Markets watchdog Sebi decided to tighten norms for utilisation of IPO proceeds by companies, introduce special situation funds to invest only in stressed assets and amend various regulations, including those on mutual funds and settlement proceedings.
The board of Sebi, which met also gave its nod for amending Foreign Portfolio Investor (FPI) regulations and introducing a provision for appointment or reappointment of any person, including as a Managing Director or a Whole Time Director or a Manager, who was earlier rejected by the shareholders at a general meeting.
Once the amended norms are in place, such appointments or reappointments can only be done with the prior approval of the shareholders. Amid a flurry of Initial Public Offers (IPOS) hitting the market this year and many more expected in 2022, the watchdog has to tighten the norms, including restricting the quantum of issue proceeds a company can use for unidentified inorganic growth.
Amendments will also be made to 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. The latest decisions also assume significance against the backdrop of many new-age companies raising funds or seeking to mop up money through initial share sales. Sebi Chairperson Ajay Tyagi asserted that the regulator has no intention to control the prices of IPOs in any manner.
Price discovery is a function of the market and that is how it works globally as well, he said at a media briefing after the board meeting. In a raft of measures, the regulator approved the introduction of Special Situation Funds (SSFs) that will invest only in stressed assets.