SEBI amends DIP Guidelines

SEBI vide its Circular SEBI/CFD/DIL/DIP/36/2009/09/07 dated July 9,2009 has amended the SEBI (Disclosure and Investor Protection) Guidelines, 2000. These amendments give effect to important decisions taken by the SEBI Board on June 18, 2009, including the introduction of 'Anchor Investor' in public issue. The key amendments are summarised below: -

1. An unlisted company making an IPO should compulsorily list its securities on at least one stock exchange having nationwide trading terminals (i.e. BSE or NSE)
2. Concept of 'Anchor Investor' is introduced in public issues through book building. Keys points in relation to 'Anchor Investor' concept are as follows: -  

• 30% of QIP reservation may be allocated to Anchor Investors
• The minimum application size - Rs.10 crores. 25 % payable on application – balance within 2 day of closure of issue
• If price determined in IPO is greater than the price paid by AI, AI will be required to pay the difference to the company
• One-third of the Anchor Investor portion shall be reserved for domestic mutual funds
• Bidding for to open one day before the issue opens and shall be completed on the same day.
• Allocation to Anchor Investors - minimum 2 investors for upto Rs.250 crs. and 5 for more than Rs.250 crores
• Shares shall be in a lock-in of 30 days from the date of allotment in the public issue

A copy of the Circular is available here.

A copy of the amended SEBI (Disclosure and Investor Protection) Guidelines, 2000 is available here.

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'Anchor Investor’ allowed in public issues, Simplified disclosure norms for rights issues and Removal of the entry load on investors in MF schemes

SEBI vide its press release PR No.192/2009 dated June 18, 2009 has announced the decisions took by SEBI Board on the same day. Major decisions are as follows:-
1. ‘Anchor Investor’ allowed in public issues
An issuer making a public issue of shares through book building may allocate on a discretionary basis up to 30% of the QIB portion of the issue to anchor investors (AIs), who is a QIB. The minimum size of application by AIs would be Rs. 10 crore. There will be a lock-in of 30 days on the shares allotted to these investors from the date of allotment. No person related to the promoter/promoter group/BRLMs can apply as anchor investor. 
2. Simplified disclosure norms for rights issues
Since rights issues are made to existing shareholders, who are in possession of basic information about the company and have been receiving reports regarding major developments in the company on a continuous basis, it has been decided to rationalize disclosures in rights issue offer document by doing away with or modifying existing disclosure requirements. Disclosures that have been done away with include summary of the industry and business of the issuer company, promise vs. performance with respect to earlier/ previous issues, ‘Management discussion and analysis’. The disclosures relating to financial statements, litigations, risk factors, etc. have been simplified. 
3. Removal of entry load for the schemes, existing or new, of a Mutual Fund 
4. Holding period for equity shares which are received on conversion of fully paid compulsorily convertible securities – Explained 
Current guidelines state that a shareholder can make an offer for sale of the equity shares if he has held them for a period of at least one year. Board decided that in case equity shares which are received on conversion of fully paid compulsorily convertible securities, including depository receipts are being offered for sale, the holding period of such convertible securities as well as that of resultant equity shares together would be taken into account for the purpose of eligibility.
5. IPOs of unlisted companies should be listed on stock exchange with nationwide trading terminals
An unlisted company making an IPO should list the securities on at least one stock exchange having nationwide trading terminals. This aims at providing a liquid trading platform to investors in securities of the company.
6. Listed company cannot issue shares with superior voting rights
This is to avoid the possible misuse by the persons in control to the detriment of public shareholders.
7. Other decisions
• Measures to improve transparency in payment of commission to Mutual Fund distributors
• Rationalization of the fees of various intermediaries

A copy of the press release is available here.