The Hindu Business Line : SEBI sets market cap level for fast-track issues

Mumbai, Nov. 29 A company eligible for a fast-track issue of shares must have an average market capitalisation of Rs 10,000 crore of public shareholding for a period of one year, said SEBI in its amendments to its disclosure and investment protection norms issued today.

The Fast Track Issue (FTI) provision is on the lines of the Well Known Seasoned Issuers model of the US, where established and compliant listed companies need make only rationalised disclosures, rather than comprehensive ones, for follow-on public offers and rights issues.

The Rs 10,000-crore level must have been maintained up to the end of the quarter preceding the month in which the proposed issue is approved by the company Board, said SEBI.

Audited accounts

Mr Damodaran, speaking on this matter a couple of weeks ago, had said that “around 30 Indian companies can raise fast track money when the norms are in place.”

Another important requirement is that the impact of auditors’ qualifications on the audited accounts of the company disclosed in the offer document must not exceed 5 per cent of the net profit/loss after tax of the company.

IDR offerings

SEBI, which had restricted application in an IPO of Indian Depository Receipts to Qualified Institutional Buyers (QIBs), has now allowed all categories of investors to apply, subject to 50 per cent issue subscription by QIBs.

Companies making public issues can offer a discounted price to retail individual investors provided the discount is not more than 10 per cent.

Retail investor

The definition of retail individual shareholder for listed companies has been changed to mean an investor whose shareholding is of value not exceeding Rs. 1 lakh on the day immediately preceding the record date (Rs. 50,000 earlier). Such an investor will apply for bids for securities of value of not more than Rs. 2 lakh.

Investment in Indian Depository Receipts has not been tested at all, said analysts.

This would depend a lot on which company comes in .

The larger the company, the larger the QIB participation, generally, said one of them. However this is a good window for other people to invest.

On FTI, analysts felt that corporates could take better advantage of the mood and swing of the market as the process would be faster.

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