Tarun Sharma Moneycontrol News
The Securities and Exchange Board of India (SEBI) could amend the Issue of Capital and Disclosure Requirements (ICDR) after analysing public opinion during its board meeting scheduled for June 21.
The market regulator is planning to overhaul the ICDR regulations and wants to appoint a monitoring agency for every initial public offer (IPO) that hits the market. At present, IPOs only above Rs 100 crore are monitored.
A source told Moneycontrol, "Given the market scenario, there is need for monitoring all issuers."
Under the current arrangement, the issuer makes necessary preparations for the use of proceeds of the IPO to be monitored by a public financial institution or by one of the scheduled commercial banks named in the offer document as bankers of the issuer.
SEBI constituted the ICDR committee under the chairmanship of Prithvi Haldea in June 2017, to review the regulations and simplify the language and complexities in the existing ICDR regulations, along with incorporating changes/new requirements according to changes in market practices and regulatory environment.
The exercise took over eight months and the committee identified over 150 changes that were deliberated at the Primary Markets Advisory Committee (PMAC).
Further, SEBI is planning to reduce the time period for the announcement of the price band from five working days to two working days prior to the issue opening date. However, the committee feels that volatility in the global markets has a direct impact on market sentiments and market prices of the listed peer group companies.
The announcement of the price band around five working days prior to the issue opening date many times means that issuers have to decide the price band at least 8 calendar days prior to issue opening, which is a long period of market exposure.
The price disclosure five days prior to the issue opening date was decided to give retail investors enough time to evaluate their investment decisions. In practice, it has been seen that retail investors apply mainly on the last day of the issue and primarily take the decision not on the price advertisement, but on the QIB book. Hence, it has proposed to reduce the time period for the announcement of the price band from five working days to two.
The market regulator is planning to make a major change in IPOs of small and medium enterprises (SME). It wants to reduce the minimum anchor investor size from Rs 10 crore to Rs 2 crore along with increasing the eligibility from Rs 10 crore to Rs 50 crore in post issue paid up capital.
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