Sebi cuts lock-in period for promoters to 18 months post-IPO

Markets regulator Sebi has reduced the minimum lock-in period for promoters' investment post an initial public offering (IPO) to 18 months from three years, under certain conditions.

The move comes at a time when many companies are looking to list on the stock exchanges.

In addition, the Securities and Exchange Board of India (Sebi) has streamlined disclosures requirements of group companies.

In a notification, Sebi said that if the object of the issue involves offer-for-sale or financing other than for capital expenditure for a project, then the minimum promoters' contribution of 20 per cent would be locked-in for 18 months from the date of allotment in the IPO.

Currently, the lock-in period is three years.

Capital expenditure includes civil work, miscellaneous fixed assets, purchase of land, building and plant and machinery, among others.

Further, the lock-in period for the promoter shareholding in excess of the minimum 20 per cent has also been reduced from the existing one year to six months.

The regulator has also reduced the minimum lock-in of pre-IPO securities held by persons other than promoters to six months from the date of allotment.

There is a lock-in period of one year at present.

Apart from this, the regulator has reduced the disclosure requirements at the time of IPO.

The disclosure requirements in the offer documents, in respect of group companies of the issuer company, has been rationalized to exclude disclosure of financials of top 5 listed or unlisted group companies.

These disclosures will continue to be made available on the website of the group companies.

"In case of an issuer not being a government company, statutory authority or corporation or any special purpose vehicle set up by any of them, the names and registered office address of all the group companies shall be disclosed in the offer document," Sebi said in a notification dated August 13.

To give effect to this, Sebi has amended ICDR (Issue of Capital and Disclosure Requirement) rules.

This comes after the board of Sebi approved a proposal in this regard early this month.

Photograph: Shailesh Andrade/Reuters