Sebi said that if the issuer company proposed for listing in an SME IPO is closely controlled by the promoter & promoter group and the business is handled by the promoter as well as the promoter group, then the members of the promoter group Any action taken against them could have a significant impact on the issuer, he said. .
The proposal is part of a consultation paper submitted by Sebi on Tuesday, in which the market regulator plans to tighten rules for launching IPOs of small and medium enterprises to protect retail investors.
“An issuer shall not be eligible to make an initial public offering if: (a) the issuer, its promoters, group of promoters, directors, or selling stockholders are denied access to the capital markets by the board of directors; (b) any promoter or director of the issuer is a promoter or director of another company that is prohibited by the board of directors from accessing the capital markets; or (d) if any of the promoters or directors is a fugitive economic offender,” the proposed regulations state.
Current rules do not include promoter groups, only promoters or directors of companies (who are also promoters or directors of other companies), willful defaulters, fraudulent borrowers and fugitive economic offenders are prohibited has been done.
The consultation paper also seeks feedback on a proposal to introduce a two-year cooling-off period before an IPO for small and medium-sized enterprises (SMEs) for companies established after conversion from limited liability partnerships or partnerships. Sebi has also sought views on whether there should be a cooling-off period of two years. The period up to the SME IPO of the company if the promoters change or new promoters take office after acquiring 50% or more of the shares prior to the submission of the draft proposal document. Regulators are also considering the following proposals: Due to the rapid expansion of the market size, and from the perspective of protecting small individual investors, the IPO application size for small and medium-sized enterprises will be raised to a maximum of 400,000 rupees.
Also read: SME IPO: Sebi considers doubling application amount up to Rs 400,000 crore, issues consultation paper
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