Mumbai: Markets regulator Sebi on Thursday relaxed IPO norms by reducing the time for the announcement of price band for initial public offers (IPO) from five days to two days before the issue opening date. While simplifying the procedural requirements during a public offer, the regulator has also strengthened the disclosure requirement during a public offer by expanding the definition of group company.
Other than promoters and subsidiaries, group companies would also include such companies with which there were related party transactions during the period for which financial information is disclosed.
The shareholding threshold for identifying promoter group has been revised from 10 per cent to 20 per cent and the issuer has to disclose the financial details only for the preceding three years as against the present duration of five years.
“The move to permit issuers to announce the IPO price band two days before (earlier 5 days) the issue opening date, will enable them to budget for volatility in domestic and global markets. Same is the case with the amendment to Takeover Regulations relating to upward revision. The amendments in ICDR Regulations relating to rights issue and public issue will simplify the disclosures in the offer documents, which is otherwise a tedious, and a cumbersome process. These changes will ease the manner and the time generally taken to raise funds from public,” said Yogesh Chande, Partner, Shardul Amarchand Mangaldas.
“The regulatory changes proposed in the ICDR are very progressive and good both for issuers and investors. Issuers will benefit from rationalized disclosure requirements such as disclosure requirements for financial statements in IPOs reduced to 3 years from 5 years and the concept of materiality introduced for certain disclosures. There is greater focus on disclosures of related party transactions,” said Ramesh Srinivasan, MD & CEO, Kotak Investment Banking said.
