The Securities and Exchange Board of India (Sebi) is examining the relevance of the company ‘promoters’ concept and studying the possibility of shifting to ‘controlling shareholders’.
While the concept of ‘promoters’ has been prevalent in India for a long period of time, globally, rather than promoters, the concept of ‘controlling shareholders’ is more prevalent. “Keeping in mind changing realities of the global and Indian markets, we are examining the relevance of the concept of ‘promoter’ in today’s times along with whether any changes to Sebi Regulations are warranted in this regard,” Sebi Chairman Ajay Tyagi said.
Tyagi said the Sebi will soon take a view on a proposal to reduce the time taken for rights issues to around 31 days. Besides, the market watchdog is in the process of taking steps to further strengthen the framework for alternative investment funds (AIFs), Tyagi said at a Ficci event here.
With regard to rights issue, the regulator came out with a consultative paper on the mode of fund raising in May. In the paper, Sebi proposed to reduce the overall time taken for rights issue to around 31 days as well as make the application and allotment process more efficient. Currently, the rights issue process takes 55-58 days from the time a company decides to launch the issue till the listing. “Sebi had put out a consultative paper to reduce the timelines for rights issues. We will be soon taking a view on this subject,” Tyagi said.
He said in recent times, rights issue has seen a pick-up in the activity. In the rights issue mode, shares are issued to existing investors at a pre-determined price, normally at a discount, in proportion to their holdings.
The regulator said that there is a need to reduce the timelines — both in the pre-issue opening phase and after issue closure — such that issuer and shareholders benefit from process efficiencies.
On AIF, Sebi said it is in the “process of taking steps to further strengthen the framework for AIFs in areas such as standardisation of the private placement memorandum and benchmarking framework for performance disclosures”. Tyagi said there is a conscious effort to move from bank credit to other forms of credit. —With PTI