To prevent misuse of funds raised from public, Sebi today said companies will have to keep the money in scheduled commercial banks till the amount is utilised for specified purposes.
This would prevent the companies from diverting such funds for other purposes, including for making profits through mutual funds and other market instruments.
While raising funds through public issue the company has to specify the purpose for raising the funds. However, there has been a widespread practice of companies using these funds for other purposes in the interim period.
"In order to prevent misuse of funds during the interim period pending utilisation by the issuer, for funds raised through public/rights issue... The board decided that net issue proceeds pending utilisation shall be deposited only in the scheduled commercial banks," Sebi said in a statement issued after its board meeting.
"In case of public/rights issue of Indian Depository Receipts, the issuer shall keep the funds in a bank having a credit rating of 'A'or above by an international credit rating agency," it added.
Meanwhile, the depositories have been advised to develop a mechanism to maintain complete reconciled record of total issued and listed capital, including both physical and dematerialised shares.
Depositories have been advised to implement risk management policy. It has been suggested to popularise e-KYC among depository participants.
The regulator has asked to "put in place systems to facilitate generation and dispatch of single Consolidated Account Statements for investors having investments in securities and mutual funds, which has been implemented with effect from March 1, 2015."
Earlier, an expert committee was set up by Sebi to review and assess the depository system on the basis of CPSS-IOSCO principles so as to benchmark with global best practices.
