SEBI will set up a committee to guide it in processing audit reports

The Securities and Exchange Board of India (SEBI), on Tuesday, made electronic voting mandatory for all listed companies — in respect of those businesses to be transacted through postal ballot — which would help shareholders participate in decision-making without being physically present in the meetings.

“It would be implemented in a phased manner,” SEBI said in a release after its board meeting here. To begin with, SEBI said, “it would be mandated for top 500 listed companies on the BSE and NSE based on market capitalisation.”

This is “in line with the budget proposal of the Finance Minister to make it mandatory for top-listed companies to provide for electronic voting facilities,” it added.

SEBI said that it would create Qualified Audit Report Review Committee (QARC) represented by ICAI and stock exchanges to guide SEBI in processing audit reports where auditors have given qualified audit reports. “Deficiencies in the present process would be examined and rectified,” said the market regulator. It would be required for listed companies to file annual audit reports to the stock exchanges and after preliminary scrutiny and based on materiality, exchanges would refer these reports to SEBI/QARC.

The capital market regulator has devised a process wherein if the qualifications are significant and is justified, SEBI may mandate a restatement of the accounts of the entity and require the entity to inform the same to the shareholders by making the announcement to stock exchanges.

The SEBI said that it had also modified the minimum subscription requirements for infrastructure companies coming out with initial public offerings (IPOs). “The minimum subscription would not be less than 90 per cent of the offer, subject to allotment of minimum 25 per cent or 10 per cent, as the case may be, of the securities offered to the public.”

On a review of offer for sale (OFS) through the stock exchange mechanism, the capital market regulator stipulated that between two OFS issuances, by any company, a minimum gap of two weeks would be maintained.

Further, it said that institutional investors could have the option of applying with 100 per cent upfront margin in cash or with an ad-hoc margin of certain lower percentage to be determined by the exchanges. “If they are putting in ad-hoc margin they won’t be allowed to modify the bids,” SEBI said.

To give more transparency in the pricing mechanism, SEBI said that indicative price would be displayed during the last 60 minutes of the close of bidding session, irrespective of the book being built, instead of last 30 minutes. The minimum size of the offer would be Rs.25 crore. However, the size of the offer can be less than Rs.25 crore so as to achieve minimum public shareholding in a single tranche, said SEBI. Market participants expect that these measures would help corporates achieve the stipulated public shareholding norms of the SEBI which has to be completed by June 2013.

“The issuer shall have the option to upsize the offer, subject to appropriate disclosure in the notice, and advance pay-in of shares,” SEBI added.

Further, additional time would be provided to the custodians to confirm the institutional bids during post-close trading hours, subject to the condition that the bids and payments have been received before the closure of the bidding process. This issue has been put forth by the custodians to SEBI in the aftermath of ONGC’s offer for sale, which witnessed system glitches in the last hours of trading.

Keywords: listed firmsSEBIe-voting