Sebi tightens norms on IPO proceeds

Rationalises rules for settlement proceedings.

Mumbai: Sebi on Tuesday approved a slew of amendments to various regulations, including tightening rules for the utilisation of IPO proceeds.

Changes have been cleared for regulations governing foreign portfolio investors, Alternative Investment Funds (AIFs), mutual funds, settlement proceedings, among others. The decisions were taken at a meeting of the Sebi board here on Tuesday.

The watchdog has also decided to introduce provisions relating to appointment or re-appointment of persons who fail to get elected as directors, including as Whole Time Directors or Managing Directors or Managers, at the general meeting of a listed entity.

“Appointment or a re-appointment of any person, including as a Managing Director or a Whole Time Director or a Manager, who was earlier rejected by the shareholders at a general meeting, shall be done only with the prior approval of the shareholders,” Sebi said in a release.

The time period for filing settlement applications by entities will be 60 days from the date of receipt of the show-cause notice or a supplementary notice, whichever is earlier, according to Sebi.

The decision is aimed at rationalising norms on settlement proceedings. In this regard, changes will be made to the settlement proceedings regulations, which had come into force from January 1, 2019.

“Time period for filing a settlement application rationalised to 60 days from the date of receipt of the show-cause notice or a supplementary notice, whichever is later,” the regulator said in a release.

Further, the time period for submission of revised settlement terms form, after the Internal Committee (IC), will be rationalised to 15 days. This will be from the date of the IC meeting.

The time period for remittance of the settlement amount and compliance with all the settlement terms will be rationalised. All payments under the settlement regulations will be accepted only through a dedicated payment gateway.

Separate guidelines dealing with the procedure to be adopted for arriving at suitable terms pursuant to the filing of a compounding application will be issued. The amendments would also provide clarifications of certain provisions relating to the condition precedent for settlement, non-monetary terms, provisions relating to irregularity in the procedure, settlement scheme and legal costs, in the settlement process.

“In order to bring uniformity in the settlement regulations, certain substitutions or insertions or omissions or consequential amendments” will also be carried out, the release said. Amendments have also been approved to regulations governing Foreign Portfolio Investors (FPIs).

This will enable Sebi to “generate unique registration numbers of FPIs on receiving the basic details of the applicants,” the release said. According to Sebi, changes will be made to regulations on listing obligations and disclosure requirements for issuance of securities in dematerialised form in case of investor requests for duplicate shares. -(PTI)