Amendments to the SEBI ICDR Regulations

SEBI on September 23, 2019 has notified amendments to the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 in order to include Part V in Chapter X. This chapter deals with migration of companies listed on the Innovators Growth Platform (‘IGP’) to the general category of the main board. For giving effect to the same, the company is required to fulfil the conditions of the stock exchanges, if any, and fulfil the following conditions as per the new chapter:

i.       Such company should have been listed on the IGP for a minimum period of 1 year and should have at least 200 shareholders at the time of application for the migration.

ii.    The company, its promoters, promoter group and directors should not be debarred by SEBI from accessing the capital markets. The promoters or directors should not be holding the same position in any other company, which at the time of the application is debarred by SEBI from accessing the capital markets in any other company. Further, the company, its promoters and its directors should not be willful defaulters and the promoters and directors of the company should not be fugitive economic offenders.

iii.     The company should have a net worth of at least Rs. 1 crore and net tangible assets of at least Rs. 3 crore, calculated on a consolidated basis, in each of the preceding 3 full years, of which, in case of net tangible assets, not more than 50% should be held in monetary assets.

iv.     The company should have an average operating profit of at least Rs. 15 crore, calculated on a consolidated basis, during the preceding 3 years, with operating profit in each of the preceding 3 years.

v.       In case of name change of the company in the preceding year, at least 50% of the revenue calculated on a consolidated basis, should be generated from the activity indicated by its new name.

vi.      In the event the company does not satisfy the aforementioned conditions (iii) to (v), then the company is required to have 75% of its capital to be held by qualified institutional buyers at the time of applying to trade under the regular category.

vii.    The promoters of the company should hold at least 20% of the total capital, and any shortfall thereto can be met by an alternate investment fund, foreign venture capital investor, scheduled commercial bank, any public financial institution or an insurance company to the extent of 10% without being identified as a promoter.

viii.    The aforementioned holding of 20% will be locked in for a period of 3 years and further any excess of 20% will be locked in for a period of 1 year. Wherever contributions made were locked in for 6 months at the time of listing on the IGP, such period would be deducted from the lock-in applicable to the migration to the main board. Furthermore, the condition of lock-in would not apply to a company which has been listed on the IGP for a minimum period of 3 years or more.

SEBI has also brought about changes corresponding to the new SEBI (Foreign Portfolio Investors) Regulations, 2019.

Published In:Inter Alia - Quarterly Edition - September 2019 [ English
Date: September 30, 2019