MUMBAI: As what could be a first of its kind among securities market regulators in the world, the Securities and Exchange Board of India (SEBI) on Thursday decided to make grading of initial public offerings (IPOs) of companies mandatory and further tightened the disclosure norms of real estate IPOs with immediate effect.

A continuous process

The decision has been taken on the recommendation of the Primary Market Advisory Committee of the board, said Mr. Damodaran, Chairman, SEBI, while addressing a press conference after its board meeting here. He added that rating would be a continuous process.

Elaborating decisions on real estate IPOs, Mr. Damodaran said Land bank details must be accompanied with ownership evidences. The agreement for developing a land should also be accompanied by any existence of revocation clause. All such agreements should be available for inspection any time by the authorities.

Post IPOs, real estate companies should have continuous disclosures. Forecasts of the land value and project value will not be allowed and it should be based on current market valuation. And no future projections are allowed in case of real estate companies.

As per the announcement in the Union budget for 2007-08, SEBI decided to allow short-selling by the institutions.

Mr. Damodaran said exchanges had already indicated their readiness to implement short selling by institutions. SEBI also made the Permanent Account Number (PAN) mandatory for preferential allotments. It now allowed companies to publish abridged annual report and listing agreement would be suitably amended for this purpose.

SEBI decided to use the electronic mode (e-mails and website) to issue summons to persons who have to appear before the investigating officers of the regulator. SEBI Chairman said that this measure would speed up the investigations.

Ceiling on fees

The board also decided to introduce ceiling on various fees levied by SEBI. Some of the ad valorem fees did not have caps till now. Delisting of securities was also discussed in the board meeting. The question is whether we should stay with reverse book building or find some other measures, Mr. Damodaran said. However, the issue would be considered in the next board meeting in May, he added.

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