SEBI GUIDELINES REGARDING NEW ISSUES

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Published on March 23, 2014

Author: SuryadevMaity

Source: slideshare.net

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SEBI GUIDELINES REGARDING NEW ISSUES

SEBI GUIDELINES REGARDING NEW ISSUES By Suryadev Maity Sec - B

• SEBI - The Securities and Exchange Board of India is the regulator for the securities market in India. It was established on 12 April 1992 through the Securities and Exchange Board of India Act, 1992. INTRODUCTION Agency overview Formed 12 April 1992 Jurisdiction Government of India Headquarters Mumbai, Maharashtra Employees 643 (SEP,2011) Agency executive U. K. Sinha, Chairman

MEANING OF NEW ISSUE :- It refers to the set-up which helps the industry to raise the funds by issuing different types of securities. These securities are issued directly to the investors (both individuals as well as institutional) .

• The regulator has introduced the optional pure auction method of book building in share sales. In pure auction format, the company mentions a floor price. Investors are free to bid at any price above the floor price, and shares are allotted on a top-down basis, starting from the highest bidder. • The regulator at its board meeting also took a decision that would help investors avoid waiting for a full year to know the correct financial health of a company as companies would have to disclose their balance sheets on a half-yearly basis. Internationally, most jurisdictions require disclosure of balance sheet items on an interim basis whereas in India companies disclose only interim financial results. N E W I S S U E S :-

• SEBI has proposed to setup a SME (Small and Medium Enterprise) Board dedicated for trading the shares of small and medium scale enterprises (SMEs) who, otherwise, find it difficult to get listed in the main exchanges. The concept originated from the difficulties faced by SMEs in gaining visibility or attracting sufficient trading volumes when listed along with other stocks in the main exchanges. • SEBI has decided that companies listed on the SME exchanges would be exempted from the eligibility norms applicable for IPOs and FPOs prescribed in the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 (ICDR). N E W I S S U E S :-

• SEBI has made few changes to the existing regulations regarding IPO issues to employees. Currently the ICDR regulations permit reservation up to 10% of issue size to employees in public issues. However, there is no ceiling on number of shares that could be allotted. The Board decided to put a ceiling of Rs.1 lakh on the value of allotment that can be made to an employee under employee reservation category and to permit reservation up to 5% of the post issued capital instead of 10% of issue size. • SEBI has made changes to the minimum number of investors in the SME which stipulates that there has to be minimum 50 investors at the time of IPO. Previously there was no restriction regarding the minimum number of investors N E W I S S U E S :-

• SEBI has also made IPO Grading is made compulsory. IPO grading is the grade assigned by a Credit Rating Agency registered with SEBI. All IPOs that come out in India need a mandatory IPO grading • SEBI has changed the norms regarding the merchant bankers/underwriters which stipulate that the merchant bankers to the issue will undertake market making for three years through a stock broker who is registered as market maker with the SME exchange. N E W I S S U E S :-

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