To check the flow of illicit funds in the issuance of shares to investors on preferential basis, market regulator SEBI has notified the new norms that make it mandatory for payments and allotments to be done directly through the beneficiaries’ accounts.
The payment for preferential shares will need to be made only from the own bank accounts of the buyers, while it would be necessary to carry out such allotments through demat accounts.
Besides, the identity of the ultimate beneficial owner of these shares will have to be disclosed, as per the SEBI notification dated August 26.
There have been concerns that promoters might use the preferential allotment route through front entities and thus adversely impact the interest of public shareholders.
“The issuer shall ensure that the consideration of specified securities, if paid in cash, shall be received from respective allottee’s bank account,” SEBI noted.
SEBI said the issuer is required to submit a certificate of the statutory auditor to the stock exchange where the equity shares are listed stating that it is in compliance with necessary regulations and the relevant documents are maintained.
The regulator said that the specified securities allotted on preferential basis would not be transferred till trading approval is granted for such securities by all the recognised stock exchanges where the equity shares of the issuer are listed.
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.