Regulations
SEBI asks DPs to provide basic services demat account for small investors

All depository participants have been asked by SEBI to provide basic services demat account with limited services and reduced cost to retail investors

Market regulator Securities and Exchange Board of India (SEBI) has asked all depository participants (DPs) to provide a “basic services demat account” (BSDA) with limited services and reduced cost to small, retail investors.

 

“An individual can have only one BSDA in his or name across all DPs where the value of securities would be capped at Rs2 lakh at any point of time,” SEBI said in a release.

 

The Annual Maintenance Charges (AMC) structure for the BSDA shall be on a slab basis—if the value of holding is (1) up to Rs50,000 there will be NIL AMC and (2) for value of holding from Rs50,001 to Rs2 lakh AMC will be up to Rs100.

 

“The value of the holding shall be determined by the DPs on the basis of the daily closing price or NAV of the securities or units of mutual funds. If the value of holding in such BSDA exceeds the prescribed criteria at any date, the DPs may levy charges as applicable to regular accounts (non-BSDA) from that date onwards," SEBI said.

 

The BSDA account holder can get an electronic statement free of cost. He can also have two physical statements during the billing cycle free of cost, but would have to pay up to Rs25 for additional statements in physical format.

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SEBI tweaks rules for faster stake dilution by promoters

 

IPPs and OFSs are avenues made available to the promoters to help them dilute their stake and meet the guidelines of 25% minimum public shareholding in private companies and 10% in PSUs

New Delhi: With an aim to help promoters dilute stake to meet minimum 25% public holding norms, Securities and Exchange Board of India (SEBI) on Monday allowed the promoter entities to hit the market with successive institutional placement programme (IPP) and offer for sale (OFS) schemes with a two-week gap, reports PTI.

 

IPPs and OFSs are two recently announced avenues made available to the promoters by market regulator SEBI to help them dilute their stake and meet the guidelines of 25% minimum public shareholding in private firms and 10% in PSUs.

 

These are two fast-track stake sale programmes available for share sale through auction method, as against the long-drawn processes involved in traditional avenues like follow-on public offers (FPOs).

 

Various amendments have been notified by SEBI in its regulations pursuant to decisions taken at its last board meeting on August 16, where it decided that retail investors would be assured a minimum lot of shares and rules would be relaxed for promoters to meet minimum public holding norms.

 

However, the earlier regulations did not allow the promoter of a company to launch an IPP if any of the promoter group entities had purchased and/or sold shares in a 12-week period prior to the offer. Besides, the promoters were also not allowed to purchase and/or sell in the 12-week period after the offer.

 

While retaining this restriction, SEBI has amended rules to provide some relaxation to the promoters seeking faster dilution of their shareholding through IPP or OFS routes.

 

Now, such promoters may offer their shares through IPP or OFS routes within this 12-week period, subject to a condition that there shall be a gap of minimum two weeks between the two successive OFSs and/or IPPs.

 

In another amendment to its regulations mandating a minimum of 10% net offer to public in IPOs and FPOs, and of 25% in certain cases, SEBI has done away with the exemptions given to the government entities and certain infrastructure sector firms.

 

In a separate amendment to its ICDR (Issue of Capital and Disclosure Requirements) regulations, SEBI has amended rules that require minimum 90% subscription in an issue.

 

Now, this minimum subscription requirement for IPOs would be subject to allotment of a minimum number of securities.

 

This requirement would also apply in case of shares being sold through OFS scheme.

 

However, other minimum subscription related requirements would not apply to shares offered through OFS. These requirements include those related to refund of application money within a given time frame in the event of non-receipt of minimum subscription.

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SEBI allows PE help to start-up IPOs for lock-in requirement

SEBI allowed professionals and qualified entrepreneurs to get help from private equity and other funds to meet share lock-in requirements

New Delhi: With an aim to help companies set up by professionals and qualified entrepreneurs to tap capital market, market regulator Securities and Exchange Board of India (SEBI) has allowed them to get help from private equity (PEs) and other funds to meet share lock-in requirements, reports PTI.

 

As per regulations of SEBI, promoters are required to lock-in at least 20% stake in the company for at least three years after allotment of shares in initial public offering (IPO).

 

Besides, any holding in excess of this minimum 20% promoter stake is required to be locked in for one year.

 

To encourage professionals and technically qualified entrepreneurs who are unable to meet the requisite 20% contribution by themselves as promoters, the regulator has now decided to allow such start-up promoters to meet this requirement with help of SEBI-registered registered AIFs.

 

AIFs or alternative investment funds are a newly approved class of investors which include private equity (PE), SME, infrastructure, venture capital funds, among others.

 

However, the contribution of these AIFs would be capped at 10% to meet the promoter share lock-in guidelines.

 

The proposal has been approved by the SEBI board and would be soon incorporated into the relevant guidelines.

 

SEBI is of the view that such a step would encourage the professional and first-generation entrepreneurs to tap the capital market to raise funds.

 

The decision was taken after a recommendation in this regard by SEBI's Primary Market Advisory Committee (PMAC).

 

The PMAC was of the view that in the companies founded by professionals or first-generation entrepreneurs, where the post-IPO equity held by promoters is less than 20%, AIFs could be permitted to provide the balance equity, subject to a minimum 10% being contributed by the promoters.

 

The PMAC also suggested that the capital contributed by AIFs for this purpose shall be locked in for two years.

 

SEBI, however, decided that the requirement of lock-in of three years should uniformly apply to both Promoters and AIFs.

 

Further, SEBI has decided to review the lock-in tenure at periodic intervals, as per the international practice.

 

The promoters are allowed to pledge their locked-in shares as collateral security for any loans granted for financing one or more of the objects of the issue, provided pledge of shares is one of the terms of sanction of the loan.

 

The PMAC had suggested a relaxation in this regard by allowing pledging of locked-in shares for loans taken by the company for other objects of its business, as laid down in its memorandum and articles of association.

 

SEBI, however, rejected the idea, as it felt that the existing restrictions were aimed at ensuring the commitment of the promoters towards the objects of the issue.

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