SEBI sets new IPO norms

By Our Special Correspondent

CHENNAI, DEC. 22. The Securities and Exchange Board of India (SEBI) today stipulated a minimum size of Rs. 100 crores for initial public issues (IPOs) by companies in all sectors where the public offer is less than 25 per cent of the post-issue capital.

A SEBI release issued after a board meeting in New Delhi says, ``The present rules require a minimum offering of 25 per cent of post issue capital to public. This requirement has been relaxed to 10 per cent offering to public by issuers in the eligible sectors - IT, telecom, media and entertainment, subject to certain condition imposed by SEBI.

``The board carefully considered and deliberated on the recommendation of the Primary Markets Advisory Committee for a minimum offering size of Rs. 250 crores. The board however, felt that this high issue size will make a few companies in India eligible to avail of this facility. The board therefore, decided to reduce the limit to Rs. 100 crores and retain the existing limit of minimum public offer of 20 lakhs securities (excluding reservations, firm allotment and promoters' contribution). ''

The SEBI board ``also decided that the Issue shall be made only through the book building method with allocation of 60 per cent to qualified institutional buyers (QIBs). These new guidelines would be applicable to all sectors and would replace the existing guidelines in this regard. Companies not fulfilling the aforesaid conditions would be required to make a minimum public offering of 25 per cent under the existing policy.

The Board also removed the restriction of minimum public issue size of 25 crores in the case of an IPO through book building and allowed all companies to make issue through book building. However, if the track record criterion is satisfied, allocation to QIBs can be less than 60 per cent. ''

On the quantitative conditions for continuous listing, the release says, ``Currently there is no regulatory requirement to maintain a minimum floating stock post listing on a continuous basis. This matter was discussed by the Secondary Market Advisory Committee and based on its recommendations, the Board approved the following policy for continuous listing as a measure of investor protection as it would ensure availability of floating stock on a continuous basis:

(1) Henceforth there will be a requirement for all listed companies to maintain a minimum level of non-promoter holding on a continuous basis as a condition for listing.

(2) All new companies shall be required to maintain on a continuous basis the non-promoter holding at the same level as applicable at the point of entry (that is, 10 per cent or 25 per cent).

(3) For existing listed companies, where the non promoter holdings is less than the applicable limit at the point of entry, the companies will be given time upto one year to raise the level of non-promoter holding to at least 10 per cent. In case they fail to do so, they will be required to buy out the public shareholding in a manner similar to that provided in the SEBI (Substantial Acquisitions and Takeovers) Regulations.

(4) No preferential allotment/ buy back of listed companies would be permitted if as its result the non promoter holding falls below the ceilings permitted under the SEBI (DIP) Guidelines applicable at the point of entry.

(5) None of the above conditions will apply to BIFR companies.

(6) The stock exchanges will monitor the level of non- promoter holding on a half yearly basis from the returns to be submitted by companies in specified formats. The non-promoter holding will also be disclosed half yearly as part of half-yearly disclosures by the companies.

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Section  : Business
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