Market regulator Securities and Exchange Board of India on Friday made a slew of announcements to prepare the stock markets for "new tasks, processes and larger numbers" in the new year.
Among the changes are, permission to promoters to increase their holdings up to 75 per cent through market purchases subject to open offers, a gradual introduction of unique identification numbers for investors and easing of disclosure requirements for secondary public offers.
The regulator said its takeover code would be amended to remove restrictions on market purchases and preferential allotments.
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It has been proposed that promoters be allowed to sell their entire stake to an acquirer in case of a takeover provided the acquirer does not overstep the provisions of the listing agreement which require a minimum public holding of 25 per cent.
Investors involved in transactions worth more than Rs 500,000 will need to provide bio-metric identification while for others, PAN numbers will do for now. Eventually, all investors would be required to provide bio-metric identification, Sebi chairman M Damodaran said.
In an announcement after Sebi's 101st board meeting, Damodaran also permitted mutual funds to bring out gold exchange traded funds and pitched for optional rating of IPOs.
He also increased the position limit on derivatives and introduced refunds on public-issues through the Reserve Bank of India's electronic clearing scheme.
Companies will also have the facility of single-filing of results for the Bombay Stock Exchange, the National Stock Exchange and Sebi. The regulator, however, has not allowed any extension of deadline to ensure companies strictly comply with the provisions of the listing norms.
Describing the changes as moves made to cope with the changed circumstances of the Indian market, Damodaran pointed out that the institution itself would have to be re-engineered to "attract good people" and retain them.
"We have tried to increase market efficiency as people are going abroad to raise money (due to the tedious regulations here) when they can do it here," he explained.
One of the measures taken to ease the process of raising capital is the removal of disclosure statements by companies going in for subsequent public offers or issuance of other market-instruments to raise cash.
"Since these are known entities (through their IPOs) there is no need to repeat the entire process every time a company wants to raise Rs 200 crore (Rs 2 billion)," he said.
Pointing to the increasing popularity of the primary markets among companies seeking to raise capital, the regulator has mooted the idea of setting up an "investor fund" or making alternate arrangements to sponsor independent rating of companies approaching the market for funds.
According to the outlined plan, those companies that wish to be certified by recognised agencies will have the option of doing so, without having to foot the bill for the same.
Another step aimed at easing the IPO worries of retail investors is the shifting of issue-refunds from the cheque- or DD-based model to electronic fund transfer through the RBI's ECS.
Only investors in 15 cities in the country, where a system of interbank transfers is in place, will be benefited, while the refunds in other towns and cities will be transferred to the electronic form as and when the RBI extends its facility.
Sebi has also increased the maximum time period between two board meetings to 4 months from the current 3, though it is still mandatory for listed companies to have at least four board meetings a year.
It has also clarified that only reports pertaining to a company's financial matters need be put up for shareholders' approval and not necessarily all reports meant to exercise control over a firm's affairs.
It has also clarified that sitting fees paid to executive directors are not needed to be approved by shareholders.
Other decisions
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Unique identification must. Investors transacting over Rs 5 lakh require to provide bio-metric details, others require PAN numbers
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Position limits for derivatives being hiked
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Optional rating of IPOs, cost to be borne by investor protection fund
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No extension of Clause 49 deadline. 50 per cent independent directors on board must
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Refund of payments through electronic clearing system
- Go ahead for gold exchange traded funds
