Mumbai: The Securities and Exchange Board of India (SEBI) on Wednesday relaxed the regulations for “Offer for Sale” (OFS) of shares through stock exchange, among other reform measures.
OFS is a financial tool used to issue additional stocks in a listed company held by its promoter.
According to the regulator, the reviewed framework will expand the number of companies which can avail the use of OFS mechanism.
“In order to expand the universe of companies to whom OFS mechanism is available, presently being top 200 companies by market capitalisation, and to bring clarity relating to the conditions laid down for cancellation of OFS…
“OFS mechanism shall be available for shareholders of companies with market capitalisation of Rs 1,000 crore and above, with the threshold of market capitalisation computed as the average daily market capitalisation for six months prior to the month in which the OFS opens,” SEBI said in a statement released after a board meeting.
In another key decision SEBI decided to relax the regulations to list startups on stock exchanges.
Accordingly, the market regulator decided to rename the Institutional Trading Platform as the Innovators Growth Platform (IGP) in its board meet held during the day.
“In order to be eligible for listing on the IGP, the issuer shall be a company which is intensive in the use of technology, information technology, intellectual property, data analytics, bio-technology or nano-technology to provide products, services or business platforms with substantial value,” the statement said.
As per the statement, 25 per cent of the pre-issue capital of the issuer company for at least a period of two years shall be held by qualified institutional buyers, family trust with net-worth of more than Rs 500 crore rupees, Category III Foreign Portfolio Investor, a pooled investment fund with minimum assets under management of $150 million and registered with a financial sector regulator in the jurisdictions where it is resident.
Accredited investors for the purpose of IGP would include any individual with total gross income of Rs 50 lakh annually and who has minimum liquid net worth of Rs 5 crore or any corporate body with net worth of Rs 25 crore, it said.
The board also approved the proposal to allow mutual funds to create “Segregated Portfolios” with respect to debt and money market instruments subject to various safeguards.
“This facility will be available to mutual funds based on credit events. Creating ‘Segregated Portfolio’ may be optional for mutual funds, but approval of trustees is necessary for activating such portfolio,” the statement said.
Creation of Segregated Portfolio is a mechanism to separate distressed, illiquid assets from other more liquid assets in a mutual fund portfolio to deal with a situation arising due to a credit event.
With a Segregated Portfolio, investors who may take the hit when the credit event happens shall get the upside of future recovery, if any, the regulator said.