SEBI also plans to increase the minimum detention period for promoters from one year to five years. It has also proposed gradual release of promoter holdings, with 50% of excess promoter holdings to be released after one year and remaining 50% after two years.
Among other suggestions, SEBI has proposed that the offering portion in small and medium enterprise IPOs should be limited to 20% of the total issue size.
To strengthen oversight of IPOs of small and medium enterprises, SEBI has proposed to make it mandatory for companies raising more than Rs 2,000 crore in fresh capital to appoint a monitoring body.
If a monitoring body is not required, SEBI proposes to submit an auditor’s certificate every six months confirming proper utilization of funds. This certificate must be submitted to the stock exchange along with the issuing company’s financial statements.
Similarly, if a company has raised more than Rs 500 crore for working capital, it will submit a statutory auditor’s certificate every six months to ensure that the funds are being used properly in accordance with the disclosures. There is a need. as stated in the offer document.
Under the new proposal, SME listed companies with paid-up capital of Rs 10 million or more and net assets of Rs 25 million or more will have to submit quarterly disclosures on board composition, committee meetings and governance.
It also requires that shareholding patterns, financial results, and deviations be submitted quarterly rather than every six months to increase transparency and accountability.
Another important proposal is that a company must have been in existence for at least two full fiscal years before filing a draft prospectus for an IPO. Additionally, SEBI has proposed introducing a two-year cooling-off period for companies with more than 50% change in promoters or change in ownership before filing for an IPO.
SEBI is inviting public comments on these proposed changes until December 4, 2024.
