rediff.com: SEBI modifies public issue norms

The Securities and Exchange Board of India, or SEBI, said on Wednesday it had modified its public issue norms, enabling companies without track records required under the existing guidelines, to tap the markets by the book building route.

The Securities and Exchange Board of India, or SEBI, cleared a badla for scrips in the rolling settlement segment.

The markets regulator cleared badla for 1-day, 2-day, 3-day, 4-day and 5-day settlements.

It also raised the cap in carryforward for an individual stock from Rs 200 million to Rs 400 million.

The modified carryforward system specifies that brokers cannot have more than Rs 200 million outstanding in an individual stock.

In such cases, 60 per cent of the issue size should be allocated to qualified institutional buyers, or QIBs, SEBI chairman told a news conference.

Under the present guidelines, firms have to be making distributable profits in three of the preceding five years to be eligible to offer IPOs.

With the change, even dot-coms that by nature of not having earnings were unable to tap the domestic markets, can now do so by the book building route.

With the changes to the SEBI (disclosures and investor protection guidelines), public offerings for issues of more than five times the pre-issue net worth, both in case of initial issues and those by listed companies, will be allowed only by the book-building route.

For all issues, merchant bankers and issuers will have to provide a justification for the issue price in the offer document, it said. If it does not justify the issue price, the issue cannot proceed, SEBI said.

SEBI also said companies would have to seek approval of stock exchanges for listing prior to the issue so that trading can start within seven days from the date of allotment.

It said companies will also be allowed to raise unsecured or subordinated debt for providing mezannine capital if these are subscribed to by QIBs.

SEBI also said the lock-in provisions for the promoters contribution in case of IPOs had been rationalised.

The minimum promoters contribution of 20 per cent will continue to remain locked in for three years, but the balance of the pre-IPO capital held by promoters and others will be locked in for one year from the date of allotment of the IPO, it said. SEBI also said the lock-in of shares issued on a preferential basis by listed companies will be for one year from the date of allotment except if they were issued for acquisitions as share swaps.

(c) Copyright 2000 Reuters Limited. All rights reserved. Republication or redistribution of Reuters content, including by framing or similar means, is expressly prohibited without the prior written consent of Reuters. Reuters shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.


	HOME \| BUSINESS \| REUTERS \| REPORT