SEBI amends ICDR regulations regarding the non-requirement of minimum promoters' contribution

SEBI amends ICDR regulations regarding the non-requirement of minimum promoters' contribution

The Security and Exchange Board of India (SEBI) has issued a notification wherein it amended the Issue of Capital and Disclosure Requirements Regulations, 2018 (ICDR) regarding the non-requirement of minimum promoters' contribution

The SEBI amended the ICDR by issuing a notification and passed the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) (Amendment) Regulations, 2021. It notified the new Amendment under Regulation 112 which comprises the cases where the promoter's contribution is not required.

According to Regulation 112, the equity shares of the issuer are frequently traded on a stock exchange for a minimum of three years immediately preceding the reference date. That the issuer has redressed approx. 95% of the complaints that are received from the investors till the end of the quarter immediately preceding the month of the reference date. The issuer complied with the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 for at least three years immediately preceding the reference date.

The said regulation further provided that if the issuer failed to comply with the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, regarding the composition of the board of directors, for any quarter during the last three years immediately preceding the date of filing of draft offer document/offer document, but is compliant with such provisions at the time of filing of draft offer document/offer document, and if he/ she has made adequate disclosures regarding the offer document related to such non-compliances during the three years immediately preceding the date of filing the draft offer document/offer document, then, in that case, it shall be considered as compliance of the requisite condition.

In the notification, the SEBI has also laid down certain conditions that where the promoters propose to subscribe to the specified securities offered to the extent greater than higher of the two options available in Regulation 113 sub-regulation (1) clause (a), it notified that the subscription that is more than such percentage shall be determined according to the provisions of Regulation 164 or the issue price, whichever is higher.

A new proviso in Regulation 167 is also inserted by SEBI which mentions, "Provided that the lock-in provision shall not apply to the specified securities to the extent to achieve 10% public shareholding."

The SEBI also stated that clause (c) of Regulation 115, shall be omitted.