The Securities and Exchange Board of India ( Sebi) on Monday cleared the decks for initial public offerings ( IPOs) by stock exchanges and depository firms by providing clarity on the listing framework.
It said the combined shareholding of trading members, associates and brokers in a listed exchange cannot exceed 49 per cent. Every shareholder will have to declare their “ fit & proper” status at the time of the IPO. The depositories will monitor the investment caps for single entities.
The industry players, however, said they would wait for more clarity.
“We welcome the Sebi move.
We will be able to comment once the detailed regulations are published.
BSE will try to expedite the listing process, based on the regulations. Listing of exchanges is expected to bring additional transparency to their working,” said a BSE spokesperson.
BSE had proposed to list in 2012 but could not because of the lack of enabling provisions.
The NSE, which recently told its shareholders about its listing plans, said it was examining Sebi’s decision, which was revealed after its board meeting on Monday. More clarity is expected once it issues a circular.
“Most of the measures announced by Sebi were already there in the Stock Exchange and Clearing Corporations ( SECC) regulations,” said Sandeep Parekh, the founder of Mumbaibased Finsec Law Advisors.
TheSebiboardalsoapproved mostoftherecommendationsof the K V Kamath- led panel on clearing corporations. It said exchanges need not transfer 25 per cent of their profits to a core settlement guarantee fund of clearing corporations. It has allowed the transfer of five per cent of the profit from a depository to an investor protection fund. The regulator has asked companies to provide an exit option to shareholders if the objects of fund raising are changed — a move that is likely tobenefitminorityshareholders.
For instance, a company raises rS.100 crore through an IPO to build a factory. Later, it decides to scrap the factory and instead acquires a rival company. It will now have to provide the option of a refund to investors.
Business Standard, New Delhi, 1st Dec.2015
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