Sebi to tighten norms for IPO proceeds utilisation amend various other regulations
Mumbai Dec 28 PTI Markets watchdog Sebi on Tuesday decided to tighten norms for utilisation of IPO proceeds by companies introduce special situation funds to invest only in stressed assets and amend various regulations including those on mutual funds and settlement proceedingsThe board of Sebi which met on Tuesday also gave its nod for amending Foreign Portfolio Investor FPI regulations and introducing a provision for appointment or re-appointment of any person including as a Managing Director or a Whole Time Director or a Manager who was earlier rejected by the shareholders at a general meetingOnce the amended norms are in place such appointments or re-appointments can only be done with the prior approval of the shareholdersAmid a flurry of Initial Public Offers IPOs hitting the market this year and many more expected in 2022 the watchdog has decided to tighten the norms including restricting the quantum of issue proceeds a company can use for unidentified inorganic growthAmendments will also be effected to cap the number of shares that can be offered by selling shareholders and to increase the lock-in period for shares subscribed by anchor investorsThe latest decisions also assume significance against the backdrop of many new-age companies raising funds or seeking to mop up money through initial share salesSebi Chairperson Ajay Tyagi asserted that the regulator has no intention to control the prices of IPOs in any mannerPrice discovery is a function of the market and that is how it works globally as well he said at a media briefing after the board meetingIn a raft of measures the regulator approved the introduction of Special Situation Funds SSFs that will invest only in stressed assetsSSFs will be introduced as a sub-category under Category I Alternative Investment Funds AIFsIn a release after the board meeting Sebi said SSFs will invest only in stressed assets such as stressed loans available for acquisition in terms of the RBI norms or as part of a resolution plan approved under the Insolvency and Bankruptcy CodeThese funds will also invest in security receipts issued by Asset Reconstruction Companies ARCs securities of companies in distress and any other assetsecurity as may be prescribed by the board from time to timeIn a move to further safeguard the interest of mutual fund investors Sebi has decided to mandate trustees of mutual funds to obtain the consent of unit holders when the majority of trustees decide to wind up a schemeAs part of amending the mutual fund regulations the watchdog will make it mandatory for the funds to follow Indian Accounting Standards Ind AS from the 2023-24 financial year onwardsFurther the time period for filing settlement applications by entities will be made 60 days from the date of receipt of the show cause notice or a supplementary notice whichever is earlier This is part of rationalising the norms governing settlement proceedingsTo enhance the role of KYC Registration Agencies KRAs the regulator has decided to make them responsible to carry out independent validation of the KYC records uploaded onto their system by the Registered Intermediary RIBesides such agencies will have to maintain an audit trail of the uploadmodificationdownload with respect to KYC records of clientsThe markets watchdog has also decided to relax pricing norms and lock-in requirements to make it easier for companies to raise funds through preferential allotment of sharesOn changes in the issue structure of an IPO Yash Ashar Partner Head of Capital Markets at Cyril Amarchand Mangaldas said the amendments could have a long term impactThese amendments are mainly a reaction to several IPOs earlier this year and follow after consultation papers issued by Sebi he notedThe regulator could have prescribed additional and more detailed continuous disclosures and monitoring keeping in mind existing requirements including shareholder approval for proposed acquisitions These changes may impact plans of issuers planning to list on Indian stock exchanges Ashar said PTI BEN SP RAM BAL BAL
Mumbai Dec 28 PTI Markets watchdog Sebi on Tuesday decided to tighten norms for utilisation of IPO proceeds by companies introduce special situation funds to invest only in stressed assets and amend various regulations including those on mutual funds and settlement proceedingsThe board of Sebi which met on Tuesday also gave its nod for amending Foreign Portfolio Investor FPI regulations and introducing a provision for appointment or re-appointment of any person including as a Managing Director or a Whole Time Director or a Manager who was earlier rejected by the shareholders at a general meetingOnce the amended norms are in place such appointments or re-appointments can only be done with the prior approval of the shareholdersAmid a flurry of Initial Public Offers IPOs hitting the market this year and many more expected in 2022 the watchdog has decided to tighten the norms including restricting the quantum of issue proceeds a company can use for unidentified inorganic growthAmendments will also be effected to cap the number of shares that can be offered by selling shareholders and to increase the lock-in period for shares subscribed by anchor investorsThe latest decisions also assume significance against the backdrop of many new-age companies raising funds or seeking to mop up money through initial share salesSebi Chairperson Ajay Tyagi asserted that the regulator has no intention to control the prices of IPOs in any mannerPrice discovery is a function of the market and that is how it works globally as well he said at a media briefing after the board meetingIn a raft of measures the regulator approved the introduction of Special Situation Funds SSFs that will invest only in stressed assetsSSFs will be introduced as a sub-category under Category I Alternative Investment Funds AIFsIn a release after the board meeting Sebi said SSFs will invest only in stressed assets such as stressed loans available for acquisition in terms of the RBI norms or as part of a resolution plan approved under the Insolvency and Bankruptcy CodeThese funds will also invest in security receipts issued by Asset Reconstruction Companies ARCs securities of companies in distress and any other assetsecurity as may be prescribed by the board from time to timeIn a move to further safeguard the interest of mutual fund investors Sebi has decided to mandate trustees of mutual funds to obtain the consent of unit holders when the majority of trustees decide to wind up a schemeAs part of amending the mutual fund regulations the watchdog will make it mandatory for the funds to follow Indian Accounting Standards Ind AS from the 2023-24 financial year onwardsFurther the time period for filing settlement applications by entities will be made 60 days from the date of receipt of the show cause notice or a supplementary notice whichever is earlier This is part of rationalising the norms governing settlement proceedingsTo enhance the role of KYC Registration Agencies KRAs the regulator has decided to make them responsible to carry out independent validation of the KYC records uploaded onto their system by the Registered Intermediary RIBesides such agencies will have to maintain an audit trail of the uploadmodificationdownload with respect to KYC records of clientsThe markets watchdog has also decided to relax pricing norms and lock-in requirements to make it easier for companies to raise funds through preferential allotment of sharesOn changes in the issue structure of an IPO Yash Ashar Partner Head of Capital Markets at Cyril Amarchand Mangaldas said the amendments could have a long term impactThese amendments are mainly a reaction to several IPOs earlier this year and follow after consultation papers issued by Sebi he notedThe regulator could have prescribed additional and more detailed continuous disclosures and monitoring keeping in mind existing requirements including shareholder approval for proposed acquisitions These changes may impact plans of issuers planning to list on Indian stock exchanges Ashar said PTI BEN SP RAM BAL BAL
