Key highlights of the SEBI (Issue of Capital and Disclosure Requirements) (Fourth Amendment) Regulations, 2019; definitions of promoter, promoter group and QIBs stands revised
The Securities and Exchange Board of India (“SEBI”), in a notification dated September 23, 2019, has issued amendments to the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018.
- The amendment has revised the definitions of promoter, promoter group and qualified institutional buyer to remove references to the Category III foreign portfolio investor. As per the amended position:
- A foreign portfolio investor other than individuals, corporate bodies and family offices will not be deemed to be a promoter merely by virtue of the fact that 20% or more of the equity share capital of the issuer is held by such person unless such person satisfy other requirements prescribed under these regulations
- A foreign portfolio investor other than individuals, corporate bodies and family offices will not be deemed to be promoter group merely by virtue of the fact that 20% or more of the equity share capital of the promoter is held by such person or entity.
- A qualified institutional buyer will include foreign portfolio investor other than individuals, corporate bodies and family offices.
- The eligibility criteria for issuers seeking listing of their specified securities pursuant to an initial public offer or for only trading on a stock exchange of their specified securities without making a public offer has been revised.
Now, the law states that on the date of filing of draft information document or draft offer document with the Board, 25% of the pre-issue capital of the Issuer Company for at least a period of two years, should have been held by Foreign Portfolio Investor and not Category III Foreign Portfolio Investor.
- A detailed provision for Migration to the Board has been introduced by adding a new part to chapter X.
Earlier, an issuer who had listed its specified securities on a recognised stock exchange could at its option migrate to the main board of that recognised stock exchange after expiry of three years from the date of listing and on complying with the eligibility requirements of the exchange. Now, additional eligibility requirements for a company to trade under the regular category of the main board have been provided under the regulations.