Summary: The SEBI, empowered by the SEBI Act, 1992, regulates market intermediaries, protects investor rights, and ensures market integrity. To govern capital issuance and disclosures, SEBI introduced the Issue of Capital and Disclosure Requirements (ICDR) Regulations, 2018 under Section 30 of the SEBI Act. These regulations apply to unlisted issuers for initial public offerings (IPOs) and listed issuers for preferential issues, further public offerings, bonus issues, qualified institutional placements, and rights issues of ₹50 crore or more. Rights issues below ₹50 crore require a letter of offer filed with SEBI. The ICDR Regulations also apply to small and medium enterprises (SMEs) and Indian Depository Receipts (IDRs) for IPOs and rights issues. Additionally, they govern listings on the Innovators Growth Platform. However, the regulations do not apply when securities are issued for acquisitions through cash, listed shares, convertible debt securities, or a combination thereof. Alongside the ICDR Regulations, key laws such as the Companies Act, 2013, SEBI Act, 1992, Securities Contracts (Regulation) Act, 1956, and Depositories Act, 1996 play a crucial role in regulating the Indian stock market.
The SEBI has derived its power from the SEBI Act, 1992, to functions as a regulatory authority and to oversee every market intermediaries, protect the rights of investors and to ensure the market integrity. It shall be the duty of the Board to protect the interests of investors in securities and to promote the development of, and to regulate the securities market by such measures as it thinks fit.
In this direction
, the SEBI has issued various regulations to regulate and govern the processes involved in the functions of market intermediaries.
Also, SEBI can issue directions to the intermediaries who are associated with the market and has powers to regulate trading and settlement on stock exchanges.
SEBI has the power to carry out routine inspections of market intermediaries to ensure compliance with prescribed standards. It also has investigation powers similar to that of a civil court in terms of summoning persons and obtaining information relevant to its inquiry.
By exercising the power conferred to SEBI under section 30 of SEBI Act, 1992, the SEBI has issued the (Issue of Capital and Disclosure Requirements) Regulations, 2018 /ICDR Regulations, 2018. This articles summarizes the applicability of the SEBI ICDR Regulations:
Applicability of ICDR Regulations:
I. Unlisted Issuer:
- initial public offer
II. Listed Issuer:
- preferential issue
- further public offer
- bonus issue
- qualified institutions placement
- rights issue of aggregate value of the issue size is fifty crore rupees or more
In case of rights issue of size less than fifty crores rupees: Issuer shall prepare the letter of offer in accordance with specified requirements in the regulation and file the same to SEBI for information and dissemination on the website.
III. Small and Medium Enterprise (SMEs)
- initial public offer
IV. Indian Depository Receipts (IDRs)
- initial public offer
- rights issue
V. Listing on the Innovators Growth Platform through an issue or without an issue
Non-Applicability of ICDR Regulations:
The ICDR Regulations does not applies to the issue of securities in cases where the offer price for direct and indirect acquisitions of shares/voting rights/control over the target company may be paid:
- in cash
- by issue, exchange or transfer of listed shares in the equity share capital of the acquirer or of any person acting in concert
- by issue, exchange or transfer of convertible debt securities entitling the holder thereof to acquire listed shares in the equity share capital of the acquirer or of any person acting in concert;
or by combination of all these.
Apart from the SEBI ICDR Regulations, 2018, following are the most important Regulations/Acts to regulate the stock market in India;
- Companies Act, 2013
- SEBI Act, 1992
- The Securities Contracts (Regulation) Act, 1956
- The Depositories Act, 1996
References:
- SEBI Website (sebi.gov.in)
- SEBI (ICDR) Regulations, 2018
- SEBI (SAST) Regulation, 2011
- investor.sebi.gov.in
- clearias.com
- wikipedia.org
Note: Readers are advised to read the original content of the Regulations/References.
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