Promoter holding: Sebi finetunes stake dilution rules

 Market regulator Sebi on Monday allowed promoter entities to hit the market with successive Institutional Placement Programme (IPP) and Offer for Sale (OFS) schemes -- with a two-week gap -- to facilitate stake dilution by promoters to meet the minimum 25 per cent public holding norms by promoters.

It may be noted that IPPs and OFSs are two recently announced avenues made available to promoters by market regulator Sebi to help them dilute stake and meet the guidelines of 25 per cent minimum public shareholding in private firms and 10 per cent in PSUs.
 
Several amendments have been notified by Sebi pursuant to decisions taken at its last board meeting on August 16, where it was decided that retail investors would be assured a minimum lot of shares and rules would be relaxed for promoters to meet minimum public holding norms.

However, the earlier regulations did not allow the promoter of a company to launch an IPP if any of the promoter group entities had purchased and/or sold shares in a 12-week period prior to the offer. Besides, the promoters were not allowed to purchase and/or sell in the 12-week period following the offer. While retaining this restriction, Sebi has amended the rules to provide some relaxation to the promoters seeking faster dilution of their shareholding through the IPP or OFS routes.

In another amendment to its regulations mandating a minimum of 10% net offer to public in IPOs and FPOs, and of 25% in certain cases, Sebi has done away with the exemptions given to government entities and certain infrastructure sector firms. In a separate amendment to its ICDR (Issue of Capital and Disclosure Requirements) regulations, Sebi has amended rules that require minimum 90 per cent subscription in an issue. Now, this minimum subscription requirement for IPOs would be subject to allotment of a minimum number of securities. This requirement would also apply in case of shares being sold through the OFS scheme.