Issuance of securities to more than 49 persons but up to 200 persons in a financial year would constitute a deemed public issue and companies/promoters would have to provide an exit option to investors at a price which is 15 per cent over and above the subscription amount if they wish to avoid penal action, SEBI’s board on Monday decided.
Starting April 1, 2014, any offer or allotment of securities is considered as public issue if the number of offerees/allottees exceeds 200 persons in a financial year under the Companies Act, 2013 as against the cap of 49 persons provided in the Companies Act, 1956.
The refund would consider amounts already paid to the allottees, including interest/dividend.
In case of transfer of securities by the original allottees, option for refund has to be provided to the current holders of the securities, SEBI said.
Biz reporting SEBI also made business responsibility reporting mandatory for the top 500 companies by market capitalisation as of March 31 every year, up from the existing 100.
A business responsibility report will disclose steps taken by listed companies from an environmental, social and governance perspective.
Meanwhile, SEBI has initiated a public consultation process for disclosure requirements for issuance and listing of green bonds (bonds whose proceeds are deployed in eco-friendly projects); introduction of primary market debt offering (debt public issue) through private placement on electronic book; exit opportunity to dissenting shareholders besides public issuance of convertible securities.
SEBI has also approved the proposal for providing general exemption from open offer obligations arising due to passive increase in voting rights as a result of expiry of call notice period and forfeiture of shares.
Delisting made simple Tejesh Chitlangi, Partner, IC Legal, said, “Overall these are some very strong regulatory moves and proposals with a clear attempt to bring Indian market at par with its more advanced global peers. Some of the decisions have been an outcome of their success witnessed in overseas markets and have stood the test of time.” Finally, SEBI decided to relax the requirement for delisting of small companies from ‘not traded during the last one year’ to ‘traded quantity of less than 10 per cent of total shares in the last 12 months’ as eligibility for a simplified procedure of de-listing.
However, to protect the interest of investors, the exit price should not be less than the floor price.