Capital markets regulator SEBI is set to announce a slew of measures, including IPO and Offer for Sale reforms, to give a boost to the primary markets and make it easier for companies to raise funds.
These issues, along with new guidelines for research analysts, common Know Your Client (KYC) procedure for financial sector, changes to ESOP regulations and introduction of minimum penalty provisions, among others, are expected to be discussed at SEBI’s board meeting in New Delhi on Thursday.
The SEBI board will also discuss a proposal to make it mandatory for all listed PSUs to have at least 25 per cent public shareholding - a move that will help the government to raise close to Rs 60,000 crore through sale of excess shares in 38 state-run firms.
This will be SEBI’s first board meeting since a new government led by Prime Minister Narendra Modi assumed office last month.
The board will also be apprised of the elaborate contingency plan put in place by SEBI during recent general elections. A strong vigil mechanism was put in place by SEBI, while RBI was also roped in to implement these measures.
With regard to primary market reforms, the Securities and Exchange Board of India (SEBI) has proposed relaxing the restrictions on sale of bonus shares held by promoters or other investors during an Initial Public Offering (IPO).
Another proposal before the board is expanding the framework of Offer for Sale (OFS) mechanism for selling shares and plans are on the anvil for providing discount for retail investors under this route.
OFS route was introduced in February 2012 as a fast-track mode for sale of shares by promoters. Since then more than 100 companies have sold shares through this mechanism to mop-up close to Rs 50,000 crore.
According to the official, the board is also expected to discuss the proposal for introducing minimum penalties in the monetary policy provisions under the securities law.
After extensive discussions with stakeholders, SEBI has also finalised elaborate norms for ‘research analysts’ to ward off any conflict of interest in their activities. The draft regulations in this regard are expected to be approved by the board during the meeting.
Under the proposed norms, foreign entities acting as research analysts for Indian markets or India-listed companies will need to tie-up with a registered entity in India, while domestic players will also be subjected to strict disclosures and scrutiny.
The board will also discuss the developments in the derivatives market.