In a bid to foster a more business-friendly environment and streamline the initial public offering (IPO) process, the Securities and Exchange Board of India (SEBI) has introduced significant amendments to its regulations, according to an official notification.
One notable change is the elimination of the 1% security deposit requirement in public/rights issues of equity shares. This move aims to simplify the capital-raising process for companies opting for IPOs.
Moreover, under the new amendments, promoter group entities and non-individual shareholders holding more than 5% of the post-offer equity share capital can now contribute towards the minimum promoters’ contribution (MPC) without being categorized as promoters.
To facilitate companies utilizing convertible securities for fundraising, equity shares resulting from the conversion of compulsorily convertible securities held for at least a year prior to filing the Draft Red Herring Prospectus (DRHP) will now count towards meeting the MPC requirement.
Additionally, the amendment introduces a streamlined process for adjusting the size of an offer for sale (OFS). Companies will now be able to increase or decrease the size of OFS based on a single criterion, either the issue size in rupees or the number of shares, as disclosed in the draft offer document.
In cases of force majeure events, the requirement for extending the bid/offer closing date has been relaxed. Instead of the previous mandate of a minimum three-day extension, companies now have the flexibility to extend the closing date by a minimum of one day, allowing for greater adaptability in unforeseen circumstances.
These regulatory changes are poised to simplify the IPO landscape and fundraising activities, creating a more conducive environment for companies to access capital markets with ease.
(SEBI, IPO, Regulations, Amendments, Fundraising, Initial Public Offering, Equity Shares, Security Deposit, Promoter Group, Non-Individual Shareholders, Minimum Promoters’ Contribution, Convertible Securities, Draft Red Herring Prospectus (DRHP), Offer for Sale (OFS), Regulatory Framework, Capital Markets, Force Majeure Events, Closing Date, Business-Friendly Environment, Streamlining)
