With this move, Sebi has slotted all investing public putting in up to Rs 2 lakh to buy shares through a public offer as ‘retail investors’ and at the same time – from investors’ perspective – it will help cut the numerous application investors sometime make in the name of relatives to get more shares.   In retrospect, considering the retail investor limit in 2005 was at Rs 50,000, the latest move had lead to quadrupling of the limit.

Briefing reporters, Chairman C B Bhave clarified even as the board doubled the investment limit in IPO/FPO, “there is no change in retail investors’ quota of public offers.”
Bhave said they (Board) need more to decide on the new takeover code – wherein proposals were made to give retail investors parity with promoters, and also for open offer for 100 per cent stake in acquisitions.  “A decision could not be made and the issue would be taken up again in the next meeting of the board,” he said.

On preferential allotment, with respect to equity shares and convertible instruments, Sebi has come out with guideline specifying that any promoter who has defaulted or issue convertible instrument which has defaulted the company will not be allowed to issue preferential allotment of equity shares or convertible instruments to the promoter for the next one year period.  

Further, Sebi said if any promoter has sold shares in the previous six months, then he would also not be eligible for any preferential allotment of shares or warrants for the next one year period there.

IPO norms for insurers

The market regulator also came out with guidelines for insurance companies who are looking to hit the capital market. Sebi and Insurance Regulatory and Development Authority have been working together for the framework to get life insurance companies to raise funds from the market and list in the capital markets and this framework is more or less ready.

Sebi has added some more disclosures to the framework wherein you need to put in the risk factors upfront indeed in the offer document.  Other formats include amendments to the ICDR guidelines which allow monitoring agencies like one we have for banks in India where RBI is monitors banks.