MUMBAI: To give impetus to start-ups in India, capital market regulator Securities and Exchange Board of India (SEBI) on Wednesday announced relaxation in norms for e-commerce, data analytics, biotechnology and nanotechnology firms to raise funds through stock exchange listing.The Institutional Trading Platform would be renamed as Innovators Growth Platform, where the new companies can list as per the amended rules, SEBI announced after its board meeting. SEBI has reduced the minimum application size for such listings from Rs 10 lakh to Rs 2 lakh, and done away with any requirement of minimum reservation of allocation to a specific category of investors.
It has also brought down the minimum number of allottees to 50 from 200, and kept the minimum offer size at Rs 10 crore. The requirement of limiting allocation to a single institutional investor at 10 per cent has been dropped. Post-issue single holding can also exceed the current cap of 25 per cent.
As per the new rules, companies with 25 per cent of pre-issue capital for at least two years with qualified institutional investors can list under the platform, as also family trusts with a net worth of `500 crore. Well-regulated foreign investors, and a class of accredited investors can list on the platform. Also, there is no mandated reservation for any category of investors.
In another move, the Sebi board also approved a proposal to expand the offer-for-sale mechanism for reduction of stake in listed companies, and relaxed clubbing of investment limit norms for well-regulated foreign investors. Offer for sale can now be made by all companies with market capitalisation of `1,000 crore and above.
Also in the case of offer for sale, SEBI said companies need not file fresh offer documents when the change in either the number of shares offered for sale or the estimated issue size is less than 50 per cent. At present, any increase or decrease in size by over 20 per cent requires a fresh filing to be made.On the issue of clubbing of investment limits for well-regulated foreign portfolio investors (FPIs), SEBI said clubbing of investment limit will be on the basis of common ownership of more than 50 per cent or common control. Clubbing of investment limits would not be applicable for public retail funds like insurance companies, pension funds and mutual funds or unit trusts that are open for retail subscriptions.
Pricing norms for corporate bonds
Regulator Sebi said on Wednesday that an earlier proposal to come out with a methodology for uniform valuation of such products across the financial sector would not be pursued. Such an exercise was suggested by a working group on development of corporate bond market in India, chaired by Khan. The Department of Economic Affairs, Ministry of Finance will work to bring uniformity in the valuation process for corporate bonds. Sebi will, however, prescribe norms to be followed across all mutual funds for strengthening the system of valuation of corporate bonds for mutual funds.
Side-pocketing allowed for MFs
Among a slew of reforms unveiled at its board meeting on Wednesday, the Securities and Exchange Board of India (SEBI) allowed mutual funds to create segregate portfolios of debt and money market instruments in case of a credit event while ensuring fair treatment to all unit holders. “Creating segregated portfolio may be optional for mutual funds, but approval of trustees is necessary for activating such a portfolio.” Known as ‘side pocketing’ in mutual fund (MF) parlance, this mechanism prevents distressed assets from damaging returns generated from more liquid and better-performing assets.