The Securities and Exchange Board of India (Sebi) on Monday said it may consider changing some aspects of the recently announced delisting proposals, if need arises, based on the feedback it received by market participants, Sebi chair UK Sinha said on the sidelines of an investment banking conference organised by the Association of Investment Bankers of India (AIBI).
Sinha said market participants have expressed concerns regarding the need for participation of at least 25% of total public shareholders in a company for it to successfully delist the shares from stock exchanges.
“A large number of comments and representations are coming on one particular aspect of delisting guidelines. Since the delisting guidelines have not even been announced, we said let us see how it pans out and what the experience is. If there are any difficulties, Sebi will always be looking at problems,” Sinha said on the sidelines of the AIBI event.
On November 19, the market regulator announced various changes to delisting of shares regulations, among other announcements such as insider trading, treatment of wilful defaulters, listing regulations, and e-IPO.
In the delisting norms, Sebi changed the requirement of public participation to 25% of the number of shareholders, instead of requirement of receiving participation from 50% of public shareholding. Data showed that 85-90% of the 40 delisting offers in the past saw less than 25% of shareholders participate in the delisting offer.
Sinha said that Sebi has accelerated the process to give faster clearance to draft documents filed with the market regulator. “Your industry have a very strong role to play in the growth of this country… and there is a huge shortfall of funds required if you wish to grow at 10%,” he said.
Sebi chief general manager VS Sundaresan, in his speech, also highlighted the point of granting faster approvals to companies seeking to tap primary markets. the process now takes less than three months, including discussion with merchant bankers for any clarifications. “There is a market perception that documents filed with us get stuck…Sebi takes only the time required to clear the documents,” Sundaresan said, adding that one company got an approval in less than 30 days to launch its IPO.
Sebi plans to launch the e-IPO guidelines very soon, Sundaresan said without giving any specific timeline. He said that Sebi has received feedback from the primary market advisory committee (PMAC) for e-IPO and Sebi will soon release its discussion paper. It may be a six-to-nine months process, he added.
Sebi also highlighted the need to improve disclosure standards in the wake of recent cases — DLF and CARE Ratings, and asked merchant bankers to be more alert and responsible when disclosing information in the prospectus. “There is a serious need for introspection,” Sinha said.
Sinha told merchant bankers to be more serious about real estate investment trusts (REITs) and Infrastructure Investment Trust (InvITs). “We have had extensive consultation on REITs. I would like this aspect to be taken seriously. I am aware about certain issues related to taxation and I am happy to tell you that we have passed on those concerns to the government. But pending that, if we can make some progress in the area of REITs a new type of entrepreneurial activity will be unleashed in this country and there may be huge opportunity for people to release their funds,” Sinha said.