Market regulator amends share rules

June 19th, 2009 - 1:54 pm ICT by IANS  

Mumbai, June 19 (IANS) The Indian capital markets watchdog has unveiled a slew of measures to woo investors to the equities markets.
Primary among the reforms announced by the Securities and Exchange Board of India (SEBI) Thursday night was the approval of an “anchor investor”, which allows the investor to subscribe up to 30 percent of the quota for institutional investors in an initial public offering (IPO).

SEBI also barred promoter groups to act as anchor investors.

“No person related to the promoter/promoter group can apply as anchor investor. This would bring more certainty to transactions,” SEBI said.

As per the new guidelines, an anchor investor will have to subscribe to a minimum of Rs.10 crore worth of shares, with 25 percent of the total investment to be paid at the time of the IPO, and the balance 75 percent within two days of issue closure.

The market regulator also relaxed rights issue norms, as many companies are now looking at this mode of raising finances. The changes brought would help companies bring down costs of a rights issue.

“Rights issues are made to existing shareholders, who are in possession of basic information about the company and have been receiving reports regarding major developments in the company,” a SEBI statement said.

“It has been decided to rationalise disclosures in rights issue offer document by doing away with or modifying existing disclosure requirements. The revised set of disclosures would make the process of rights issues faster for companies and also reduce the overall cost of such issuances,” it added.

It also provided relief to retail investors in mutual funds and various market intermediaries by removing the entry load fee charged by the funds, and slashing registration fees for brokers, mutual funds and foreign institutional investors among other steps.

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