Sebi plans e-IPO, exit policy for exchanges

The Securities and Exchange Board of India (Sebi) plans an electronic mechanism for initial public offers (IPO) as well as a means to provide an exit to companies which are listed exclusively on defunct exchanges.

The implementation of the e-IPO would require an amendment to the Companies Act to remove a requirement for the investor to agree to conditions of the issue in writing.

A clarification from the Ministry of Corporate Affairs (MCA) is awaited, according to the agenda for Sebi’s last board meeting which was released on its website on Friday.

“MCA has held the view that in the case of subscription of the to be listed shares which is in demat form, it may not be necessary that an investor needs to “agree in writing”. However, MCA is to give a written clarification to this effect, “it said.

The regulator also suggested that not all the paperwork filed with the offer documents are necessary for Sebi to process them. Doing away with some of them could reduce the size of the offer document and make it less bulky, according to Sebi.

The regulator also examined recommendations the Association of Merchant Bankers of India with respect to norms for anchor investors.

While AMBI has proposed many slabs, it is proposed to restrict the slab to two as per provisions of extant regulations and introduce maximum number of anchor investors also in each slab and also for anchor tranche up to Rs10 crore.

Sebi has also proposed enhanced disclosures in respect of private equity and venture capital funds  regarding their investee companies and details of their holdings in other companies wherein they have been shown as promoters.

Sebi also discussed the issues which need to be addressed on the exit policy for exchanges. The main points of contention were the manner in which the assets of stock exchanges need to be dealt and how to deal with exclusively listed companies.

The exit policy gains significance in light of the fact that though there are currently 25 stock exchanges in India, only one fifth of them are currently fully functional as stock exchanges with rest doing nothing or doing some trades.

The secondary market advisory committee examined a BSE proposal for introduction of third-party warrants on its platform and made observations on the same. The exchange has accordingly been asked to submit a revised proposal.

The Sebi board also examined the framework for stock borrowing and lending with reference to participation by foreign institutional investors (FIIs).

“Any changes to the present framework on collaterals applicable to FIIs may require changes to the provisions of Fema (Foreign Exchange Management Act),” said the note.

Sebi is also examining a volume based graded compliance framework for stock brokers in addition to having the framework based on number of customers being served by the specific broker.