Sep 30, 2021

Amendments to ICDR Regulations

SEBI has amended the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 (‘ICDR Regulations’) on August 13, 2021. A summary of the amendments is set out below:

Particulars Pre-2021 Amendment Regulations Post- 2021 Amendment Regulations
Relaxation in lock-in period of pre-issue holding for IPOs and FPOs – Promoters •    Securities forming part of minimum promoter contribution – To be locked-in for three years from the date of allotment in the public offering or from the date of commencement of commercial production (whichever was later).

•   Securities held over and above the minimum promoter contribution – To be locked in for one year from the date of allotment in the public offering.

•    Securities forming part of the minimum promoter contribution – To be locked-in for 18 months from the date of allotment in the public offering.[1]

•    Securities held over and above the minimum promoter contribution – To be locked in for six months from the date of allotment in the public offering.[2]

Relaxation in lock-in period of pre-issue holding for IPOs and FPOs – Persons other than Promoters •   To be locked-in for one year from the date of allotment in case of IPOs.

•   To be locked-in for three years from the date of allotment in case of FPOs.

•   To be locked-in for six months from the date of allotment in case of IPOs.

•   To be locked-in for 18 months from the date of allotment in case of FPOs.

Identification of promoter group in IPOs and FPOs A body corporate with common financial investors i.e., individuals and/ or companies holding 20% or more of the equity share capital, of the issuer company was required to be categorized as a member of the promoter group in case where a body corporate is identified as a promoter. This requirement has been dropped.
Truncated disclosures for group companies in IPOs and FPOs •   Complete corporate information including financials for the preceding three years was required to be disclosed for the top five group companies (based on market capitalization / turnover for unlisted companies) in the offer documents.

•   Significant adverse factors such as striking off, declaration as defunct, incurring of losses, initiation of winding up, etc. were required to be disclosed in the offer documents.

•   Risk factors with respect to refusal of listing, failure to comply with listing requirements and pendency of investor complaints were required to be disclosed for listed group companies in the offer documents.

•   Name and registered office of all group companies are required to be disclosed in the offer document and the selected financial line items are required to be made available on the respective websites of the top five group companies (based on market capitalization / turnover for unlisted companies).

•   The requirement of disclosing significant adverse factors has been dropped.

•   The requirement of disclosing risk factors for refusal of listing, pending investor complaints and non-compliance of listing requirements by listed group companies has been done away with.

 

[1] The relaxation is not applicable to IPOs or FPOs where a majority of the issue proceeds (excluding the offer for sale portion) are proposed to be utilized for funding of capital expenditure. Capital expenditure has been defined to include civil work, miscellaneous fixed assets, purchase of land, building and plant and machinery, etc.

[2] Same as footnote 2 above.

 

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