Sebi changes norms for IPO issues

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Mumbai: The Securities and Exchange Board of India (Sebi) has made due amendments to the Sebi (Disclosure and Investor Protection) Guidelines, 2000. As announced in an earlier board meeting, these amendments include the enhanced validity period of observations from three months to twelve months for the issuers in case of the initial public offer documents. The benefit of extended validity period would be available to all the observations letters whose validity period has not expired on December 4, 2008.

In line with board decision, Sebi has issued a circular stating that every issuer shall be required to file an updated offer document with the regulator, highlighting all changes made in the document, before opening of the issue. “The updating includes significant changes in the offer document like an updated Red Herring prospectus or letter of offer shall be filed with the regulator at least one month before filing the same with Registrar of Companies,” the regulator said. Sebi has accordingly amended the Sebi (Disclosure and Investor Protection) Guidelines, 2000.

Sebi said the timelines for completion of bonus issues has been reduced. Currently, in terms of the Sebi (DIP) guidelines, a listed company is required to complete a bonus issue within a maximum period of six months from the date of approval of the issue by the board of directors of the company. “The DIP guidelines have been amended to reduce the timeline for completion of bonus issues. Accordingly, where no shareholders’ approval is required as per the articles of association of the issuer, the bonus issue shall be completed within fifteen days from the date of the approval by the board of directors of the issuer in this regard.

However, where shareholders’ approval is required for capitalisation of profits or reserves as per the articles of association of the issuer, the bonus issue shall be completed within sixty days from the date of the meeting of board of directors where-in bonus was announced subject to shareholders’ approval”, the regulator said.