SEBI eases norms for share buy-backs, IPOs

SEBI eases norms for share buy-backs, IPOs

News

1. 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.

Important facts

2. Proposed changes for IPO

• Give companies more time for the upward revision of open offer price and to announce the price band for an initial public offer (IPO).
• A company can now announce the price band two days before the opening day of IPO instead of the earlier requirement of five days.
• Financial disclosures now need to be mentioned only for three years instead of five
• 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.
• Disclosure requirements related to group companies have been made more specific in the SEBI (Issue of Capital and Disclosure Requirements) Regulations.

3. For IPO’s by SME

• The minimum anchor investor size has been reduced to ₹2 crore from the existing ₹10 crore.
• 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.
• Amend the norms related to the tenure and directorships of managing directors and public interest directors (PID) of SMEs.
  • 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.

4. SEBI will also release new norms for enhanced monitoring and supervision of market intermediaries, especially registrar and transfer agents (RTA).