August 7, 2021 1:08:52 am
The board of the markets regulator, the Securities and Exchange Board of India (Sebi), Friday eased the norms for the lock-in period of shares held by promoters in companies after an initial public offering (IPO).
Sebi has proposed that if the objective 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 should be locked-in for 18 months from the date of IPO allotment. Currently, it is 3 years. Moreover, the promoter shareholding in excess of 20 per cent needs to be locked in only for 6 months, compared to one year now. Also, the lock-in of shares held before the IPO by non-promoters has been cut to six months compared to 1 year.
Promoter definition rationalised
Sebi has decided to rationalise the definition of promoter group, in cases where the promoter is a corporate body, companies having common financial investors will be excluded.
The Sebi board has also eased disclosure norms for offer documents. It has also decided to rationalise the definition of promoter group — in cases where the promoter is a corporate body and companies having common financial investors will be excluded.
The board agreed in-principle to the proposal of doing away with the concept of promoters and moving to ‘person in control.’ It asked Sebi to engage with other regulators, prepare draft regulations and a transition road map for this move. In an earlier discussion paper, Sebi said this shift is necessitated by the changing investor landscape in India where concentration of ownership and controlling rights do not vest completely in the hands of the promoters or promoter group due to the emergence of new shareholders.
Sebi also eased some disclosure requirements under its takeover regulations for acquirers and promoters who buy or sell shares aggregating to 5 per cent and any change of 2 per cent thereafter. Sebi has also allowed firms to provide share-based benefits to employees who are exclusively working for it or any of its group firms. It has decided to dispense with the minimum vesting and lock-in periods for all share benefit schemes in the event of death or permanent incapacity of an employee.
Firms can issue sweat equity shares to the extent of 15 per cent of their existing paid-up equity share capital in a single year. The total sweat equity should not exist 25 per cent of equity share capital at any time.
Sebi has decided to facilitate ease of doing business in market infrastructure institutions like stock exchanges and depositories. It has decided to make the ‘fit and proper’ status mandatory for people buying less than 2 per cent shares in unlisted MIIs.
Meanwhile, Sebi has brought in the concept of ‘accredited investors’ in the domestic market.
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