Sebi eases FPO norms; scraps minimum promoter's contribution requirement

Capital markets watchdog Sebi on Friday relaxed the framework for Follow-on Public Offers (FPOs), a move that will help pomoters of companies to raise funds more easily through this route.

The applicability of minimum promoters' contribution norm and the subsequent lock-in requirements for the issuers making FPO have been done away with by the regulator, as per a notification.

Earlier, promoters were mandated to contribute 20 per cent towards a company's FPO. Besides, in case of any issue of capital to the public, the minimum promoters' contribution was required to be locked-in for three years.

The regulator said the relaxation would be available for those companies which are frequently traded on a stock exchange for at least three years. Also, such firms should have redressed 95 per cent of investor complaints.

The issuer company needs to be in compliance with the LODR (Listing Obligations and Disclosure Requirements) Regulations for at least three years, according to Sebi.

Subject to certain conditions, an issuer who has not complied with the listing requirements relating to the composition ofboard of directors for any quarter during the last three years immediately preceding the date of filing of draft offer document would be deemed as compliant.

The condition is that the issuer should be compliant with the requirement at the time of filing preliminary paper and that adequatedisclosures are made in the offer document about such non-compliances.

Sebi board had approved the proposal in December.