Market watchdog SEBI on Tuesday announced a slew of changes to tighten norms for the utilization of IPO proceeds.
Key Changes:
Introduction of special situation funds to invest only in stressed assets was among the many changes proposed by the SEBI board. They also made amendments to various regulations like on proceedings of settlements and mutual funds.
The SEBI board also gave approval for amending Foreign Portfolio Investor (FPI) regulations and for the introduction of provision for the appointment or re-appointment of any person, which includes Managing Director, Full time Director or a Manager who was earlier rejected by the shareholders at a general meeting. After the amendments, appointments or re-appointments can be done with the prior approval of the shareholders.
As 2021 saw many IPO listings and the same is expected in 2022, SEBI has decided to tighten the norms which also include restricting the quantum of issue proceeds a company can use for inorganic growth. New amendments will cap the number of shares that can be offered by selling shareholders and to increase the lock-in period for shares subscribed by anchor investors. This move is important as many companies are raising funds and mopping up money through initial share sales.
Measures To Safeguard Mutual Fund Investors:
SEBI has taken a decision to mandate trustees of mutual funds to obtain the consent of unit holders when the majority of trustees decide to wind up a scheme.
From now on it will be mandatory for the funds to follow Indian Accounting Standards from the 2023-24 financial year.
