SEBI proposes steps to fast track FPO, rights issue permission

In order to speed up its approval process for issuance of follow-on public offer (FPO) and rights issue, India's securities market regulator Thursday proposed to extend a fast track route to companies with market capitalisation of public shareholding between Rs.250 crore to Rs.3,000 crore.

In its discussion paper, the Securities and Exchange Board of India (SEBI) said the fast track route may be extended to companies having an average market capitalisation of public shareholding between Rs.250 crore to Rs. 3,000 crore, subject to fulfillment of certain additional conditions.

The additional conditions proposed by SEBI under its SEBI (ICDR) Regulations, 2009 include that the promoters should mandatory subscribe to their rights entitlement and should not renounce their rights.

The regulator has also said the shares of the company should not have been suspended (except for corporate actions) from trading in past three years.

According to SEBI, the annualised delivery based trading turnover should be 10 percent of the total paid-up capital and there should be no direct or indirect conflict of interest between the lead manager, its group or associate company with the issuer or its group or associate company.

The market regulator has also proposed that the issuer, promoter group and directors of the issuer should not have settled any alleged violation of securities laws through the consent mechanism with it in last three years.

The SEBI has proposed to extend the fast track route to the central public sector undertakings to facilitate divestment programme without the requirement of a minimum average market capitalisation of public shareholding.

Also, in case where any CPSE is not able to comply with any of these conditions, the SEBI may, based on the merits of the case, consider granting exemption.