Sebi extends anchor investors' lock-in period to 90 days for 50% portion

The existing lock in of 30 days shall continue for 50% of the portion allocated to anchor investor, says Sebi as part of stricter measures to reform IPO market

Securities and Exchange Board of India's (Sebi) board took a slew of decisions on Tuesday, including extension of the lock-in period for anchor investors to 90 days. The markets regulator cleared changes to regulations pertaining to issue of capital and disclosure requirements and also tightened rules for IPO proceed utilisation.

"The existing lock in of 30 days shall continue for 50% of the portion allocated to anchor investor and for  the remaining portion, lock in of 90 days from the date of allotment shall be applicable for all issues opening on or after April 1, 2022," said the market regulator in a statement.

The decision comes at a time when shares of food delivery major Zomato and that of One97 Communications, the parent of Paytm, had slipped 9% and 13%, respectively, when the mandatory one-month lock-in period for their anchor investors ended.

In case of book built issues, a minimum price band of be at least 105% of the floor price shall be applicable for all issues opening on or after notification in the official gazette.

Sebi board also decided to restrict investors holding over 20% stake to sell a maximum of 50% of their shares through the offer for Sale (OFS) in IPOs where DRHP filed without track record.

"Shares offered for sale by selling shareholders, individually or with persons acting in concert, holding less than 20% of pre-issue shareholding of the issuer, shall not exceed more than 10% of pre-issue shareholding of the issuer," added Sebi.

For promoters, the lock-in requirement for allotment up to 20% of the post issue paid-up capital shall be reduced to 18 months from the existing 3 years. The lock-in requirement for allotment exceeding 20% of the post-issue paid-up capital shall be reduced to 6 months from the existing 1 year.

For non-promoters, the lock-in requirement for allotments shall be reduced from a requirement of 1 year to 6 months.

Sebi also approved amendments to regulations governing Alternate Investment Funds, Foreign Portfolio Investors, mutual funds, settlement proceedings, among others.

Sebi rationalised time period for filing settlement applications by entities to 60 days from date of receiving show-cause notice.

The watchdog has also decided to introduce provisions relating to appointment or re-appointment of persons who fail to get elected as directors, including as Whole Time Directors or Managing Directors or Managers, at the general meeting of a listed entity.

"Appointment or a 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 meeting, shall be done only with the prior approval of the shareholders," Sebi said in a release.

Amount for general corporate purpose (GCP) shall not exceed 35% of the total amount being raised, said Sebi.

"Amount raised for GCP shall also be brought under monitoring and utilisation of same shall be disclosed in monitoring agency report. Monitoring agency report shall be placed before audit committee for  consideration “on  a  quarterly  basis”  instead of  “on an  annual basis”," said Sebi.