Search the Internet          Tips  Sites: Finance, Investment

Sebi panel urges primary market reform

A panel appointed by the Securities and Exchange Board of India on Monday made proposals aimed at reviving the flagging market for domestic public share offerings, along with tougher laws to make issuers more transparent.

The market watchdog's primary market advisory committee, which met during the day, said there should be more "material and critical" disclosures in public issue advertisements and that firms should allot shares within a week from the public issue closure date, instead of 15 days.

India's once-booming primary market saw issuers raise only Rs 61.1 billion ($1.27 billion) in the year to March 2001, down from the Rs 276.3 billion peak in 1994-95, after investor confidence was hit by a string of junk issues.

From April to December 2001, issuers raised a mere Rs 37.77 billion.

The panel also said that several multinational companies that were allowed to set up shop in India on condition that they offer a stake to the public had not done so.

The market watchdog should ensure that those companies which had not satisfied that clause should be asked to do so, it said.

In cases of demergers, mergers and other events with a major impact on share valuations, the panel proposed that the regulator should require more detailed disclosures.

Companies should be allowed to make restricted public offerings where only qualified institutional buyers will be allowed to participate, while the regulator should also introduce "confidential filing" by companies, the panel said.

Simultaneous offerings in the domestic and overseas market should also be allowed, it said.

The expert panel also proposed that Sebi should allow investors to make electronic payments, in addition to conventional modes of payment.

Other recommendations made by the panel include guidelines for distributors of primary issues and a requirement that IPO issuers disclose consolidated accounts prior to their issue.

ALSO READ:
The SEBI Story