SEBI on Tuesday approved several amendments in various rules, including stringent norms for utilization of IPO proceeds. Changes have been approved in the rules governing foreign portfolio investors, alternative investment funds (AIFs), mutual funds, settlement procedures, etc.
These decisions were taken in the meeting of SEBI Board in Mumbai on Tuesday. The watchdog has also decided to introduce provisions relating to the appointment or reappointment of persons who fail to be elected as directors, including whole-time directors or managing directors or managers, at the general meeting of a listed entity.
“The appointment or reappointment of any person, including a managing director or a whole-time director or a manager, who was earlier dismissed by the shareholders in a general meeting, shall be made only with the prior approval of the shareholders,” SEBI said. said in a release.
The market watchdog has also tightened the rules on initial public offerings, which have seen a sudden craze in India.
It said, “In case of book built issues, the minimum price band for all issues opened on or after notification in the Official Gazette shall be at least 105 per cent of the floor price.”
It also extended the lock-in period for anchor investors at a time when shares of companies going for IPOs have seen a post-listing decline.
“The existing lock-in of 30 days for 50 per cent of the allotted share to the anchor investor will continue and for the remaining portion, the lock-in of 90 days from the date of allotment will be applicable for all issues opened on or after April 1. 2022,” the market regulator said in a release.
SEBI has laid down provisions for the “Offer for Sale” portion of an IPO, whereby shareholders receive proceeds from an issue.
“Shares offered for sale by selling to shareholders, either individually or with persons acting in concert, shall not exceed 20 per cent of the issuer’s pre-issue shareholding, plus 50 per cent of their pre-issue shareholding. Shares offered for sale to shareholders, either individually or with persons acting in concert, shall not be less than 20 per cent of the pre-issue shareholding of the issuer, not exceeding 10 per cent of the pre-issue shareholding of the issuer,” it said.
For non-institutional investors, post-book built issue opening on or after April 01, 2022, the allotment conditions have been modified as under – i. One-third of the amount available to NIIs shall be reserved for applicants with an application size of more than two lakh rupees and up to ten lakh rupees, and ii. Two-thirds of the share available for NIIs will be reserved for applicants with an application size of more than Rs.10 lakh.
(with PTI inputs)