In a bid to ease compliance towards companies planning public offers (IPOs), the Securities and Exchange Board of India (Sebi) has notified norms that open more avenues to meet the minimum promoters’ contribution (MPC).
The market regulator has permitted promoter group entities and non-individual shareholders to contribute to the mandated promoters’ contribution in the case of a shortfall without being identified as a promoter.
However, these non-individual shareholders must hold more than 5 per cent of the post-offer equity share capital.
Equity shares from the conversion of compulsorily convertible securities held by foreign ventures, alternative investment funds for a year before filing the documents for IPO can also be considered towards the MPC.
For maintaining skin in the game, the regulator mandates a 20 per cent minimum promoter contribution.
The relaxation will help new-age companies and startups to have more contributors to this threshold as the founders, who are often the promoters, have diluted their stake in previous rounds of funding.
These changes were first proposed in January by an expert committee chaired by S K Mohanty, former whole-time member of Sebi.
The market regulator has also allowed companies to extend the IPO period by just one day instead of the compulsory three days till now if there were any unforeseen instances like a banking strike.
Sebi has also provided more flexibility to alter the issue size after the submission of an offer document.
Sebi mulls tweaks to buyback norms
Sebi on Tuesday proposed tweaks to the buyback norms, which includes allowing issue of ESOPs during buyback period, removing the concept of ‘record date’ for open market buyback and providing the manner of calculating the entitlement ratio.
The changes, based on an expert committee recommendation, are aimed at facilitating ease of doing business.
In the consultation paper, Sebi has also suggested changes to the rules governing investment bankers, which includes mandatory certificate of registration for entities acting as bankers to an issue.
Awfis’ Rs 600 cr IPO to hit market today
Co-working space operator Awfis Space Solutions Ltd will hit the capital market on Wednesday with its initial public offering (IPO) to raise to Rs 599 crore.
The company has fixed a price band of Rs 364-383 per share for its maiden public issue, which will open on May 22 and conclude on May 27.
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