 "Sebi eases minimum promoter contribution norms to boost IPO process")
In a bid to ease compliance towards companies planning public offers (IPOs), the Securities and Exchange Board of India (Sebi) has notified norms that open more avenues to meet the minimum promoters’ contribution (MPC).
The market regulator has permitted promoter group entities and non-individual shareholders to contribute to the mandated promoters’ contribution in the case of a shortfall without being identified as a promoter.
However, these non-individual shareholders must hold more than 5 per cent of the post-offer equity share capital.
Equity shares from the conversion of compulsorily convertible securities held by foreign ventures, alternative investment funds for a year before filing the documents for IPO can also be considered towards the MPC.
For maintaining skin in the game, the regulator mandates a 20 per cent minimum promoter contribution. The relaxation will help new-age companies and startups to have more contributors to this threshold as the founders, who are often the promoters, have diluted their stake in previous rounds of funding.
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These changes were first proposed in January by an expert committee chaired by S K Mohanty, former whole-time member of Sebi.
The market regulator has also allowed companies to extend the IPO period by just one day instead of the compulsory three days till now if there were any unforeseen instances like a banking strike. Sebi has also provided more flexibility to alter the issue size after the submission of an offer document.
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