SEBI board tightens rules for utilization of IPO proceeds – Times of India

New Delhi: Market regulator Self decided to put on a hat on Tuesday IPO proceeds Will bring under supervision of funds earmarked for future acquisition of unspecified targets and reserves for general corporate purposes. The regulator has prescribed certain conditions for selling shares in an offer-for-sale (OFS): IPO According to a statement issued by SEBI after the board meeting, the lock-in period by significant shareholders and anchor investors has been extended by 90 days.
Further, SEBI has decided to modify the allocation method for non-institutional investors (nii,
This comes amid the filing of draft papers with SEBI for raising funds through initial public offerings (IPOs) of new-age technology companies.
SEBI Chairman Ajay Tyagi It was emphasized that the regulator has no intention of controlling the IPO prices in any way.
“Price discovery is a function of the market and that’s how it works globally,” he told a media briefing after the board meeting.
SEBI’s board has approved the proposal for setting a combined limit of up to 35 per cent of the new issue size for deployment of inorganic growth initiatives and general corporate purpose (GCP) items where the intended acquisition/strategic investment is unknown. items of offer.
However, such limits will not apply if the proposed acquisition or strategic investment object is identified and appropriate specific disclosures are made at the time of filing the offer document.
It has been observed that in some of the recent draft proposal documents, new age technology companies are proposing to raise fresh funds for those items, where the object is referred to as ‘financing inorganic development initiatives’.
Also, the regulator said that the amount raised for GCP would be brought under surveillance and its utilization would be disclosed in the monitoring agency’s report.
The report will be placed before the Audit Committee for consideration “on quarterly basis” instead of “on an annual basis”.
Credit Rating Agencies (CRAs) registered with SEBI will be allowed to act as monitoring agencies instead of scheduled commercial banks and public financial institutions.
“Such surveillance will continue up to 100 per cent instead of 95 per cent utilization of the issue proceeds,” Sebi said.
The regulator has prescribed certain conditions for offer-for-sale (OFS) to the public in IPOs where draft papers are filed by an issuer without a track record.
Under this, shares offered for sale to shareholders, either individually or in concert with persons acting in concert, should not exceed 20 per cent of the issuer’s pre-issue shareholding, not exceeding 50 per cent of their pre-issue shareholding .
Further, the shares offered for sale by such sale stakeholders holding less than 20 per cent of the issuer’s pre-issue shareholding should not exceed 10 per cent of the issue’s pre-issue shareholding.
With regard to the lock-in period for anchor investors, SEBI said that the existing lock-in of 30 days will continue for 50 per cent of the allotted portion to anchor investors and for the remaining portion, for a lock-in of 90 days from the date of allotment. Will stay Applicable to all issues opened on or after 1st April 2022.
In case of book-built issues, SEBI said a minimum price band of at least 105 per cent of the floor price shall be applicable for all issues opened on or after notification in the official gazette.
For book-built issues opening on or after April 1, 2022, SEBI said one-third of the portion available to NIIs would be reserved for applicants with application size above Rs 2 lakh and up to Rs 10 lakh.
In addition, two-thirds of the share available to NIIs will be reserved for applicants with an application size of more than Rs 10 lakh.
In case of NII category, the allotment of securities will be on ‘draw of lot’ as is currently applicable for Retail Individual Investors (RII) category.