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SEBI hikes retail investor limit in IPO to Rs 2 lakh

Retail investors are elated as Securities and Exchange Board of India (SEBI) Chairman CB Bhave on Monday increased the investment limit in initial public offer (IPO) and follow-on offer (FPO) to Rs 2 lakh from current Rs 1 lakh.

However, he was quick to add that there is no change in retail investors quota of public offers.The SEBI discussed issues like preferential allotment to promoters, the takeover regulations, among other issues.


The market was expecting some kind of indication on the takeover committee report  which hasn't come in but SEBI Chairman CB Bhave did clarify that the board did discuss the track report and it has been put up for discussion within the board members.

The board will take up the track report in the next board meeting which is expected in December and that's when the entire new takeover regulation is expected to come into effect. But the bigger news which has come in today is about preferential allotment to promoters especially with respect to equity shares and convertible instruments, SEBI very clearly came out with a guideline today that any promoter who has defaulted or issue convertible instrument which has defaulted the company will not be allowed to issue preferential allotment of equity shares or convertible instruments to the promoter for the next one year period.

It also said that any promoter which has done selling of shares in the market will not also be eligible to be given any preferential allotment of shares or warrants for the next one period there.

Apart from that SEBI also came out with guidelines for insurance companies who are looking to hit the capital market. SEBI and Insurance Regulatory and Development Authority (IRDA) have been working together for the framework to get life insurance companies to raise funds from the market and list in the capital markets and this framework is more or less ready.

SEBI has added some more disclosures to the framework wherein you need to put in the risk factors upfront indeed in the offer document.  Other formats include amendments to the ICDR guidelines which allow monitoring agencies like one we have for banks in India where RBI is monitors banks, IRDA will be allowed to monitor life insurance companies who come into the capital markets there. So these are some of the big things which are coming in from the SEBI board meeting.

The takeover regulation was something which was widely expected in this board meeting, it did not come through but another big important which came out was the doubling of the retail segment where retail investors can invest up to Rs 2 lakh in an initial public issue or a follow on public issue and that's also one of the big thing which was pending SEBI had floated a discussion paper and based on the recommendations and feedback that it received it has gone ahead and increased the size of that investment from Rs 1 lakh to Rs 2 lakh.

 

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