New Delhi: Tightening Regulations for the Initial Public Offering (IPO), Sebi has put a close on the use of the results caused for the acquisition in the future that is not declared and limits the number of shares that can be offered by significant shareholders.
Also, the regulator has extended the key period of anchor investors to 90 days and now, the funds provided for the purposes of public companies will be monitored by credit rating agencies, according to notifications released on January 14.
Furthermore, Sebi has revised the allocation methodology.
For non-institutional investors (NIIS).
To effect this, SEARCH has changed various aspects of regulatory frameworks based on ICDR regulations (capital issues and disclosure requirements).
This comes in the midst of many new technology companies that submit drafts with a paper to raise funds through the initial public offering (IPO).
Regulators say that if a company in the bidding document sets objects for future inorganic growth but has not identified any acquisition or investment target, the amount for the object and the number for the purpose of the General Company (GCP) will not exceed 35 percent.
Of the total raised.
It was seen that lately, in several drafts offering documents, new technology companies propose to raise fresh funds for objects where the object is referred to as ‘inorganic growth initiative funding’ without providing details.
“The amount is intended for these objects where the issuing company does not identify the acquisition or investment target, as mentioned in the object of the problem in the DRAFT document offer …
will not exceed 25 percent of the number raised by the Issuer,” said Sebi.
However, these boundaries will not apply, if the acquisition operation of the proposal or strategic has been identified and the appropriate specific disclosure is carried out at the time of submitting the bidding document.
Experts believe that the inability to mobilize money for the acquisition in the future that cannot be identified will have an impact on fundraising plans from several unicorns, especially where the company may not have other capital use and where existing shareholders do not want to sell.
In addition, Sebi said the amount submitted for public purposes will be brought into the same monitoring and utilization it will be disclosed in the monitoring agency report.
This report will be placed before the Audit Committee to consider “each quarter” instead of “on an annual basis”.
The loan rating agency (CRA) is registered with SEBI, it will be permitted to act as a monitoring body instead of the scheduled commercial bank and public financial institutions.
Such monitoring will continue up to 100 percent, not 95 percent utilization of current results problems, said Sebi.
The regulator has prescribed certain conditions for the sale-for sale (ofs) to the public in the IPO, where the concept of paper was submitted by the publisher without a track record.
Below, SBI said shareholders with more than 20 percent of shares in the company before the IPO will be allowed to sell up to 50 percent of their shares in the Ofs.
Furthermore, investors with less than 20 percent of shares in the company before initial sales will be able to sell only 10 percent of their shares ons.
Regarding the key period for anchor investors, Sebi said the existing key 30 days will continue for 50 percent of the portion allocated for anchor investors and for the remaining part, the 90-day key from the date of allotment will apply to all the problems opened or after 1 April 2022.
In the event of a book-built problem, Sebi said the minimum price ribbon at least 105 percent of the floor price will apply to all the problems opened or after notifications in the official sheet.
For the problem of making books opened on or after April 1, 2022, Sebi said a third of the portions available for NII would be provided for applicants with more application size than Rs 2 Lakh and up to RS 10 Lakh.
Furthermore, two-thirds of the available portions for NII will be provided for applicants with application size more than Rs 10 Lakh.
Allotment of securities in the case of the NII category will be on ‘lottery lot’, as it currently applies to the retail investor category.
The amendment came after the SBI Council approved a proposal in this case in his meeting last month.
It came against the background of the 63 companies that raised the number of crore records of Rs 1.2 lakh through the sale of the initial shares in 2021.
It was much higher than RS 26,611 Crore which was appointed by 15 companies through the sale of initial shares throughout 2020 and almost doubled Best of RS 68,827 Crore by 36 companies in 2017.