To revitalise the primary market, the Securities and Exchange Board of India will soon notify new norms to sell shares through electronic Initial Public Offers (e-IPOs), while manipulators may face stronger action in the new year with tougher norms being finalised for insider trading.
Besides, SEBI is looking into herald into global best standards on corporate governance practices of listed companies. The listing agreement signed by the companies with the stock exchanges would be converted into listing regulations for better enforcement of the listing norms.
New measures are also on the anvil to revive the bond market and SEBI would soon come out with final norms for listing and trading of municipal bonds with an aim to channelise household investments for infrastructure building and also contribute to the Prime Minister Narendra Modi’s Smart Cities programme.
One of the keenly awaited moves from SEBI in the new year would be e-IPO mechanism, through which investment in public offerings can be done online without signing any physical documents.
Application money
Currently, applications for IPOs can be uploaded on a real-time basis only through ASBA (application supported by blocked amount). Only self-certified syndicate banks are authorised to manage and offer ASBA, which allows application money to stay in an investor’s bank account until the shares are allotted.
The SEBI board had already approved the proposal to use secondary market infrastructure for public issuance called e-IPOs and revamp insider trading norms to prevent the menace.
It will soon notify regulations for selling shares through e-IPO, sources said.
This will facilitate more retail investors in IPOs and the issuance process is likely to undergo a sea change, resulting in reduction in timelines, they added.
Post-issue timeline
At present, the time taken for a company to get listed after initial share sale is around 12 days. SEBI may reduce the post issue timeline from T+12 days (12 days from issue closure to listing and trading) to T+6 days.
Once the process gets stabilised, timelines could be further curtailed to T+2/3 days, the sources said.
Despite a stable government coming into power and the resultant buoyant secondary market, fund raising through IPO was just Rs 1,528 crore in 2014.
Besides, only six main-board IPOs came to the market. The entire year saw just one follow-on offer. This was by state-run Engineers India Ltd (EIL), which also happens to be the biggest public offer with an issue size of Rs 495 crore.