Chairman U K Sinha-led Security Exchange Board of India (Sebi), the capital market regulator, on Tuesday made a series of announcements regarding the listing and fund-raising norms for start-ups in India, IPO investments, FMC-Sebi merger among others.
Here are the top 6 announcements made by Sebi:
1) Start-ups: Relaxed (or Easy) listing, fund-raising norms
Announcing a major boost for start-ups, Sebi has relaxed norms for start-ups – including e-commerce firms – to get listed and raise funds through a separate institutional trading platform on domestic stock exchanges instead of going overseas. Under these new norms, the minimum investment requirement would be Rs 10 lakh. Small retail individual investors would not be allowed to invest.
2) IPOs made cheque-free, listing time halved to six days
Sebi has made Initial Public Offer (IPO) investments cheque-free. It has also reduced the time required for listing of companies to six days with effect from January 1, 2016, earlier it used to take 12 days and thereby keeping investors’ funds locked in for longer period. This step is expected to reduce the costs associated with the public offering.
3) FMC-Sebi merger by September-end
FM Arun Jaitley proposed merger of Forward Markets Commission (FMC) with Sebi to be completed by September-end. The merger of commodities regulator FMC with capital market regulator Sebi will help streamline regulations and curb wild speculations in commodities market, while facilitating participation of domestic and foreign institutional investors and launch of new products such as options.
4) New norms for re-classification of promoters approved
Sebi has cleared a new set of norms for re-classification of promoters. Under these new norms, an outgoing promoter would have to forego control and all special rights and dilute stake to 10 per cent to become a public investor. The outgoing promoter can however continue to hold CEO or similar senior positions for up to three years, provided it is approved by the boards and shareholders of the company.
5) Companies have to keep IPO funds in banks till utilisation
Companies will now have to keep the money in scheduled commercial banks till the amount is utilised for specified purposes as per Sebi instructions. Market regulator Sebi believes this will prevent misuse of funds raised from public.
6) Banking days not trading days for request on disinvestment OFS
Partly bowing to government’s request on Offer For Sale (OFS) route for PSU investment, Sebi has allowed companies to disclose plans two banking days prior to the share sale instead of two trading days as was the norm earlier. Trading days norm gives scope for the speculators to beat down the share price of the disinvestment-bound PSU, as per the government.
Chairman UK Sinha explained it with the following example: At present the notice for OFS has to be made on Thursday for a share sale taking place on Monday. With the new norms considering banking days instead of trading days, notice can be made on Friday evening as Saturday would be counted as an intermediate banking day. Since the notice has been issued on Friday evening, no trading can take place in between, thus eliminating any possible speculative trading.
(With inputs from Agency)