum anchor investor size has been reduced to ₹2 crore from the existing ₹10 crore.

Further, insurance companies and foreign portfolio investors have been allowed to participate as anchor investors in main board IPOs.

The regulator has also brought parity in terms of shareholding limits for domestic and foreign entities in stock exchanges, clearing corporations and depositories. This would allow eligible foreign and domestic entities to hold up to 15% stake in such market institutions. Until now, only a select set of investors were allowed to hold 15% stake in exchanges and depositories.

SEBI has also decided to amend the norms related to the tenure and directorships of managing directors and public interest directors (PID) of such market institutions. A person can serve as the MD for two terms of five years each or up to 65 years of age. For a PID moving from one market institution to another a one-year cooling period would be mandatory.

The regulator will also soon set out new norms for enhanced monitoring and supervision of market intermediaries, especially registrar and transfer agents (RTAs).

Incidentally, SEBI had earlier constituted a committee chaired by R. Gandhi, a former Reserve Bank of India deputy governor, to examine this specific issue regarding RTAs but decided against accepting the committee's proposals.

SEBI said it would soon issue a circular for RTAs with the new guidelines.

Status of probes

Mr. Tyagi said ICICI Bank had sought more time to reply to the show-cause notice issued by SEBI but did not specify a deadline.

"We are yet to receive the reply [from ICICI Bank]... they want to inspect some documents," he said.

In the NSE co-location matter, the regulator clarified that the probe had been completed and enforcement action had been initiated against both entities and individuals. Details of the findings would soon be released in the public domain, it said.



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