The Securities and Exchange Board of India (“SEBI”) vide its notification dated 14 January 2022, has amended the Securities and Exchange Board of India ((Issue of Capital and Disclosure Requirements) Regulations, 2018 (“ICDR Regulations”). Some of the key amendments introduced in the ICDR Regulations has been discussed hereinafter.
The amendments have prescribed certain additional conditions for an offer for sale (“OFS”), where the prospective issuer does not satisfy the net worth criteria, operating profits criteria or other requirements as provided under regulation 6 of the ICDR Regulations. The amendments provide that shareholders holding more than 20% (twenty percent) stake in the preissue shareholding of such issuers shall only be allowed to sell up to 50% (fifty percent) of their shares in the public offer and shareholders with less than 20% (twenty percent) stake shall only be permitted to sell up to 10% (ten percent) of their shares in the public offer.
The amendments also provide that if a prospective issuer company has identified future inorganic growth as one of its objectives in its offer documents, but has not identified any acquisition or investment target, the amounts utilised for such inorganic growth as well as for general corporate purpose (“GCP”) shall not exceed 35% (thirty five percent) of the total
amount being raised through the public issue. The above limit would be inapplicable if the proposed acquisition or strategic investment object has been identified and suitable specific disclosures about such acquisitions or investments have been made in the offer documents.
As per the amendment, a credit rating agency registered with SEBI shall be permitted to act as a monitoring agency for the funds raised by an issuer and such monitoring shall continue till 100% (hundred percent) of the amounts raised have been utilised, including amounts raised for general corporate purposes. Earlier, the amounts raised for general corporate purposes were outside the purview of monitoring by the concerned monitoring agencies.
Further, with respect to the lock-in period of the shareholding for anchor investors, the amendments have provided that 50% (fifty percent) of the shareholding of the anchor investors shall be locked in for a period of 30 (thirty) days, whereas the remaining portion shall be subject to a lock-in of 90 (ninety) days from the date of allotment of all issues that open on or after 01 April 2022.
Please click here to read the amendment notification.
