SEBI cuts lock-in period for promoters to 18 months post-IPO

Markets regulator SEBI has reduced the minimum lock-in period for promoters’ investment post an initial public offering (IPO) to 18 months from three years, under certain conditions.

The move comes at a time when many companies are looking to list on the stock exchanges.

In addition, the Securities and Exchange Board of India (SEBI) has streamlined the disclosure requirements of group companies.

In a notification, SEBI said that if the object of the issue involves offer-for-sale or financing other than for capital expenditure for a project, then the minimum promoters’ contribution of 20% would be locked in for 18 months from the date of allotment in the IPO. Currently, the lock-in period is three years.

Capital expenditure includes civil work, miscellaneous fixed assets, purchase of land, building and plant and machinery, among others.

Further, the lock-in period for the promoter shareholding in excess of the minimum 20% has also been reduced from the existing one year to six months.

Takeover norms eased

SEBI also amended the takeover regulations because of the implementation of the System Driven Disclosures (SDD).

Under the new rule, certain disclosure obligations for the acquirers / promoters on acquisition or disposal of shares aggregating to 5 % and any change of 2 % thereafter, annual shareholding disclosures and creation or invocation or release of encumbrance registered in depository systems under takeover regulations would not be applicable.

The amendment will be effective from April 1, 2022, the regulator said in a notification, dated August 13.

The development came after the board of SEBI approved a proposal in this regard earlier this month.

Under SDD, relevant disclosures are disseminated by the stock exchanges based on the aggregation of data from the depositories without human intervention.

The SDD for the said disclosures is already in place and runs parallel with the submission of physical disclosures under the takeover regulations, SEBI had said in its board meeting.

The obligation for physical disclosures would be done away with effect from April 1, 2022, it had added.

Separately, the regulator has amended the regulations on listing obligations and disclosure requirements.

These relate to issuers who have listed non-convertible debt securities, non-convertible redeemable preference shares, perpetual debt instruments and/ or perpetual non-cumulative preference shares.

These amendments are aimed at improving transparency, rationalisation and removing redundant provisions to provide further robustness to the corporate bond market.

With regards to documents and information to holders of non-convertible securities, SEBI said the listed entity will have to send soft copies of the full annual reports to all the holders of such securities who have registered their email address either with the listed entity or with any depository.

The new rule has become effective from August 13.

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