Sebi board decides to reduce minimum lock-in period for promoters post IPO

The market regulator reduced the lock-in period to 18 months from 3 years under some conditions

Markets watchdog Sebi on Friday cleared a slew of proposals, including new regulations for share-based employee benefits and sweat equity, as well as decided to amend norms for alternative investment funds.

Besides, the regulator will reduce the minimum lock-in period for promoters post an Initial Public Offer (IPO) and also facilitate ease of doing business with respect to market infrastructure institutions.

The market regulator reduced the lock-in period to 18 months from existing 3 years. The Sebi board agreed "in-principle" to the proposal for shifting from the concept of promoter to "controlling shareholders".

The lock-in of promoters shareholding to the extent of minimum promoters contribution (i.e. 20% of post issue capital) shall be for a period of eighteen months from the date of allotment in IPO/further  public offering (FPO) instead of existing three years, in the following cases:

a) If the object of the issue involves only offer for sale.

b) If the object of the issue involves only raising of funds for other than for capital expenditure for a project (more than 50% of the fresh issue size).

c) In case of combined offering (fresh issue + offer for sale), the object of the issue involves financing for other than capital expenditure for a project (more than 50%of the issue size excluding OFS portion).

Among others, it has been decided at the board meeting to amend takeover regulations by doing away with certain disclosure obligations for acquirers and promoters.

The Sebi board also cleared proposal to provide investment flexibility, streamline regulatory processes for Alternative Investment Funds.

Holding period for VC Fund/AIF of category I & II or Foreign Venture Capital Investor shall be 6 months as against 1 year earlier.

Sebi board also approved doing away with certain disclosure obligations for acquirers/promoters pertaining to acquisition/disposal of shares to 5% and any change of 2% thereafter.

Sebi also approved proposal to facilitate ease of doing business in stock exchanges, other MIIs.