SEBI Board Meeting Decisions

SEBI, at its Board Meeting held on June 26, 2012 has taken certain important decisions. The gist of the same is given herein below:

1. Platform for E-Voting by Shareholders of Listed Entities
Ms. Anjali Aggrawal
Vice President
+919971673336
anjali@indiacp.com
Top 500 listed companies at BSE and NSE based on market capitalization basis, have to now mandatorily provide for e-voting facilities in respect of those businesses to be transacted through postal ballot.

2. Manner of dealing with Audit Reports filed by listed entities
In order to enhance the quality of financial reporting done by listed entities, it has been decided to put in place, a mechanism to process qualified annual audit reports filed by the listed entities It has been, inter-alia, decided that:

  • Deficiencies in the present process would be examined and rectified.
  • SEBI would create Qualified Audit Report review Committee (QARC) represented by ICAI, Stock Exchanges, etc. to guide SEBI in processing audit reports where auditors have given qualified audit reports.
  • Listed entities would be required to file annual audit reports to the stock exchanges along with the applicable Forms (Form A: 'Unqualified' / 'Matter of Emphasis Report'; Form B: 'Qualified' / 'Subject To' / 'Except For Audit Report').
  • After preliminary scrutiny and based on materiality, exchanges would refer these reports to SEBI/QARC.
  • Cases wherein the qualifications are significant and explanation given by Company is unsatisfactory would be referred to the ICAI-FRRB. If ICAI-FRRB opines that the qualification is justified, SEBI may mandate a restatement of the accounts of the entity and require the entity to inform the same to the shareholders by making the announcement to stock exchanges.
3. Amendment to certain provisions in SEBI (ICDR) Regulations relating to Infrastructure Sector
SEBI (ICDR) Regulations to be amended with regard to the minimum public shareholding and minimum subscription requirements in case of Infrastructure Companies coming out with IPOs to state that the minimum subscription shall not be less than 90% of the offer, subject to allotment of minimum 25% or 10%, as the case may be, of the securities offered to the public. This has been done in view of the amended Securities Contracts (Regulation) Rules, 1957.

4. Review of Offer for Sale (OFS) through stock exchange mechanism
With the intent to make the e-OFS mode more user friendly for diluting the Promoters holding and thus enabling companies to be Cl 40 A compliant by the deadline of June 2013, SEBI has decided to bring about following amendments to the earlier Circular issued in January 2012:

4.1 Within the cooling off period of +12 weeks, the promoter(s)/promoter group entities can offer their shares only through e-OFS or Institutional Placement Programme (IPP) while maintaining a gap of 2 weeks between two successive OFS or IPP. This would also be applicable on promoters who have already offloaded their shares through OFS or IPP.

4.2 Modification / cancellation of bids shall not be allowed during the last 60 minutes from the close of bidding session, as against the earlier prescribed time limit of 30 minutes.

4.3 Indicative price shall be displayed during the last 60 minutes of the close of bidding session irrespective of the book being built, earlier bids were allowed without the indicative price being mentioned.

4.4 The dissemination of floor price shall not be a part of the notice. It has been decided that if the seller intends to disclose the floor price, the price shall be disclosed after the close of business hours on (T-1) day (T day being the day of OFS) whereas previously the floor price had to be a part of the notice.

4.5 SEBI has decided to simplify the Offer Size computation by deleting the cap of 1% of the paid up capital of the company and has prescribed the minimum size of the offer to be Rs.25 crore . However, the size of offer can be less than Rs.25 crore so as to achieve minimum public shareholding in a single tranche.

4.6 The issuer has been given the option to upsize the offer subject to appropriate disclosure in the notice and advance pay-in of shares.

4.7 Institutional investors shall have the option of applying with 100% upfront margin in cash or with an adhoc margin of certain lower percentage to be determined by the Exchanges. In the latter case the bids shall not be permitted to be modified.

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