The Securities and Exchange Board of India (Sebi) on Monday tightened the rules for companies raising funds through share issues by barring those with less than one year of listing history from tapping the qualified institutional placement (QIP) route.

Sebi, however, allowed companies with less than six months' listing history to raise money through preferential allotments.

The capital markets regulator also said shares that have been pledged with banks and financial institutions as collateral would not be eligible for computation of the minimum promoters' contribution.

Sebi also asked investment bankers to make the public issue document for 30 days, instead of 21 days earlier.

Sebi's rules on QIPs come after 17 firms raised Rs 3,827 crore (Rs 38.27 billion) through this route in the past six months, while three or four more companies are planning to raise over Rs 800 crore (Rs 8 billion).

In June last year, Sebi first allowed listed companies to raise funds by placing shares with qualified institutional buyers such as foreign institutional investors (FIIs), domestic financial institutions and mutual funds.

The guidelines were aimed at discouraging companies from tapping overseas markets for share issues.

Sebi also barred companies from public issues unless its draft prospectus was filed with the regulator through a merchant banker at least 30 days before the prospectus is filed with the Registrar of Companies (ROC).

On promoter contribution during IPOs, promoters are required to divest at least 10 per cent through IPOs under current norms.

The regulator has also made grading IPOs from at least one credit rating agency mandatory.

Its circular said issuers were required to "disclose all the grades obtained by it for its IPO in the prospectus, abridged prospectus, issue advertisements and all other places where the issuer is advertising for the IPO."

TIGHTENING THE MONEY TAP