Separate trading platform for SMEs, freedom on issue price
Market regulator SEBI on Monday allowed stock exchanges to have separate trading platforms for small and medium enterprises, relaxed the criteria for their initial open offers and follow on offers by all companies.
Mumbai: Market regulator SEBI on Monday allowed
stock exchanges to have separate trading platforms for small
and medium enterprises, relaxed the criteria for their initial
open offers and follow on offers by all companies.
The market watchdog allowed firms to go for pure auction
for pricing of their issues for institutional investors
instead of the current practice of giving a price band.
The board also put an upper quota limit of Rs one lakh
that each employee of a company can get in a public issue and
asked firms to disclose their balance sheets half-yearly.
"It makes sense to allow the present exchanges to do it
(set up the SME trading platform). This will help the process
to be cost effective to set up the new trading platform for
SMEs... It need not have to be a separate exchange," Sebi
Chairman C B Bhave told reporters here on Monday.
SME firms will also be exempted from the eligibility norms
like track records on profit applicable to other firms to come
out with issues, he said.
Bhave said only those firms with a maximum paid-up
capital of Rs 25 crore would be allowed to trade on the
separate trading platforms.
A minimum Rs 10 crore of capital is required, if these
firms list their shares on main boards of NSE and BSE, he
Giving more choice of pricing shares in a book building
form to companies, Bhave said the new mechanism of giving only
floor price to institutional bidders will be applicable to
follow-on public offer in the initial stages.
This method would not have a price band as is the
practice now for institutional bidders.
However, non-institutional investors like retail, high
networth individuals and employees would have to be allotted
shares at the floor price, if companies choose this method,
"There was a demand from the market that instead of
present practice of declaring floor price and price-band, if
only floor price is given, pure auctions should be allowed to
take place in the public issue. Board decided that the issuer
can pure auction, (but ) this will be limited to Qualified
Institutional Bidders," Bhave said.
He pointed out if the issuer desires to place a cap
either in terms of number of shares or percentage to issued
capital of the company so that a single bidder does not garner
all shares on offer and there is wider distribution, the same
may be permitted, he said.
Sebi also decided to make it mandatory for listed Indian
companies to come out with half-yearly disclosure of balance
sheet, audited or unaudited.
This has been done "taking note that internationally most
jurisdictions require disclosure of balance sheet items on an
interim basis," Bhave said.
On quota for each employee in public issues, Bhave said
it has been decided to put a ceiling of Rs 1 lakh for this
Currently, there is no ceiling for each employee, but
employees as a group could be alloted shares up to 10 percent
of the issue size. SEBI also changed this norm to 5 percent
of the post-issued capital, Bhave said.
Relaxing norms for follow-on offers, the regulator
reduced the average market capitalisation of listed Indian
companies to Rs 5,000 crore from the current Rs 10,000 crore
for these issues.
The market regulator also extended the relaxation on the
disclosure norms given for rights issues to FPOs as well. With
this, companies going for FPOs now require to give only the
audited accounts for last financial year, instead of five
years restated financials required currently.
The watchdog made it mandatory to disclose only limited
review of audited results within 45 days of the end of the
quarter as against 30-days earlier.
Sebi also reduced timeline for disclosure of audited
annual results from 90-days to 60-days for those companies,
which opt to submit annual audited results on a standalone
Post Satyam fraud, Bhave said Sebi completed the peer
review auditing of 47 companies out of total 51 from BSE and
NSE, but did not found any discrepancies in their accounts.
SEBI also decided to accord status of qualified
institutional buyer to insurance funds, set up by armed forces
such as army group insurance fund.
Bhave said listed companies will now have an option to
submit their consolidated financial statements as per global
accounting standard, IFRS.
However, such entities will have to continue to file
their standalone financials as per Indian standards in line
with requirements under the Companies Act.
On the extension of trading hours, Bhave said that
exchanges are free to decide on the trading hours between 9 am
and 5 pm.
"We have asked exchanges to decide. Practically, they
have to decide," he said.