As per the new changes, the requirement of a 1% security deposit in public/rights issues of equity shares has been done away with, streamlining the process for companies seeking to raise capital through IPOs.
In a move aimed at enhancing the ease of doing business for companies seeking initial public offerings (IPOs) or fundraising, the Securities and Exchange Board of India (SEBI) has approved significant amendments to its regulations, as per the official notification.
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As per the new changes, the requirement of a 1% security deposit in public/rights issues of equity shares has been done away with, streamlining the process for companies seeking to raise capital through IPOs.
Further, promoter group entities and non-individual shareholders holding more than 5% of the post-offer equity share capital will now be permitted to contribute towards the minimum promoters’ contribution (MPC) without being identified as promoters.
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To ease the process for companies utilising convertible securities for fundraising, equity shares resulting from the conversion of compulsorily convertible securities held for a year before filing the Draft Red Herring Prospectus (DRHP) will now be considered for meeting the MPC requirement.
Furthermore, the amendment simplifies the process for adjusting the size of an offer for sale (OFS). Now, the increase or decrease in the size of OFS requiring fresh filing will be based on only one criteria, either the issue size in rupees or the number of shares, as disclosed in the draft offer document.
In cases of force majeure events, the requirement for extending the bid/offer closing date has been relaxed. Instead of the previous mandate of a minimum three-day extension, companies will now have the flexibility to extend the closing date by a minimum of one day, providing them with more manoeuvrability in unforeseen circumstances.
These amendments are expected to streamline the regulatory framework governing IPOs and fundraising activities that aims to make it more conducive for companies to access capital markets.
