The Securities and Exchange Board of India (SEBI) approved several regulatory changes.
Key changes are as follows:
▪ Offer for sale (OFS): Non-promoter shareholders, with at least 10% of the share capital of a company, are currently eligible to offer shares worth at least Rs 25 crore through the OFS mechanism. OFS involves the sale of shares in the stock market. SEBI has removed the 10% shareholding limit for non-promoter shareholders. Further, it has reduced the cooling-off period between two OFS issues from 12 weeks to a range of two weeks to 12 weeks based on the liquidity of securities of eligible companies.
▪ Disclosures for initial public offer (IPO): SEBI has mandated companies coming out with IPOs to disclose: (i) key performance indicators, and (ii) price per share of issuer based on past transactions and fundraising.
▪ Issuers will also have an option to pre-file IPO offer documents with SEBI. This would allow issuers to carry out limited interaction with prospective investors without disclosing sensitive information. The pre-filing document with SEBI’s initial observations will be available for at least 21 days to better inform the decision-making process of the investor.
▪ Open offer for PSU disinvestment: According to current regulations, the price of shares for open offers is determined based on the average market price of the shares for 60 trading days preceding the announcement of a company’s takeover. Open offer is made by an acquirer to the shareholders of the company being acquired.17 SEBI noted that disinvestment of public sector undertakings (PSUs) involves public announcements at various stages which impacts its share price. Hence, the framework for determination of price for open offer as outlined above has been removed in case of PSUs.
▪ Online bond platforms: SEBI approved the proposal to regulate online bond platforms. Such platforms will have to register with SEBI as stock brokers under the debt segment of stock exchanges.Source
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