SEBI Notifies ‘Fast-Track’ Route For Share Sales

To boost fund raising from markets, the Securities and Exchange Board of India (SEBI), notified new norms, which will provide all listed companies a ‘fast-track’ route for share sales.

As per the new norms, firms in which public shareholders own stocks worth Rs.1,000 crore will now be able to access this route through a follow-on public offer (FPO). Currently, the minimum requirement is Rs.3,000 crore.

The minimum public holding requirement for a rights offer is Rs.250 crore.

The listed companies can tap the ‘fast-track’ route even without complying to this minimum average market value limit, provided they meet other conditions.

Under the ‘fast-track’ route, a listed company would not be required to file any draft offer document for its FPO or rights issue and they can proceed with fund-raising programme without necessarily getting ‘observations’ from SEBI.

This new route would also give a boost to the government’s disinvestment drive.

In the case of rights issues, promoters would not renounce their rights, except to the extent of renunciations within the promoter group, or for the purposes of complying with minimum public shareholding norms.

This new mode would be allowed only for those firms in which the promoter group and directors of the issuer have not settled any alleged violation of securities laws through the consent mechanism with SEBI in the past three years.

It also requires that the equity shares of the issuer have not been suspended from trading as a disciplinary measure during last three years.

There should not be any conflict of interest between the lead merchant banker and the issuer or its group or associate company.

The issuer company would keep funds in a bank having a credit rating of ‘A’ or above by an international credit rating agency.