- News>
- Finance & Markets
Sebi panel recommends lock-in period for preference shares
Mumbai, Sep 02: SEBI`s Primary Market Advisory Committee (PMAC) has recommended that preferential shares should carry lock-in period, to be issued only for cash consideration and not in the form of swap.
Mumbai, Sep 02: SEBI`s Primary Market Advisory Committee (PMAC) has recommended that preferential shares should carry lock-in period, to be issued only for cash consideration and not in the form of swap.
Pointing to apprehensions expressed by the exchanges on the valuations of shares especially on share swap ratios, PMAC today said the shares allotted on preferential basis involving swap of equity shares/ securities convertible into equity shares at a later date, for acquisition, should not be exempted from lock-in requirement.
The market regulator may consider prohibiting issuance of shares through preferential allotment for consideration other than cash, the panel said.
On non-compliance with guidelines for preference shares, the panel said that Sebi should take up matter with Department of Company Affairs (DCA) to stipulate that the preferential allotments by a listed company should be considered void if exchanges do not grant permission to listing shares.
Sebi may also consider appointing merchant bankers to ensure due diligence and avoid non-compliances in the future.
The period for allotment for preference shares should be reduced from one month as against the current practice of three months to deal with concern of fraudulent allottees.
The facility for shelf prospectus should be extended to subordinate debt issues of public sector banks and scheduled banks, it added.
Bureau Report
The market regulator may consider prohibiting issuance of shares through preferential allotment for consideration other than cash, the panel said.
On non-compliance with guidelines for preference shares, the panel said that Sebi should take up matter with Department of Company Affairs (DCA) to stipulate that the preferential allotments by a listed company should be considered void if exchanges do not grant permission to listing shares.
Sebi may also consider appointing merchant bankers to ensure due diligence and avoid non-compliances in the future.
The period for allotment for preference shares should be reduced from one month as against the current practice of three months to deal with concern of fraudulent allottees.
The facility for shelf prospectus should be extended to subordinate debt issues of public sector banks and scheduled banks, it added.
Bureau Report