SEBI notified SEBI (Issue of Capital and Disclosure Requirements) (Third Amendment) Regulations, 2021 to amend the existing SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 vide Notification No. SEBI/LAD-NRO/GN/2021/45, Dtd. 13th August, 2021 which shall come into force as on the date of its publication in the Official Gazette.

Sr. No. Amendment Comments
1 Omission: Regulation 2(1)(pp)(iii)(C) The definition of promoter group is rationalized, in case where the promoter of the issuer company is corporate body, to exclude companies having common financial investors by omitting the following provision:

C) any body corporate in which a group of individuals or companies or combinations thereof acting in concert, which hold twenty per cent. or more of the equity share capital in that body corporate and such group of individuals or companies or combinations thereof also holds twenty percent. or more of the equity share capital of the issuer and are also acting in concert; and

2 Substitution: Regulation 16(1)(a)

the words “three years from the date of commencement of commercial production or date of allotment in the initial public offer, whichever is later”, shall be substituted with the words “eighteen months from the date of allotment in the initial public offer”.

The aim of this amendment is to reduce the lock-in period of specified securities held by the promoters from 3 years from the date of commencement of commercial production or date of allotment in the IPO, whichever is later to 18 months from the date of allotment in the IPO.
3 Insertion: Regulation 16(1)(a) Proviso

Provided that in case the majority of the issue proceeds excluding the portion of offer for sale is proposed to be utilized for capital expenditure, then the lock-in period shall be three years from the date of allotment in the initial public offer.

Self-explanatory.
4 Substitution: Regulation 16(1)(b)

the words “one year” shall be substituted with the words “six months”.

promoters’ holding in excess of minimum promoters’ contribution shall be locked-in for a period of 6 months from the date of allotment in the IPO instead of existing 1 year.
5 Insertion: Regulation 16(1)(b) Proviso

Provided that in case the majority of the issue proceeds excluding the portion of offer for sale is proposed to be utilized for capital expenditure, then the lock-in period shall be one year from the date of allotment in the initial public offer.

Self-explanatory.
6 Substitution: Regulation 16(1) Explanation

Explanation: For the purpose of this sub-regulation, “capital expenditure” shall include civil work, miscellaneous fixed assets, purchase of land, building and plant and machinery, etc.

The concept of date of commencement of commercial production is completely removed from Regulation 16, consequently its meaning is also deleted from the explanation and the meaning of capital expenditure is added.
7 Substitution: Regulation 17

the words “one year” shall be substituted with the words “six months”.

The entire pre-issue capital held by persons other than the promoters shall be locked-in for a period of 6 months from the date of allotment in the IPO instead of existing 1 year.
8 Substitution: Regulation 17(c) proviso

the words “one year” shall be substituted with the words “six months”.

9 Substitution: Regulation 115(a)

the words “three years from the date of commencement of commercial production or from the date of allotment in further public offer, whichever is later;” shall be substituted with the words “eighteen months from the date of allotment of the further public offer:”

The aim of this amendment is to reduce the lock-in period of specified securities held by the promoters from 3 years from the date of commencement of commercial production or date of allotment in the FPO, whichever is later to 18 months from the date of allotment in the FPO.
10 Insertion: Regulation 115(a) Proviso

Provided that in case the majority of the issue proceeds excluding the portion of offer for sale is proposed to be utilized for capital expenditure, then the lock-in period shall be three years from the date of allotment in the initial public offer.

Self-explanatory.
11 Substitution: Regulation 115(b)

the words “one year” shall be substituted with the words “six months”.

promoters’ holding in excess of minimum promoters’ contribution shall be locked-in for a period of 6 months instead of existing 1 year.
12 Insertion: Regulation 115(b) Proviso

Provided that in case the majority of the issue proceeds excluding the portion of offer for sale is proposed to be utilized for capital expenditure, then the lock-in period shall be one year from the date of allotment in the initial public offer.

Self-explanatory.
13 Substitution: Regulation 115 Explanation

Explanation: For the purpose of this sub-regulation, “capital expenditure” shall include civil work, miscellaneous fixed assets, purchase of land, building and plant and machinery, etc.

The concept of date of commencement of commercial production is completely removed from Regulation 115, consequently its meaning is also deleted from the explanation and the meaning of capital expenditure is added.
14 Substitution: Regulation 117

the words “three years” shall be substituted with the words “eighteen months”.

Where the specified securities which are subject to lock-in are partly paid-up and the amount called-up on such specified securities is less than the amount called-up on the specified securities issued to the public, the lock-in shall end only on the expiry of 18 months (instead of 3 years) after such specified securities have become pari passu with the specified securities issued to the public.
15 Omission, Substitution: Schedule VI clause (5)(G)

i. in point (9), the words “or group companies” shall be omitted.

ii. in point (10), the words “or group companies” shall be omitted.

iii. in point (30), the symbol “,” shall be substituted with the word “and” and the words “and top 5 listed group companies by market capitalization” shall be omitted.

16 Substitution: Schedule VI clause (13)(A)

In case of an issuer not being a government company, statutory authority or corporation or any special purpose vehicle set up by any of them, the names and registered office address of all the group companies shall be disclosed in the Offer Document. The following information based on the audited statements in respect of top five group companies (based on market capitalization for listed/ based on turnover in case of unlisted) for the preceding three years shall be hosted on the website of the

respective group company (listed/ unlisted):

(i) reserves (excluding revaluation reserve);

(ii) sales;

(iii) profit after tax;

(iv) earnings per share;

(v) diluted earnings per share; and

(vi) net asset value.

The offer document shall refer the website where the details of the group companies shall be available.

Self-explanatory.
17 Omission: Schedule VI clause (13)

sub-clause (B), (C), (E) and (F) shall be omitted and sub-clause (D) and (G) shall be re-numbered accordingly.

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SECURITIES AND EXCHANGE BOARD OF INDIA

NOTIFICATION

Mumbai, the 13th August, 2021

SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) (THIRD AMENDMENT) REGULATIONS, 2021

No. SEBI/LAD-NRO/GN/2021/45.—In exercise of the powers conferred under section 30 of the Securities and Exchange Board of India Act, 1992 (15 of 1992), the Board hereby makes the following regulations to further amend the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018, namely: –

1. These regulations may be called the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) (Third Amendment) Regulations, 2021.

2. They shall come into force on the date of their publication in the Official Gazette.

3. In the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018, –

I. In regulation 2, in sub-regulation (1), in clause (pp), under sub-clause (iii), the point (C) shall be omitted.

II. In regulation 16, –

i. in sub-regulation (1), in clause (a), the words “three years from the date of commencement of commercial production or date of allotment in the initial public offer, whichever is later”, shall be substituted with the words “eighteen months from the date of allotment in the initial public offer”.

ii. in sub-regulation (1), after clause (a), the following proviso shall be inserted, namely, –

“Provided that in case the majority of the issue proceeds excluding the portion of offer for sale is proposed to be utilized for capital expenditure, then the lock-in period shall be three years from the date of allotment in the initial public offer.”

iii. in sub-regulation (1), in clause (b), the words “one year” shall be substituted with the words “six months”.

iv. in sub-regulation (1), after clause (b), the following proviso shall be inserted, namely, –

“Provided that in case the majority of the issue proceeds excluding the portion of offer for sale is proposed to be utilized for capital expenditure, then the lock-in period shall be one year from the date of allotment in the initial public offer.”

v. in sub-regulation (1), after clause (b), the existing Explanation shall be substituted with the following, namely, –

“Explanation: For the purpose of this sub-regulation, “capital expenditure” shall include civil work, miscellaneous fixed assets, purchase of land, building and plant and machinery, etc.”

III. In regulation 17, –

i. the words “one year” shall be substituted with the words “six months”.

ii. in the proviso under clause (c), the words “one year” shall be substituted with the words “six months”.

IV. In regulation 115, –

i. in clause (a), the words “three years from the date of commencement of commercial production or from the date of allotment in further public offer, whichever is later;” shall be substituted with the words “eighteen months from the date of allotment of the further public offer:”.

ii. after clause (a), the following proviso shall be inserted, namely, –

“Provided that in case the majority of the issue proceeds excluding the portion of offer for sale is proposed to be utilized for capital expenditure, then the lock-in period shall be three years from the date of allotment in the initial public offer.”

iii. in clause (b), the words “one year” shall be substituted with the words “six months”.

iv. after clause (b), the following proviso shall be inserted, namely, –

“Provided that in case the majority of the issue proceeds excluding the portion of offer for sale is proposed to be utilized for capital expenditure, then the lock-in period shall be one year from the date of allotment in the initial public offer.”

v. after clause (c), the existing Explanation shall be substituted with the following, namely, –

“Explanation: For the purpose of this regulation, “capital expenditure” shall include civil work, miscellaneous fixed assets, purchase of land, building and plant and machinery, etc.”

V. In regulation 117, the words “three years” shall be substituted with the words “eighteen months”.

VI. In Schedule VI, in Part A, –

i. in clause (5), sub-clause (G), in point (9), the words “or group companies” shall be omitted.

ii. in clause (5), sub-clause (G), in point (10), the words “or group companies” shall be omitted.

iii. in clause (5), sub-clause (G), in point (30), the symbol “,” shall be substituted with the word “and” and the words “and top 5 listed group companies by market capitalization” shall be omitted.

iv. in clause (13), sub-clause (A) shall be substituted as under:

“(A) In case of an issuer not being a government company, statutory authority or corporation or any special purpose vehicle set up by any of them, the names and registered office address of all the group companies shall be disclosed in the Offer Document.

The following information based on the audited statements in respect of top five group companies (based on market capitalization for listed/ based on turnover in case of unlisted) for the preceding three years shall be hosted on the website of the respective group company (listed/ unlisted):

(i) reserves (excluding revaluation reserve);

(ii) sales;

(iii) profit after tax;

(iv) earnings per share;

(v) diluted earnings per share; and

(vi) net asset value.

The offer document shall refer the website where the details of the group companies shall be available.”

v. in clause (13), sub-clause (B), (C), (E) and (F) shall be omitted and sub-clause (D) and (G) shall be re-numbered accordingly.

AJAY TYAGI, Chairman

[ADVT.-III/4/Exty./202/2021-22]

Footnotes:

1. The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018 was published in the Gazette of India on September 11, 2018, vide notification No. SEBI/LAD-NRO/GN/2018/31.

2. The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018 was subsequently amended on –

(a) December 31, 2018 by the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) (Amendment) Regulations, 2018, vide notification No. SEBI/LADNRO/GN/2018/57.

(b) March 29, 2019 by the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) (Amendment) Regulations, 2019, vide notification No. SEBI/LADNRO/GN/2019/05.

(c) April 5, 2019 by the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) (Second Amendment) Regulations, 2019, vide notification No. SEBI/LADNRO/GN/2019/08.

(d) July 29, 2019 by the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) (Third Amendment) Regulations, 2019, vide notification No. SEBI/LADNRO/GN/2019/29.

(e) September 23, 2019 by the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) (Fourth Amendment) Regulations, 2019, vide notification No. SEBI/LADNRO/GN/2019/35.

(f) December 06, 2019 by the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) (Fifth Amendment) Regulations, 2019, vide notification No. SEBI/LADNRO/GN/2019/42.

(g) December 26, 2019 by the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) (Sixth Amendment) Regulations, 2019, vide notification No. SEBI/LADNRO/GN/2019/47.

(h) January 01, 2020 by the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) (Seventh Amendment) Regulations, 2019, vide notification No. SEBI/LAD-NRO/GN/2020/01.

(i) April 17, 2020 by the Securities and Exchange Board of India (Regulatory Sandbox) (Amendment) Regulations, 2020 vide notification No. SEBI/LAD-NRO/GN/2020/10. 

(j) May 08, 2020 by the Securities and Exchange Board of India (Payment of Fees) (Amendment) Regulations, 2020, vide notification No. SEBI/LAD-NRO/GN/2020/11.

(k) June 16, 2020 by the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) (Amendment) Regulations, 2020, vide notification No. SEBI/LAD-NRO/GN/2020/17.

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Disclaimer: The author is based in Jabalpur and is a Practicing Company Secretary dealing in Corporate, Legal & Taxation services. The information contained in this write up, as provided by the author, is to provide a general guidance to the intended user. The information should not be used as a substitute for specific consultations. Author recommends that professional advice is sought before taking any action on specific issues. The author can also be reached at [email protected]

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