New Sebi norms reduce public issue time to 10 days

 The securities and Exchange Board of India (Sebi) has notified new guidelines that, among other things, reduces the overall time period for public issues to 10 days, and seeks disclosures relating to pledged shares in the prospectus. The new guidelines — Issue of Capital and Disclosure Requirements (ICDR) Regulations — replace the existing Disclosure and Investor Protection (DIP) guidelines. 



Earlier, there was no clarity on the timeframe, especially when the price band was revised. According to a Sebi circular, ICDR regulations, while incorporating the provisions of DIP guidelines, have included "certain changes made by removing the redundant provisions, modifying certain provisions on account of changes necessitated due to market design and bringing more clarity to the provisions." 



Under the new guidelines, the option of a 75% book building and 25% fixed price issue — which was rarely exercised — has been done away with. It has to be either a fixed price issue or a book-built one. Also, companies coming out with fixed price issues would no longer need to publish the price in the draft document. 



The new guidelines stipulate that the total issue period should not exceed 10 days, including any revision in the price. The earlier guidelines were not clear on this matter, especially when the price band was revised. Meanwhile, the allotment/refund period in public issues has been capped at 15 days. Previously, the allotment/refund period for fixed price was 30 days. 



In another important development and in its attempt to bring in more transparency in the grievance redressal mechanism, the market regulator has directed stock exchanges to disclose details of complaints lodged by investors against trading members and companies listed on the exchange, on their website. These disclosures would also include details pertaining to arbitration and penal action against trading members. 



The new regulations also give Sebi the control of the surplus money in green shoe option bank account, as this money would have to be transferred to Sebi’s Investor Protection and Education Fund (IPEF). Earlier, this surplus money was transferred to the Investor Protection Fund of stock exchanges. 



Among other things, the new guidelines have also clarified the definition of employees, key management personnel, restrictions on advertisements, currency of financial statements and the documents that have to be attached with the due diligence certificate.