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As the nature of corporate ownership changes, with private equity players and institutional investors increasingly picking substantial stakes in companies, market regulator SEBI has decided to shift to the idea of controlling shareholders from promoters.
It has also reduced the minimum lock-in of pre-IPO securities held by persons other than promoters to six months from the date of allotment. There is a lock-in period of one year at present. Similarly, the lock-in on promoters holding the mandatory 20 per cent stake post an Initial Public Offer has been reduced to 18 months from three years if the object of the issue involves only offer for sale or fund raising for capital expenditure.
Changing landscape
These decisions were taken at the SEBI board meeting on Friday. Explaining the need to shift to the concept of controlling shareholders, SEBI said: “Investor landscape is now changing, with private equity and institutional investors holding significant shareholding in listed companies. In recent years, a number of businesses and new age companies with diversified shareholding and professional management that are coming into the listed space are non-family owned and/or do not have a distinctly identifiable promoter group. Further, there is increasing focus on better corporate governance with responsibilities and liabilities shifting to the board of directors and management.”
On the move to reduce the lock-in period for promoters, SEBI said that companies going public are well established with mature businesses, have existing institutional investors like private equity firms, and alternate investment funds, and their promoters have demonstrated ‘skin in the game’ for several years before proposing listing.
The SEBI board also agreed to amend the regulations for Alternative Investment Funds to simplify and rationalise their compliance and provide investment flexibility.
Listing obligations
SEBI approved the proposals relating to listing obligations and disclosure regulations to improve transparency, rationalisation and removing redundant provisions to make the corporate bond market more robust.
Facilitating ease of doing business in market infrastructure institutions, SEBI said the ‘fit and proper’ status of persons acquiring less than two per cent in listed stock exchanges and depositories will now be applicable to unlisted stock exchanges and depositories.
The board decided to do away with certain disclosure obligations for acquirers and promoters buying or selling shares up to 5 per cent and any change of 2 per cent thereafter, beginning April 2022.
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