Sebi abolishes 1% security deposit requirements in public issues

Markets regulator Sebi connected Thursday abolished the request of a mandatory information deposit with the exchanges earlier a nationalist contented successful a bid to facilitate easiness of doing concern for issuer companies.

The determination volition beryllium applicable with contiguous effect, the Securities and Exchange Board of India (Sebi) said successful a circular.

Before this, immoderate institution that is looking to motorboat a nationalist contented of equity shares has to deposit with the banal exchanges an magnitude adjacent to 1 per cent of the contented size. The deposit was returned to the institution aft the nationalist issue.

"In bid to facilitate easiness of doing concern to issuer company, the request to deposit 1 per cent of the contented size disposable for subscription to the nationalist with the designated banal speech by the issuer institution under... Sebi (Issue of Capital and Disclosure Requirements) Regulations, 2018 (ICDR Regulations) has been dispensed with," Sebi said.

In February, the Securities and Exchange Board of India (Sebi) floated a consultation insubstantial proposing that the request of 1 per cent information deposit for nationalist oregon rights issues should beryllium done distant with.

Explaining the rationale down the move, the regulator had stated that the request of 1 per cent information deposit was enactment successful spot for public/rights issues truthful that an issuer resolves capitalist complaints relating to the transaction specified arsenic for refund of exertion money, allotment of securities and dispatch of certificates.

However, considering assorted reforms and contiguous model for nationalist oregon rights issues specified arsenic exertion done ASBA (Application Supported by Blocked Amount) UPI mode of payment, mandatory allotment successful demat, among others, the concerns relating to post-issue capitalist complaints regarding refund of exertion money, non-dispatch of carnal certificates does not arise, it had added.