Markets regulator Securities and Exchange Board of India (SEBI) has approved tightening of rules for usage of proceeds from initial public offers (IPOs), even as it cleared a series of amendments in various regulations. The move has come at a time when more than 60 public issues have hit the primary market in 2021 and companies have raised more than Rs 1.18 lakh crore through them.
SEBI has decided to restrict the quantum of issue proceeds a company can use for unidentified inorganic growth.
The changes were effected during the meeting of the regulator's board, which was held in Mumbai on Tuesday.
Amendments will also be effected to cap the number of shares that can be offered by selling shareholders and to increase the lock-in period for shares subscribed by anchor investors.
The market regulator also decided to put a cap on the usage of issue proceeds for unidentified future acquisitions and restricted the number of shares that can be offered by selling shareholders.
SEBI chairman Ajay Tyagi asserted that the regulator has no intention to control the prices of IPOs in any manner.
"We are not into approving the prices IPOs or getting into IPO valuation. What I said recently was that whatever is the price arrived at that should be better disclosed in the offer document. Moreover price discovery is a function of the market, and that is how it works globally too. Price discovery is a function of the market and that is how it works globally as well," Mr Tyagi clarified while addressing a press conference after the board meeting.
The regulator has also decided to bring under monitoring, the funds reserved for general corporate purposes and extended anchor investors' lock-in period to 90 days.
SEBI has also decided to revise the allocation methodology for non-institutional investors (NIIs).
Apart from this, changes have also been cleared for regulations governing foreign portfolio investors, alternative investment funds (AIFs), mutual funds, settlement proceedings and others.
SEBI has also decided to introduce provisions relating to appointment or re-appointment of persons who fail to get elected as directors, including as whole time directors or managing directors or managers, at the general meeting of a listed entity.
"Appointment or a re-appointment of any person, including as a Managing Director or a Whole Time Director or a Manager, who was earlier rejected by the shareholders at a general meeting, shall be done only with the prior approval of the shareholders," SEBI said in a statement.