Sebi ups retail cap in IPOs to Rs 2 lakh

The Securities and Exchange Board of India (Sebi) has raised the investment ceiling of the application size of retail investors in initial public offerings (IPOs) to Rs 2 lakh from Rs 1 lakh now.

"The limit of Rs 1 lakh was prescribed several years back.

Due to inflation the value of Rs 1 lakh has eroded over the years. In that context the limit was hiked," C. B. Bhave, chairman of Sebi, said while announcing the approval of the board of the regulator, which met on Monday.

Sebi had earlier made this proposal and placed it for public comments before taking a decision. However, it has not hiked the retail quota in public offerings from the present level of 35 per cent. While 15 per cent of the offer is reserved for non-institutional high networth individuals (HNIs), the remaining 50 per cent should be allocated to institutional investors.

REGULATORY STEPS Mandates cos to have a pre- announced date for payment of dividends and for credit of bonus shares Allows firms filing a draft offer document ( DoD) to issue public announcements about filing the DOD Asks merchant bankers to certify post- DOD news reports appearing in media Paves the way for insurers cos to raise funds from the market by specifying the disclosures to be made by such companies Tells insurers to make additional disclosures Tightens the preferential allotment framework by making promoters ineligible for issue of equity shares.

Though there were a lot of expectations that the new Takeover Code would be approved by the Sebi board in its sitting on Monday, these hopes were belied. "The board felt that some more time is needed to discuss and approve the new Takeover Code. Hopefully, a decision will be taken in its next meeting," he said, Commenting on the Sebi's decision, Jagannadham Thunuguntla, strategist and head of research of SMC Global Securities, said, " Number of demat accounts in the country is very low at 1.08 crore for a population of over 120 crore.

This facility allows existing demat account holders among retail investors to invest more in the public offerings." The Sebi board has also mandated companies to have a preannounced date for payment of dividends and for credit of bonus shares, largely to enable investors to manage their cash and securities flow efficiently . While allowing companies filing the Draft Offer Document (DoD) to issue public announcements about filing of DOD, Sebi asked the merchant bankers to certify post- DOD news reports appearing in the media group publications and electronic media having a private treaty/ shareholders' agreement with the issuer company/ promoters of the issuer company.

The Sebi board also paved the way for insurance companies to raise funds from the market by specifying the disclosures to be made by such companies. The sector neutral regulations under the Issue of Capital and Disclosure Requirements (ICDR) would be applicable to insurance companies as well.

Insurance companies have to make additional disclosures in line with the recommendations of the Sebi committee on Disclosures & Accounting Standards.

"Usually, an issuer with a public issue size of over Rs 500 crore has to appoint a monitoring agency.

This is not applicable to banks.

So we have exempted insurance companies as well from this regulation," he said.

Sebi has also tightened the preferential allotment framework by making the promoters and promoter group ineligible for issue of equity shares or convertible securities and warrants for one year from the date of expiry of the current/ cancellation of the warrants, where any promoter or promoter group entity has previously subscribed to the warrants, but failed to exercise the warrants.

 

Courtesy: Mail Today