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The Securities and Exchange Board of India (Sebi) on Friday further relaxed the norms for institutional investors bidding for shares through the offer for sale (OFS) route and tweaked the takeover regulations. In the upcoming OFS issues, these investors can now bid without making full upfront payments and will also be allowed to place orders without depositing the margin amounts. However, investors who bid without upfront margins will not be allowed to cancel or revise downwards their price or quantity. Also, such trades will be settled on a T+2 basis (transaction date plus two days).
Investors who bid with 100 per cent margin amount, however, will be allowed to modify or cancel their orders and their trades settled the next day.
The measures were announced after a Sebi board meeting in Chennai on Friday.
The steps will help the government push through share sales of its companies to meet the disinvestment target and private companies meet the public shareholding requirement before June.
Currently, there are about 125 private companies with promoter holdings greater than 75 per cent. These companies will have to offload about Rs 23,000 crore worth of paper to attain minimum public holding levels.
"The deadline of June 2013 to achieve minimum public shareholding is fast approaching and a large number of promoters are expected to offload their shares through OFS route," said Sebi in a release.
Many market participants, including the government, had requested Sebi to do away with the margin requirement due to foreign currency risks and uncertainty of allotment.
Sebi on Friday also directed stock exchanges to disclose indicative price and order book throughout the bidding session in its attempts to make the bidding process more transparent. Earlier, the indicative pricing was disclosed less than an hour before the close of trading.
Sebi also announced minor tweaks to the takeover code regulations. The regulator said if the open offer obligation gets triggered through a combination of modes, the relevant date' determining the offer price shall be the earliest date on which obligations are triggered. Sebi also clarified that the date of the board announcement for preferential allotment will be considered as the relevant date for triggering open offer obligations and determination of offer price. Sebi also aligned takeover code regulations with insider trading regulations with regard to buy or sell of two per cent by persons holding more than five per cent stake in a company.
"The good thing is there were no suggestions from the industry to make substantial changes to the takeover code. Most of the suggestions were procedural in nature," said UK Sinha, chairman, Sebi.
Sebi also made relaxations to the Infrastructure Debt Fund (IDF) regulations by widening the definition of strategic investors to include systemically important NBFCs and long-term foreign institutional investors. Sebi also permitted IDFs to invest in any public financial institutions or infrastructure finance companies. Currently, such funds have to be kept in cash or money market funds. Among other things, Sebi also extended the new fund offer period for IDFs to 45 days from 15 days and made relaxations in the limits in below-investment grade investments.
"So far, Sebi has received only three applications for IDFs, two of which have been approved and one has got an in-principle approval. However, no IDF scheme has been launched so far," Sinha said.
To develop the bond market, Sebi said that a separate debt segment' will be created on the stock exchanges, similar to the derivatives and currency segments.
Sebi on Friday also allowed two-way fungibility of Indian Depository Receipts (IDRs) and said it would soon provide a detailed roadmap for existing and future IDR issuances.
Sebi will not reopen the cases settled through the consent settlement system, Sinha said. The regulator said it is planning to hold more discussions on the proposed "safety net" for retail investors in IPOs, considering that there are divergent views on the issue.
Sebi said it was yet to receive "all papers" in the Sahara case where the Supreme Court has directed two group companies to refund money to bond holders.