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SEBI announces steps to expedite stake sales by promoters
In a move to fast-track the sale of promoters' equity in listed companies to meet minimum public shareholding norms, SEBI on Tuesday opened a new window for share sales and relaxed buyback rules.
The decision taken by the market regulator ahead of the Cabinet meeting on Wednesday will pave the way for the top 100 companies, including blue-chip PSUs like ONGC, IOC, SAIL, BHEL and NTPC, to offload their equity expeditiously.
The Government is running against time to meet its ambitious disinvestment target of Rs 40,000 crore for the current fiscal. The decisions taken at SEBI's board meeting here will provide an enabling framework for expeditious sale of PSU equities.
These include a new mechanism called an 'Institutional Placement Programme (IPP)' that would allow promoters to sell up to 10 per cent of their capital through an auction.
"The following additional methods, viz. Institutional Placement Programme (IPP) and Offer for Sale of Shares Through the Stock Exchange for the Purpose of Compliance with SCRR Requirements, are being introduced," SEBI said in a statement after the board meeting. As per Government norms, at least 10 per cent of the shareholding in all listed State-owned companies should be with the public, while in the case of private sector companies, the minimum public shareholding should be 25 per cent.
The announcement comes within days of the Government allowing foreign individuals to directly invest in the stock market with a view to boost the market sentiment. SEBI said under the IPP mode, companies would be requiredto simultaneously file a red herring prospectus/prospectus with SEBI, the Registrar of Companies and stock exchanges.
Using this method, it said "public shareholding can be increased by 10 per cent or such lesser percentage as is required to comply with the minimum public shareholding requirement."
Under the new mechanism, the offer would be restricted to Qualified Institutional Buyers (QIBs), it said. A minimum of 25 per cent of the offer would be reserved for mutual funds and insurance companies.
The company or promoter would announce an indicative floor price or price band at least one day prior to the opening of the offer, it said.
Issuers shall endeavour to maximise the number of allottees in order to ensure wider distribution of shares, it said, adding that there shall be at least 10 allottees in every IPP issuance. Furthermore, no single investor shall receive allotment for more than 25 per cent of the offer size.
In a move to fast-track the sale of promoters' equity in listed companies to meet minimum public shareholding norms, SEBI on Tuesday opened a new window for share sales and relaxed buyback rules.
The decision taken by the market regulator ahead of the Cabinet meeting on Wednesday will pave the way for the top 100 companies, including blue-chip PSUs like ONGC, IOC, SAIL, BHEL and NTPC, to offload their equity expeditiously.
The Government is running against time to meet its ambitious disinvestment target of Rs 40,000 crore for the current fiscal. The decisions taken at SEBI's board meeting here will provide an enabling framework for expeditious sale of PSU equities.
These include a new mechanism called an 'Institutional Placement Programme (IPP)' that would allow promoters to sell up to 10 per cent of their capital through an auction.
"The following additional methods, viz. Institutional Placement Programme (IPP) and Offer for Sale of Shares Through the Stock Exchange for the Purpose of Compliance with SCRR Requirements, are being introduced," SEBI said in a statement after the board meeting. As per Government norms, at least 10 per cent of the shareholding in all listed State-owned companies should be with the public, while in the case of private sector companies, the minimum public shareholding should be 25 per cent.
The announcement comes within days of the Government allowing foreign individuals to directly invest in the stock market with a view to boost the market sentiment. SEBI said under the IPP mode, companies would be requiredto simultaneously file a red herring prospectus/prospectus with SEBI, the Registrar of Companies and stock exchanges.
Using this method, it said "public shareholding can be increased by 10 per cent or such lesser percentage as is required to comply with the minimum public shareholding requirement."
Under the new mechanism, the offer would be restricted to Qualified Institutional Buyers (QIBs), it said. A minimum of 25 per cent of the offer would be reserved for mutual funds and insurance companies.
The company or promoter would announce an indicative floor price or price band at least one day prior to the opening of the offer, it said.
Issuers shall endeavour to maximise the number of allottees in order to ensure wider distribution of shares, it said, adding that there shall be at least 10 allottees in every IPP issuance. Furthermore, no single investor shall receive allotment for more than 25 per cent of the offer size.
