SEBI Relaxes Norms to Fast-track Further Public Offers

Source: Regulation Asia Editors, Regulation Asia 2020-06-12

FPOs will still be allowed to proceed if show cause notices or prosecution proceedings are still ongoing, or it securities law violations have been recently settled.

SEBI (Securities and Exchange Board of India) has temporarily relaxed its norms for further public offers (FPOs).

FPOs are used when a company issues fresh securities at any time after its IPO, or when promoters of a listed company offer a sale of securities from their holdings in a listed company at any time after the IPO.

SEBI has lowered the required market cap of public shareholding in the issuer concerned, from INR 10 billion to INR 5 billion, for the issuance of an FPO.

The regulator is also allowing companies to still proceed with FPOs if they have outstanding show cause notices or prosecution proceedings that are still ongoing, provided the necessary disclosures are made.

FPOs will also be allowed to proceed if the issuer, promoters, or directors have committed securities law violations, provided they are in compliance with the terms of any settlement orders. Typically, an FPO may not proceed if any such violation has been settled anytime within the past three years.

Also relaxed is a rule that prevents the issuance of an FPO in cases where an audit qualification, where quantifiable, exceeds five percent of net profit or loss after tax. Companies with audit qualifications will be allowed to proceed with an FPO provided the necessary disclosures are made and the accounts in offer documents are accordingly restated.

The relaxations will apply to FPOs that open on or before 31 March 2021.

The move follows the regulator’s April move to temporarily relax requirements for rights issues and IPOs to make it easier for companies to raise funds during the Covid-19 pandemic.

SEBI Relaxes Norms to Fast-track Further Public Offers

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