Markets regulator SEBI has tightened the rules related to Initial Public Offer (IPO) and its accompanying offer-for-sale (OFS). According to a notification issued on Monday, January 17, now only a limited amount can be raised from IPO for Unidentified Future Acquisitions. Along with this, the number of shares to be sold by the major shareholders has also been limited.
SEBI has said in a notification that the lock-in period of anchor investors has been extended to 90 days and now the funds reserved for normal company functioning will also be monitored by credit rating agencies.
Apart from this, SEBI has also changed the manner of allotment of shares to Non-Institutional Investors (NIIs). In order to implement all these changes, SEBI has made changes in various aspects of the ICDR (Issue of Capital and Disclosure Requirement) rules. SEBI has made these changes at a time when all the new age technology companies are rapidly submitting applications to the regulator to raise money through IPO.
If there is a clear mention of the acquisition, then there will be no restriction.
SEBI said that if a company does not identify future acquisitions or investments in its IPO document, then the proposed amount for this will not exceed 35% of the total amount to be raised through IPO. However, SEBI has said that if there is a clear mention of future acquisitions or investments, then this restriction will not apply.
The new rules of SEBI will affect the money raising plans of some unicorn companies. Apart from this, SEBI said that monitoring of funds raised for general corporate purpose will be brought under the purview of rating agencies.