SEBI modifies rules to facilitate businesses’ IPO process

According to the official statement, the Securities and Exchange Board of India (SEBI) has approved substantial revisions to its laws with the purpose of improving the ease of doing business for firms seeking funding or initial public offerings (IPOs).

With the new modifications, firms looking to raise money via initial public offerings (IPOs) would find the procedure more streamlined since the need of a 1% security deposit in public/rights issuance of equity shares has been eliminated.

Furthermore, without being recognized as promoters, promoter group businesses and non-individual shareholders owning more than 5% of the post-offer equity share capital will now be able to contribute to the minimum promoters’ contribution (MPC).

Meeting of the SEBI Board, Friday, March 15: This is a list of likely agenda items.
Equity shares arising from the conversion of compulsorily convertible securities held for a year before to filing the Draft Red Herring Prospectus (DRHP) will now be considered for satisfying the MPC requirement, making the process easier for businesses using convertible securities for fundraising.

Moreover, the modification streamlines the procedure for modifying the dimensions of an offer for sale (OFS). The draft offer document discloses that the issue size in rupees or the number of shares would be the sole parameter used to determine whether the size of OFS requires a new filing.

The criterion for extending the bid/offer closing date has been loosened in situations involving force majeure occurrences. Companies will now be able to extend the closure date by a minimum of one day, rather to the prior requirement of a minimum three-day extension, giving them more flexibility in the event of unexpected circumstances.

The goal of these modifications is to improve the accessibility of capital markets for firms by streamlining the regulatory structure that oversees initial public offerings (IPOs) and fundraising operations.

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