New SEBI regulations simplify IPO process for companies
The Securities and Exchange Board of India (SEBI) has revised its regulations to streamline the process for companies planning initial public offerings (IPOs). The new rules stipulate that any changes in the offer for sale (OFS) requiring a fresh filing will be based on either issue size in rupees or number of shares. This amendment is aimed at facilitating ease of doing business.
New provisions for promoter group entities
SEBI has introduced provisions for promoter group entities and non-individual shareholders holding more than 5% of the post-offer equity share capital. These entities can now contribute toward the shortfall in minimum promoters' contribution (MPC) without being identified as a promoter. This change is particularly beneficial for companies promoted by entrepreneurs who often have several rounds of funding prior to listing their equity shares on the stock exchanges.
SEBI provides flexibility in meeting MPC requirements
The current Issue of Capital and Disclosure Requirements rule allows certain categories of investors to contribute equity shares held by them toward the shortfall. With the new amendment, SEBI has introduced additional flexibility. Equity shares resulting from the conversion of compulsorily convertible securities that have been held for a year before filing the draft red herring prospectus are now eligible for meeting minimum public shareholding requirements. This change offers more options for companies to meet their minimum promoter contribution obligations.
SEBI allows extension of bid closing date
SEBI has also introduced flexibility in extending the bid closing date due to force majeure events such as banking strikes or similar circumstances. The extension can now be a minimum of one day instead of the previous requirement of a minimum of three days.
