Market regulator Sebi on Friday agreed “in-principle” to a proposal to move away from the concept of promoter to “controlling shareholders”, and decided to reduce the minimum lock-in period for promoters after an IPO.
The watchdog has also decided to streamline the disclosure requirement of group companies, the Securities and Exchange Board of India said in a statement after the board meeting.
The regulator is looking to move away from the concept of the promoter to “controlling shareholders” or person in control as nowadays several businesses, including new-age and tech companies, are non-family owned and do not have a distinctly identifiable promoter group.
About the lock-in period, Sebi said if the object of the issue involves an offer for sale or financing other than for capital expenditure for a project, the minimum promoters’ contribution of 20 per cent should be locked in for 18 months from the date of allotment in the initial public offer and follow on public offer. At present, the lock-in period is three years.
Further, in all these cases, the promoter shareholding above the minimum promoter contribution will be locked in for six months, instead of the existing one year.
The Sebi board also cleared amendments to regulations governing alternative investment funds.
At a time many start-ups are attracting significant investments, including from overseas, Sebi has decided to provide relaxations on the quantum of sweat equity that can be issued to new-age technology companies listed on the Innovators Growth Platform.
In the case of IGP-listed companies, the yearly limit for sweat equity shares will be 15 per cent while the overall limit will be 50 per cent of the paid-up capital at any time.