SEBI Current Affairs - 2019
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With a view to boost primary markets, stock markets watchdog Securities and Exchange Board of India (SEBI) announced a number of reforms pertaining to IPO and Offer-for-Sale. SEBI proposed that all listed PSUs (Public Sector Undertakings) must have at least 25% public shareholding in 3 years.
At present, there are over 36 PSUs where the government controls around 75%. Some of these companies include Coal India, NHPC and NTPC.
The market regulator opined relaxing the restrictions imposed on sale of bonus shares held by promoters or other investors during IPO.
As per SEBI chief UK Sinha, minimum dilution to public in IPO is to be 25% or Rs 400 crore.
Previously, if a company had more than Rs 4000 crore, it was permitted to issue only 10% which is equivalent to Rs 400 crore worth of shares. On the other hand for others if they had even Re 1 less than that then they could issue 25% which is around Rs 1000 crore.
But now this numerical incongruity has been removed and it will be 25% percent or Rs 400 crore whichever is lower. Earlier there used to be a tendency on the part of the corporates to bring their valuation to Rs 4000 crore whether they were actually worth Rs 4000 crore or not. Now that tendency is likely to moderate and they will be motivated to have real valuation. And those who are coming through with this 10% they will be given 3 years time to come to 25%.
Thus, the uneven requirement of minimum public shareholding of 25% for private promoters and only 10% for government as a promoter will be removed and it will now be made uniform. To bring this reform securities contract regulation rules will be amended in order to provide for minimum public shareholding of 25% to all the public sector companies. A 3-year time has been given to the companies to make adjustments to comply with the new requirements.
President Pranab Mukherjee cleared the re-promulgation of the SEBI Ordinance that provides powers for SEBI Chairman to authorize Investigating Authority or any other officer of the regulator to conduct search and seizure under the SEBI Act and crack down on Ponzi schemes.
SEBI ordinance – Securities Laws (Amendment) Bill 2013
- Purpose: To arm the regulator with more stringent powers comes in wake of thousands of duped investors reportedly taking to the streets in Siliguri (West Bengal) protesting the proliferation of chit fund companies there and the Rs 2,000-crore Sardhaa chit fund scam.
- SEBI can regulate any money pooling scheme worth Rs 100 crore or more and attach assets in cases of non-compliance and its Chairman can order “search and seizure operations”.
- Empowers the market watchdog to seek information, such as telephone call data records, from any persons or entities in respect to any securities transaction being investigated by it.
Note: The SEBI ordinance lapsed on January 15, has been re-promulgated for the third time as the Parliament could not pass the Securities Laws (Amendment) Bill, 2013, in the winter session.