Sebi board may ease IPO norms, approve same-day settlement framework

Exemption to certain FPIs from granular disclosures, passive funds from single co exposure also on anvil

The Securities and Exchange Board of India (Sebi) may approve easier norms for initial public offerings (IPOs), exclude more foreign portfolio investors (FPIs) from additional disclosure norms, give nod to a same-day settlement framework, and grant relief to alternative investment funds (AIFs) and mutual funds.

The decisions are likely at Sebi’s board meeting scheduled for March 15.
 

For public issuances, the market regulator may allow promoters more avenues to maintain the mandatory 20 per cent minimum promoters’ contribution (MPC) post listing and allow flexibility to companies to change issue size after the filing of draft documents, said people aware of the developments.
 

Sebi may allow the shareholding of private equity and other non-individual shareholders to qualify as MPC without them being classified as ‘promoters’. All listed companies have to maintain at least 20 per cent of the post-offer equity share capital as MPC. Further, Sebi may do away with the requirement of a 1 per cent security deposit for public issues or rights issues.

These easing points are part of an exercise to harmonise norms of listing obligation and disclosure requirements and issue of capital and disclosure requirements regulations.

For FPIs, relaxation is on the anvil from disclosures on ultimate beneficial ownership, specifically for those with investments in companies with identified promoters — or the ones where the risk of violation of minimum public shareholding does not arise. Additionally, certain university funds (categorised as FPIs) may also be granted exclusion.
 

Sebi may also allow relaxations on disclosure timelines by FPIs on specific material changes.

Following discussions with FPIs, the market regulator is confident of offering same-day settlement (T+0) from March 28. The approval for T+0 is also expected in the board meeting on Friday.
 

According to sources, ease of doing business recommendations for mutual funds are also on the agenda, including a proposal to exclude equity-oriented passive funds from the 25 per cent investment limit in group companies. The proposals also include allowing fund houses to have a single fund manager for commodity and overseas investments.
 

Sebi may give the green light to certain AIFs to pledge equity investments in the infrastructure sector to facilitate debt raising by such companies.

 

On the agenda

 More avenues to maintain minimum promoters’ contribution after listing

 Removal of 1% security deposit requirement for public issues and rights issues

 Relaxation to FPIs from additional disclosure for investments in companies with no risk of minimum public shareholding violation

 T+0 settlement cycle for equity cash market Relaxation for AIFs on liquidation scheme, leverage in certain infra assets

 Certain relief to passive MFs to bring ease of doing business