Sebi may step on MCA's toes by framing rules for public offer
A finance ministry official said that the proposal, to be taken up by the Sebi board on March 8, aims at ensuring more disclosure for both public issues and private placement. However, it may give rise to a turf war as private placement of shares by unlisted companies are dealt by MCA, a position further strengthened by the Supreme Court ruling in the Sahara case.
According to the agenda, Sebi is in the process of drafting regulations for issuance and listing of non-convertible redeemable preference (NCRP) shares, a view that has been endorsed by the Corporate Bonds and Securitisation Advisory Committee of the board. However, the committee has said that given the high-risk of the instrument, there should be stricter eligibility criteria for making public offers of such shares along with comprehensive disclosure.
“Sebi has also argued that there should be relatively liberal framework for private placement of NCRP shares which are proposed to be listed,” the official said.
However, if approved the proposal threatens to take away the power from the MCA of regulating private placement by unlisted companies. When contacted, corporate affairs secretary Naved Masood refused to comment on the issue saying that the meeting is yet to take place. The draft regulations ensure
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