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| PR No.231/2010 |
SEBI Board Meeting
The Board met on
1. Public issues by Insurance
Companies
The Board noted that the SEBI (ICDR) Regulations, 2009,
which are sector neutral would also apply to insurance
companies. The Board also noted and approved the recommendations of SEBI
Committee on Disclosures and Accounting Standards (SCODA) for the following
additional disclosures, having regard to the specific nature of insurance
companies:
- Disclosure of risk factors specific to insurance companies;
- Broad headings under which an overview of the insurance industry shall be disclosed;
- Other disclosures specific to insurance companies;
- Formats for disclosure of financial information as specified by IRDA;
- Glossary of terms used in the insurance sector;
The Board also approved the two amendments to SEBI (ICDR)
Regulations, 2009, viz., exemption from appointment of monitoring agency and
disclosure of disclaimer clause of IRDA in the offer documents of insurance
companies.
2. Preferential issue of equity shares or
convertible securities or warrants to promoters and promoter group
In order to further tighten the preferential allotment framework, the
Board decided that in case of preferential issues, where any promoter or any
promoter group entity has previously
subscribed to the warrants of the company but failed to exercise the warrants,
the promoters and promoter group shall be ineligible for issue of equity shares
or convertible securities or warrants for a period of one year from the date of
expiry of the currency /cancellation of the warrants. The Board further decided
that if any member of the promoters/ promoter group has sold shares in the
previous six months, then the promoters/ promoter group would be ineligible for
allotment on preferential basis.
3. Fixed Pay Date
In order to enable investors to manage their cash/ securities flows
efficiently and to enhance process transparency, the Board decided to mandate
companies to have a pre-announced fixed pay date for payment of dividends and
for credit of bonus shares.
4. Enhancement
of limit for defining retail individual investors
The Board decided that the maximum application size for retail
individual investors may be increased to Rs.2 lakh across all issues.
5. Rights issue framework for IDRs
In order to
facilitate simultaneous rights offering by the foreign issuers (who have listed
their Indian Depository Receipts (IDRs) in Indian Stock Exchanges) in their
home jurisdiction and in
6. Public Announcement by
Companies proposing to access the capital market
In order to draw the
attention of investors about filing of Draft Offer Document (DOD) so as to
elicit timely comments without adversely impacting the issue process, the Board
decided that the issuer company may make a simultaneous public announcement
about filing of DOD.
7. News reports appearing in the media after
filing of Draft Offer Document (DOD) with SEBI
In order to ensure that the information appearing in media is consistent with the disclosures made
in the offer document, the Board decided that the merchant bankers may submit a
compliance certificate as to whether the contents of the news reports that
appear after filing of DOD are supported by disclosures in the offer document
or not. This would apply in respect of news reports appearing in newspapers
stipulated in ICDR for issue advertisements, major business magazines and also
in the print and electronic media controlled by any media group where the media
group has a private treaty/shareholders’ agreement with the issuer
company/promoters of the issuer company.
8. Uniform/single
payment option in rights issues
In order to ensure uniform
treatment for all classes of investors in rights issues, the Board decided that
only one payment option may be given by the issuer to all the investors i.e.
either (i) part payment on application with balance money to be paid in calls
or (ii) full payment on application. The Board also decided that where the
issuer opts for part payment, it shall be incumbent on them to obtain
approvals, if any, as may be necessary for the purpose.
9. Minimum
Promoters’ contribution in Further Public Offers (FPOs)
In order to enable listed issuers to have more flexibility in raising
capital through various instruments, the Board decided that the requirement of
promoters’ contribution shall not be applicable to FPOs where equity shares of
the issuer are not infrequently traded in a recognised stock exchange for three
years and the issuer has a track record of dividend payment for three years.
10. Proforma Financial Statements
in Offer Documents
It has been observed that the company proposing a public
issue, at times, acquires an entity just after the end of the latest disclosed
financial year and as a result of such acquisition / restructuring, certain
companies become direct or indirect subsidiaries of the issuer company. In order
to understand the financial impact of such acquisition / restructuring on the
financial statements of the issuer company, the Board decided to mandate the
inclusion of a proforma financial statement in Offer Documents in cases where
the acquisition is material for the issuer company. Materiality for this
purpose would mean:
a) the total book value of the assets of the
acquired entity amounts to more than 20%
of the pre-acquisition book value of the assets of the issuer company;
OR
b) the total income of the acquired
entity amounts to more than 20% of the total income of the issuer company.
11. QIB
Status to Postal Life Insurance Funds
The Board decided to accord QIB status to insurance funds set up by
Department of Posts such as Postal Life Insurance Fund (PLIF) and Rural Postal
Life Insurance Fund (RPLIF).
12. Amendments to SEBI (FVCI) Regulations
The Board approved amendments to the SEBI (Foreign Venture Capital
Investors) Regulations, 2000 with regard to the registration procedure for Foreign
Venture Capital Investors (FVCIs). The key amendments include furnishing firm
commitment letter from investor for investing at least USD 1 million, (introduced
by SEBI vide Circular No.IMD/DOF-1/FVCI/
Mumbai