Sebi Board To Review Policy On Issue Incentives

A top-level Sebi source told Business Standard that the matter is likely to be placed at the forthcoming meeting of the Sebi board in September. The general opinion at Sebi is that there is no harm if, say, issues offer health or accident insurance cover along with issues, since these would benefit all classes of investors. But a decision will only be taken by the Sebi board.

Said the source: Incentives can be permitted in public issues if they benefit all sections of investors. Small investors can be attracted by large organisations if they give some benefits to the investors for investing in their stock.

At present, Sebi does not allow companies to provide incentives during public issues. The recent example is that of the Industrial Finance Corporation of India which was offering insurance cover to the investor as incentive in its Rs 800 crore bond offer. IFCI had to withdraw the insurance offer at the last minute before the issue opened, at Sebi's instance. The two mega corporates