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Mumbai: Capital markets regulator Securities and Exchange Board of India (SEBI) has tightened rules for small, medium enterprises (SMEs) launching IPOs for listing in the capital markets. Along with this, rules for merchant bankers have also been made stricter. It has also been expanded for mutual fund managers specifying the period for freezing of funds raised through New Fund Offers (NFOs) and the list of events to be considered as price sensitive events. Many of these decisions have been taken in SEBI board meetings.
SEBI has made all regulated entities like fund houses, exchanges, depositories, custodians using artificial intelligence accountable for its proper use, including investor protection and rules governing data usage. The SEBI board has said that an SME company can launch an IPO only if its operating profit (earnings before interest, depreciation and tax) in any two of the last three financial years at the time of filing is at least Rs 1 crore. . Brochure to raise funds. Further, in case of Offer for Sale (OFS) in an IPO, the size of the OFS should not exceed 20 per cent of the total issue size. Additionally, shareholders cannot sell more than 50 percent of their stake through the offer.
SEBI has also said that the lock-in of promoters’ holding, which is more than the minimum promoter contribution (MPC), can be released only in a phased manner. The regulator has allowed 50 per cent of promoters’ stake in MPC to be released after one year of listing and the remaining 50 per cent can be released after two years.
In this important decision, SEBA cannot run SMI IPO with the intention of directly or indirectly distributing debt to the promoters, promoter group or any related party for the purpose of the offer. The IPO prospectus filed with the stock exchanges will be available to the public for 21 days for their comments.
Meanwhile, SEBI has also changed the rules for merchant bankers in India. There will be two types of merchant bankers. Category 1 will be people with assets worth at least Rs 50 crore. Who will be allowed to carry out all merchant banking activities as permitted by SEBI.
Additionally, there will be Category 2 merchant bankers, who will be allowed to carry out licensed activities other than managing fund raising by companies on the main board of the stock exchange. These activities include IPO, Rights Offer, Offer for Sale (OFS), Qualified Institutional Offer (QIP) etc.
SEBI will now require mutual fund managers to invest the funds raised by NFOs within 30 days. Failing to do so, they must provide an exit option to all their investors to redeem their investments without any exit load.
The regulator has also said that if an investor is switching investments from an existing mutual fund investment to an NFO, the distributor will get the commission whichever is lower among the two schemes offered by the scheme. Its objective is to protect distributors from the temptation of high commissions and to discourage unnecessary switching of mutual fund investments.
