Mumbai: The SEBI has decided to relax the lock-in requirements for promoter shareholding in terms of initial public offerings (IPO) and further public offerings (FPO).
In its meeting on Friday, the SEBI board decided that the lock-in of promoters shareholding to the extent of minimum promoters contribution (20 per cent of post issue capital) shall be for a period of 18 months from the date of allotment in IPO/FPO instead of existing three years, if the object of the issue involves only offer for sale and if the object of the issue involves only raising of funds for other than for capital expenditure for a project.
Further, the relaxation would be provided also in case of combined offering (fresh issue and offer for sale) if the object of the issue involves financing for other than capital expenditure for a project.
In a statement, the SEBI said that in all the conditions, the promoter shareholding in excess of minimum promoter contribution shall be locked-in for a period of 6 months instead of existing 1 year.
The lock-in of pre-IPO securities held by persons other than promoters shall be locked-in for a period of 6 months from the date of allotment in IPO instead of existing 1 year, it said.
The period of holding of equity shares for Venture Capital Fund or Alternative Investment Fund (AIF) of category I or II or a Foreign Venture Capital Investor shall be reduced to 6 months from the date of their acquisition of such equity shares instead of existing 1 year.
A SEBI consultation paper dated May 11, 2021 had provided detailed rationale for the reduction in lock-in period such as demonstration of skin in the game by promoters, existence of private equity firms and AIFs several years before proposing listing, much less greenfield financing through IPOs, and others.
The board also decided to approve the certain measures to reduce the disclosure requirements at the time of IPO.
The definition of promoter group shall be rationalised, in case where the promoter of the issuer company is a corporate body, to exclude companies having common financial investors.
The disclosure requirements in the offer documents, in respect of group companies of the issuer company, shall be rationalised to, inter-alia, exclude disclosure of financials of top 5 listed/unlisted group companies.
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