Sebi proposes changes to public issue norms; moots shorter time period for IPO price announcement

Sebi today proposed a slew of changes to public issue norms, including shorter time period for price band announcement and lesser disclosures about group companies at the time of IPOs.

Besides, the watchdog has mooted reducing the minimum application size for anchor investors to Rs 2 crore from current level of Rs 10 crore in the case of public issues by Small and Medium Enterprises.

These proposals are based on suggestions made by the regulator's Primary Market Advisory Committee (PMAC).

In a consultation paper, Sebi has proposed that entities would not be required to file draft papers for rights issue worth up to Rs 10 crore. At present, entities coming out with rights issue worth up to Rs 50 lakh are exempted from this requirement.

Besides, the time period for announcing price band for Initial Public Offers (IPOs) is to be reduced to two working days from the current requirement of five working days.

The regulator has also suggested extension of issue period -- for IPOs and FPOs (Follow on Public Offers) -- without any modification in the announced price band.

Another suggestion is to restrict the disclosures about group companies to only information on related party transactions. This would do away with the current norms wherein information about financials and litigations, among others, related to group entities are to be disclosed at the time of public issues.

Sebi has also proposed making the provisions of monitoring agency applicable for issuances by banks, public financial institutions and insurance companies.

Further, the regulator has recommended rationalising requirements and contents of due diligence certificate, extend the requirement of disclosing the holding of 10 largest shareholders to shareholders holding at least one per cent.

In case of IPOs, the regulator has suggested doing away with the requirement that aggregate of the proposed issue and all previous issues made in the same financial year should not exceed five times the issuer's pre-issue networth.

Besides, Sebi has suggested changing the disclosure of financials to latest three years on consolidated basis. Besides, the standalone financials of the issuer company and financials of the subsidiaries can be put up on the website of the issuer company.

As per the consultation paper, foreign venture capital funds should be allowed to contribute towards minimum promoter's contribution in addition to Alternative Investment Funds.

Comments on the proposals have been sought till May 25.

The PMAC advises Sebi on issues related to the regulation and development of IPOs and other such segments.