The Hindu : Business : Investor protection norms amended

Online edition of India's National Newspaper
Friday, Nov 30, 2007
ePaper

Business

Business

Investor protection norms amended

Special Correspondent

All categories are eligible for Indian Depository Receipts issues

Special privilege to DFIs goes
Minimum application value in IDRs reduced

MUMBAI: The Securities and Exchange Board of India (SEBI) has amended the SEBI (Disclosure and Investor Protection) Guidelines, 2000, on Thursday allowing listed companies, satisfying specified requirements, to make Fast Track Issues (FTI) through follow-on public offerings and rights issues. The eligibility criteria includes minimum market capitalisation of public holding, trading turnover, track record of compliance with listing requirements and investor grievance redressal.

The guidelines have been amended to enable all categories of investors to apply for Indian Depository Receipts (IDRs) issues, subject to at least 50 per cent 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 lakh. At present, only QIBs can apply for an IDR issue.

Quoting of PAN (permanent account number) in application forms, for public and rights issues, has been made mandatory, irrespective of the value of application.

PAN and GIR

At present, applicants in public and rights issues are required to disclose their PAN and GIR (general income registration) in the application form only if they are making an application for a value exceeding Rs. 50,000.

Companies making public issues are permitted to issue securities to retail individual investors or retail individual shareholders at a discounted price, provided such discount does not exceed 10 per cent of the price at which the securities are issued to other categories of public.

For the purpose, retail individual shareholder has been defined to mean a shareholder, whose shareholding is of the value not exceeding Rs. 1 lakh as on the day immediately preceding the record date, and who makes application or bids in a public issue for a value not exceeding Rs. 1 lakh.

Retail shareholders

At present, the guidelines do not provide for issuance of shares at differential price to investors within the net public offer category. Further, 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 a 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.

The special dispensations given to DFIs (development finance institutions) have been removed by deleting the chapter on Guidelines for Issue of Capital by DFIs from SEBI (DIP) Guidelines.

The SEBI had introduced separate guidelines in 1992 for primary issuances by DFIs to place companies, corporations and institutions engaged mainly in financing developmental activities and playing a catalytic role in the infrastructure development of the country on a different footing.

At present, the SEBI said, DFIs operationally compete on an equal footing with private entities and DFIs, as a concept, may have outlived its utility.

Printer friendly page
Send this article to Friends by E-Mail

Business

News Update

Stories in this Section