Sets minimum investment size of Rs 10 lakh
In a discussion paper issued yesterday, 30 March 2015, Securities and Exchange Board of India (Sebi) said capital raising shall be allowed on the Institutional Trading platform (ITP) with certain modifications in the current regulatory framework that may include relaxation on restriction of fund raising, minimum investment from certain category of investors, etc.
Sebi said that new-age companies having innovative business model and belonging to knowledge-based technology sector, where no person (individually or collectively with persons acting in concert) holds 25% or more of the pre-issue share capital, may be considered as professionally managed companies and access capital through the institutional platform. Such issuers shall be required to file draft offer document with Sebi for observations, as provided in ICDR Regulations. The issuers shall ensure compliance with various applicable provisions in ICDR Regulations (including disclosures on key managerial personnel and business model), subject to the following carve-outs, Sebi said.
The proposed platform will have two categories of investors i.e. Qualified Institutional Buyers (QIB) and Non-institutional investors (NII). It has been suggested that the family trusts may also be allowed to apply under the QIB category, Sebi said.
Sebi said in a press release that allotment to QIBs may be on a discretionary basis whereas to NIIs it shall be on proportionate basis. Allocation between the two categories shall be in the ratio of 75% and 25% respectively. Any under subscription in non-institutional categories shall be available to QIB category. No QIBs shall be allotted more than 5% of the issue size. The minimum application size in case of such issues shall be Rs 10 lakh, Sebi said. The minimum number of allottees in such issues shall be 500. The listing on institutional platform shall be for a period of at least one year. Post one year, the company will have the option to migrate to main board subject to compliance with eligibility requirements of the Stock Exchanges, it said. Sebi also proposed lock in of the entire pre-issue capital should be for a period of six months uniformly for all shareholders.
The market regulator said that the minimum trading lot on the platform shall be of Rs 5 lakh. There is also a suggestion that this threshold limit on trading lot be lowered for sale of shares by the employees who have been granted ESOPs. On account of the risk involved in investing in such companies, it is proposed that retail investors be restricted from investing in such companies, it added.
Sebi proposed that the basis of issue price may include disclosures, other than projections, as deemed fit by the issuers accessing the market on the institutional platform in order to enable investors take informed decisions. Meanwhile, Sebi has invited public comments on the policy framework by 20 April 2015.
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