The Securities & Exchange Board of India has made a slew of amendments to its disclosure & investor protection norms. The market regulator has now allowed retail investors to participate in Indian depository receipt (IDR) issues after half the issue is subscribed by qualified institutional buyers (QIBs). The regulator has reduced the minimum application value in IDRs from Rs 2 lakh to Rs 20,000. Previously, only QIBs could apply in IDR issues.
In a 31-page circular issued on Thursday, Sebi also permitted companies to make public issues of securities to retail investors and retail shareholders at a discounted price. However, such discounts should not exceed 10% of the price at which the securities are issued to other categories of investors.
To qualify as a retail shareholder, shareholding value should not exceed Rs 1 lakh on the day immediately preceding the record date and the shareholders? application or bids in a public issue should not exceed Rs 1 lakh. Currently, guidelines do not provide for issue of shares at a differential price to investors within the net public offer category.
Sebi said applications by shareholders of listed companies under the reserved quota have been restricted to retail shareholders. ?Presently, the listed companies making public issues can make reservation on competitive basis for its existing shareholders who, as on the record date, are holding shares of Rs 50,000. Further, there is no limit on the value of the application made by such shareholders,? the regulator said.
The regulator has made quoting of PAN mandatory in all application forms for public issues or rights issues. Currently, applicants to public and rights issues are required to disclose their PAN in the application form only if they are making an application worth more than Rs 50,000.
Sebi said listed companies satisfying specified requirements could make fast-track issues through follow-on public offerings and rights issues. The eligibility criteria for this purpose includes a minimum market capitalisation of public holding, trading turnover, track record of compliance with listing requirements and investor grievance redress mechanism.
Sebi has made the necessary changes in the Sebi (Disclosure & Investor Protection) Guidelines, 2000. The regulator has also removed the special dispensations given to designated financial institutions (DFIs).
It had introduced separate guidelines in 1992 for primary issuances by DFIs, to place companies, corporations, and institutions engaged mainly in financing of developmental activities and playing a catalytic role in the infrastructure development of the country on a different footing. Presently, DFIs operationally compete on equal footing with private entities.