SEBI amends Disclosure and Investor Protection (DIP) guidelines
Securities and Exchange Board of India (SEBI) has amended the SEBI (Disclosure and Investor Protection) Guidelines, 2000 vide circular dated November 29, 2007. The highlights of the amendments are:
1.Fast Track Issues (FTIs) :
Listed companies satisfying specified requirements can make Fast Track Issues through Follow-on Public Offerings and Rights Issues. The eligibility criteria for the purpose, inter alia, include minimum market capitalisation of public holding, trading turnover, track record of compliance with listing requirements and investor grievance redressal, etc.
2. Issue of Indian Depository Receipts (IDRs) :
The guidelines have been amended to enable all categories of investors to apply for IDR issues subject to at least 50% of the issue being subscribed by Qualified Institutional Buyers (QIBs). The minimum application value in IDR issues has been reduced to Rs.20,000/- from Rs.2,00,000/-.
Presently, only QIBs can apply in an issue of IDRs.
3. Quoting of PAN mandatory :
Quoting of PAN in application forms for public/ rights issues has been made mandatory, irrespective of the value of application.
Presently, applicants in public and rights issues are required to disclose their PAN/GIR in the application form only if they are making an application for a value exceeding Rs.50,000/-.
4. Discount in issue price :
Companies making public issues are permitted to issue securities to retail individual investors / retail individual shareholders at a discounted price, provided that such discount does not exceed 10% of the price at which securities are issued to other categories of public. For the purpose, ?retail individual shareholder? has been defined to mean a shareholder (i) whose shareholding is of value not exceeding Rs. 1,00,000/- as on the day immediately preceding the record date, and (ii) who makes application or bids in a public issue for value not exceeding Rs 1,00,000/-.
Presently, the Guidelines do not provide for issuance of shares at differential price to investors within the net public offer category.
5.Reservation for shareholders in listed companies :
Application by shareholders of listed companies under the reserved quota has been restricted to retail individual shareholders.
Presently, listed companies making public issues can make reservation on competitive basis for its existing shareholders who, as on the record date, are holding shares worth up to Rs. 50,000/-. Further, there is no limit on the value of the application made by such shareholders.
6.Deletion of the chapter on Guidelines for Issue of Capital by Designated Financial Institutions (DFIs)? :
The special dispensations given to DFIs have been removed by deleting the chapter on ?Guidelines for Issue of Capital by DFIs from SEBI (DIP) Guidelines.
SEBI had introduced separate guidelines in 1992 for primary issuances by DFIs, to place companies / corporations / institutions engaged mainly in financing of developmental activities and playing a catalytic role in the infrastructure development of the country on a different footing. Presently, DFIs operationally compete on equal footing with private entities and DFIs, as a concept, may have outlived its utility.
7. Apart from the above, SEBI has also made certain miscellaneous amendments either to delete certain provisions, which have become redundant or in respect of which, there have been requests for exemption on regular basis.
Amendments in Disclosure and Investor Protection (DIP) guidelines dated 30th April 2007
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