The Securities and Exchange Board of India (SEBI) on Tuesday approved amendments to several rules to tighten norms governing the initial public offering (IPO) process and the use of IPO proceeds by promoters.
In its board meeting, SEBI approved the conditions for sale of shares by significant shareholders in the offer-for-sale (OFS) process through IPO and extended the lock-in period to 90 days for anchor investors.
Shares offered for sale by shareholders holding more than 20% of the issuer’s pre-issue shareholding should not exceed 50% of their holding. If they hold less than 20%, the offer for sale should not exceed 10% of their issue holding.
SEBI said that the existing lock-in of 30 days for anchor investors will continue for 50% of the share allotted to such investors. For the remaining part, the lock-in of 90 days from the date of allotment will be applicable for all issues opened on or after April 1, 2022.
These changes are in accordance with the proposals recommended by the primary market advisory committee of SEBI to the markets regulator.
The regulator also approved a cap on IPO proceeds earmarked for acquisition of unspecified targets and from now on, the funds reserved for general corporate purposes will be monitored by credit rating agencies.
If the issuing company earmarks an item for future inorganic growth, but has not identified an acquisition target in its offer documents, the amount for such items and the amount for general corporate purpose does not exceed 35% of the total amount Should be, SEBI said.
The limit will not apply if the acquisition item is identified and disclosed in the offer documents.
With many new-age technology firms coming up with IPO applications, many intend to allow private equity investors to exit through the OFS route.
SEBI said credit rating agencies registered with SEBI would be allowed to act as monitoring agencies instead of scheduled commercial banks and public financial institutions.
“Such monitoring will continue at 100% instead of 95% utilization of ongoing proceeds,” it said.
Closing of MF Schemes
The winding up of mutual fund schemes will now be possible only after the consent of the majority of the unit holders.
“The trustees shall obtain the consent of the unitholders by a simple majority of the unitholders present and voting on a one vote per unit basis and shall publish the results of the vote within 45 days of the publication of the notice of circumstances for the winding up.” Said it. If the trustees fail to obtain consent, the plan should be open for business from the second business day after the publication of the voting results.