SEBI tightens norms for SME IPOs, investment bankers

The SEBI board on Wednesday tightened norms for listed small and medium-sized enterprises and merchant bankers, and expanded the definition of unpublished price sensitive information (UPSI) to include more material events.

An SME company can go public only if, at the time of filing the draft prospectus, the issuing company has an operating profit of Rs 1,000 crore in two out of the last three financial years. The selling shareholder’s offer (OFS) in an IPO of a small business cannot exceed 20% of the total issue amount, and the selling shareholder cannot sell more than 50% of its shares.

The lock-in of promoter holdings in excess of the promoter minimum stake will be removed in stages. The lock-in of 50% promoter holding above MPC will be lifted after one year and the rest after two years. The allocation method for non-institutional investors in small business IPOs is consistent with the allocation method used for NII in mainboard IPOs.

Issuance proceeds of small and medium-sized enterprises for the purpose of repaying borrowings from promoters, promoter organizations, and other related parties, whether directly or indirectly, will not be accepted. The related party transaction (RPT) standard applies to main board listed companies and extends to smaller and medium-sized listed companies.

merchant banker

Merchant bankers other than banks, financial institutions and their subsidiaries may only carry out permitted activities as specified by SEBI. Other regulated activities may be carried out as separate business units after obtaining the necessary regulatory consents. Unauthorized activities will be consolidated into a separate legal entity with a separate brand name within two years.

Bankers with a net worth of at least Rs 5,000 crore fall under Category 1 and are allowed to carry out all activities that fall within the purview of SEBI. Companies with a net worth of Rs 1,000 crore fall under category 2 and are not allowed to deal with equity main board issues.

Upshi

The Sebi board has approved an amendment to include several more significant events in the definition of Unpublished Price Sensitive Information (UPSI). A SEBI study on material events disclosed to stock exchanges shows that companies are classifying only those items explicitly mentioned in the PIT rules as UPSI and are not seen to be in compliance with the law in spirit. It is being

The board agreed to a proposal to specify a schedule for putting money raised by mutual funds into new fund offerings in accordance with the scheme’s specified asset allocation.

The Board approved the simultaneous sharing of ESG rating reports with subscribers and rated issuers. and processes for addressing challenges and representations by rated issuers. This is done to facilitate the business of ERP according to the subscriber payments business model. The Board also approved an activity-based regulatory framework for ERP to carry out activities that fall under the jurisdiction of other financial sector regulators and aggregate unregulated activities into separate entities.