Market regulator the Securities and Exchange Board of India (Sebi) is considering a proposal to allow the companies to sell shares through an all-electronic Initial Public Offer (e-IPO), wherein investors would be able to bid for shares electronically and without the need for signing any papers physically.
The proposed move would help in fast-tracking the IPO process and lower the costs, besides allowing the investors to apply for shares and buy them at a click on computers without the need for signature on bulky physical documents.
The Sebi is currently awaiting a formal clearance from the Ministry of Corporate Affairs (MCA) for the e-IPO process, although the ministry has already given a go-ahead informally.
In a status report submitted before its board during its last meeting on November 24, Sebi said: "Implementing e-IPO requires amendments to the Companies Act."
The amendment would be required to dispense with the requirements of an investor to "agree in writing", since no application form submission is envisaged in the e-IPO process, as the allotment will be in demat account.
"MCA has held the view that in the case of subscription of the to be listed shares which is in demat form, it may not be necessary that an investor needs to "agree in writing"," Sebi told its board.
"However, MCA is to give a written clarification to this effect," it added.
In order to make the IPOs further paperless, the regulator also plans to do away with the requirement of attaching certain documents with the public offer filings by the companies.
The Sebi told its board in a memorandum that certain accompanying documents filed along with the offer documents were not very relevant for the purpose of processing the documents at its end.
"...Further, filing such accompanying documents in pursuance of the regulatory requirement only made the file so much more bulky to handle.
"Therefore, a review of the various documentation requirements under the said regulations was undertaken to identify documentation that are considered redundant and could be done away with," the Sebi said.
Among others, the regulator plans to do away with the requirement of attaching a copy of the agreement entered into between the issuer and the lead merchant bankers.
Instead, the banker would be required to certify that they have entered into an agreement with the issuer.
Besides, merchant bankers would also not have to submit a copy of the inter-se allocation of responsibilities between them, in case the issue is managed by more than one banker.
The offer documents would also not be required to be accompanied by the Syndicate Agreement between the syndicate members and the lead managers, as also any Placement Document in the case of a Qualified Institutional Placement (QIP).
