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Sebi rejigs buyback norms, cuts IPO price band timeline

Source: PTI
Last updated on: June 21, 2018 23:50 IST
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As per the new rules, the time line for announcing IPO price band has been reduced to two days from five days earlier, Sebi Chairman Ajay Tyagi said in Mumbai.

Sebi plans to amend various norms governing entities undertaking third party assignment under the securities law.

The markets regulator will issue a consultation paper on the subject.

The proposal was cleared by the Sebi board at its meeting in Mumbai on Thursday.


In a release, Sebi said fiduciaries in the securities market have a significant role to play in terms of credible reporting of disclosure, financial information and compliance with regulations.

Fiduciaries such as merchant bankers, credit rating agencies, custodians, debenture trustees and registrar to an issue are registered with Sebi.

However, many others, including chartered accountants, company secretaries, cost accountants and valuers, who take up assignments from issuers or market intermediaries are currently not registered with Sebi.

Against this backdrop, the Sebi board has approved issuance of consultation paper to amend various regulations in respect of entities that undertake third party fiduciary assignment under securities laws.

This would cover assignments taken up for issuers, pooled investment vehicles, intermediaries and market infrastructure entities.

"The absence of credible and reliable reporting of such information has the potential to adversely impact confidence in the securities markets and the financial system," the release said.

Besides, the board has also decided to do away with the category of sub-brokers as market intermediaries.

"No fresh registration shall be granted as sub-brokers.

"Registered sub-brokers shall migrate to authorised persons or trading members... sub-brokers who do not choose to migrate, shall be deemed to have surrendered their registration as sub-broker," the release said.

The regulator would provide a suitable time period to facilitate the transition.

Sebi approves changes to IPO norms

The IPO price band can be announced two working days before commencement of the offer, with markets regulator Sebi on Thursday approving various amendments to the regulations.

At present, the price band has to be announced five working days before the initial share sale opens for subscription.

The proposals to amend the ICDR (Issue of Capital and Disclosure Requirements) regulations were cleared by the Sebi board at its meeting in Mumbai.

"The requirement of announcing price band five working days before opening of the issue would be reduced to two working days before opening of the issue," the Sebi said in a release.

With regard to public and rights issues, the financial disclosures would need to be made for three years as against the present requirement of five years.

According to the release, restated and audited financial disclosures in the offer document would be on consolidated basis only.

Besides, the audited standalone financials of the issuer and material subsidiaries would need to be disclosed on the website of the issuer company.

While approving amendments to the ICDR regulations, the board considered the recommendations of the primary market advisory committee and the public comments received on a consultation paper.

"Threshold for submission of draft letter of offer to Sebi in case of rights issues to be increased to Rs 10 crore as against the earlier prescribed of Rs 50 lakh," the release said.

Sebi will act against pharma cos in case of non-disclosure of material information

The markets regulator also said it would take action against pharma companies if they are found not sharing information on material events like inspections and reports by the US FDA.

"It is necessary to share material information even now. If the US FDA (Food and Drug Administration) has taken any action against them (pharmaceutical companies) and they are not disclosing it, if that comes before us, we will take action,” Sebi chairman Ajay Tyagi said.

He was replying to a specific question pertaining to pharma companies not disclosing actions by drug regulators in foreign markets like the US FDA undertaking inspections of their facilities and passing orders.

There have allegedly been instances of such happenings not being properly disclosed to the investors.

Tyagi said such information that constitutes to be "material information" should be shared with the stock exchanges immediately by the respective companies.

India is one of the world's biggest pharma exporters and many of the domestic players in the sector are listed on the exchanges.

Sebi initiates enforcement actions in NSE co-location case

It also said it has initiated enforcement actions against various entities in the National Stock Exchange co-location case.

The watchdog has been probing the alleged lapses in high-frequency trading offered through the NSE's co-location facility.

"We have received the NSE investigation report in the co-location case... we have completed the examination of the investigation report... have initiated enforcement actions," Sebi chairman Ajay Tyagi said.

According to him, in the coming few days, the enforcement actions which have been initiated are likely to be completed against various entities which are involved.

The regulator was probing allegations that some brokers had unfair access to NSE's high frequency trading systems.

About the CBI registering a case against a Sebi official in the matter, Tyagi said various investigating agencies have their own jurisdiction and domain.

"So I really won't be able to comment on that," he noted.

Tyagi also said that Sebi's investigation has nothing to do with the NSE's proposed initial public offer.

In March, the NSE said Sebi had returned its consent application in the case due to the ongoing investigation.

The exchange's Rs 10,000-crore IPO has been delayed because of the probe and the regulator had earlier issued show-cause notices to several individuals and the exchange while also probing the role of some brokers.

Photograph: Shailesh Andrade/Reuters

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