Sebi clears proposal to discontinue minimum promoters' contribution norm for FPO
Sebi clears proposal to discontinue minimum promoters' contribution norm for FPO

Capital markets watchdog Sebi on Wednesday decided to provide relaxation to promoters for participating in follow-on public offer (FPO).

The board approved a proposal to do away with the applicability of minimum promoters' contribution norm and the subsequent lock-in requirements for the issuers making FPO of specified securities, Sebi said in a statement.

At present, promoters are mandated to contribute 20 per cent towards FPO. Besides, in case of any issue of capital to the public, the minimum promoters contribution needs to be locked-in for three years.

The regulator said the relaxation would be available for those companies which are frequently traded on a stock exchange for at least three years. Besides, these firms should have redressed 95 per cent of investor complaints.

The issuer company should also be in compliance with the LODR (Listing Obligations and Disclosure Requirements) Regulations for at least three years.

Besides, the board decided to provide certain exemptions to alternative investment funds (AIFs) in respect of investment committee members.

This is "conditional upon capital commitment of at least Rs 70 crore from each investor accompanied by a suitable waiver", Sebi said.

The board approved the amendments to the norms governing intermediaries to avoid the duplicity of proceedings before the designated authority and member.

Under the amendments, Sebi said designated member, if required, in the interest of justice, need to remit the matter to the designated authority, for reasons to be recorded in writing, to enquire afresh or to further enquire and resubmit the report.

The designated member may consider granting an opportunity of personal hearing in a case where either the designated authority has recommended the cancellation of the certificate of registration of the intermediary, or the designated member.

The personal hearing can be granted if the designated member is of the prima facie view that the matter at hand is a fit case for cancellation of the certificate of the registration of the intermediary.

Also, the board has decided to repeal norms on the central database.

After the introduction of Permanent Account Number as the sole identification number for all securities market transactions and the discontinuance of the requirement of Unique Identification Number issued under central database norms, Sebi said such norms have outlived their utility.

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Free Press Journal