On Friday, the Securities and Exchange Board of India (SEBI) decreased the time limit for the lock-in period of pre-IPO (Initial Public Offering) securities held by persons other than promoters to six months. Previously, the lock-in period of securities under the same category was a one-year minimum.
The regulatory body also announced that the lock-in period of promoter shareholding will be 18 months from the allotment in IPO or follow-on public offering (FPO), which is lower than the current three year lock-in period.
Furthermore, the changes shall be subject to the following conditions:
(i) if the object of the issue involves only offer for sale (OFS)
(ii) if the object of the issue involves fundraising apart from the capital expenditure of a project
Regarding combined offering, i.e., fresh issue + offer for sale, the object of the issue would involve financing for other than a project’s capital expenditure.
According to the Economic Times (ET), SEBI has approved certain measures intending to reduce disclosure requirements at the time of a company’s IPO. The definition of promoter group would be rationalized if the promoter of the issuer company is a corporate body for the exclusion of companies having common financial investors.
SEBI stated in a press release, “The companies will have flexibility in switching the administration of their schemes from the trust route to the direct route and vice versa with the approval of the shareholders, subject to the condition that the switch is not prejudicial to the interest of the employees.”
