SEBI Greenlights Amendments To Facilitate Ease Of Doing Business For IPO-Bound Cos

The Securities and Exchange Board of India has amended SEBI (Issue of Capital and Disclosure Requirements) Regulation 2018 to facilitate the ease of doing business for companies heading for IPO or funding raising.

One of the first amendments made by the regulatory body is removing the requirement of 1% security deposit in public/rights of equity shares. Further, promoter group entities and non-individual shareholders with more than 5% of post-offer equity share capital will be allowed to contribute towards minimum promoters’ contribution (MPC) without being identified as a promoter, Moneycontrol reported.

In addition, equity shares arising from the conversion of securities held for a period of 12 months before the DRHP filing will be considered for meeting the MPC requirements.

The market regulator said, “The increase or decrease in size of an offer for sale (OFS) requiring fresh filing shall be based on only one of the criteria i.e. either issue size in rupees or number of shares, as disclosed in the draft offer document.”

Also, flexibility has been offered for extending the bid/offer closing date due to force majeure events by the mandate of one day, which otherwise was three days.

Recently, SEBI has been exploring ways to bring changes in the IPO processes. Weeks back, the market regulator was reported to be deploying artificial intelligence (AI) for the initial scrutiny of DRHPs. According to media reports, SEBI’s whole time member Ananth Narayan said that AI was useful for vetting publicly available documents. 

In the case of private documents, an in-house machine learning language module is needed for further checks and balances. 

Also, recently, SEBI warned investors about potential frauds as the regulator has identified many registered fake entities promising stock market access without the need for official KYC, which becomes an attractive proposition for unsuspecting investors.