The Securities and Exchange Board of India (Sebi) has proposed key changes to streamline IPO processes, addressing long-standing hurdles around locking in pre-IPO pledged shares and simplifying offer documents. The proposals are outlined in a new consultation paper and would require amendments to the Issue of Capital and Disclosure Requirements (ICDR) Regulations, 2018.
Under current rules, all pre-issue shareholding except that of promoters must be locked in for six months post-IPO. However, depositories are unable to enforce lock-in on shares that are pledged, often leading to last-minute compliance issues for issuers, particularly in companies with numerous or hard-to-trace shareholders.
To address this, Sebi has suggested allowing depositories to mark pledged pre-IPO shares as non-transferable for the lock-in duration, based on instructions from the issuing company. The regulator said this would ease compliance and reduce delays in IPO processing.
Sebi has also proposed doing away with the mandatory abridged prospectus that currently must accompany every IPO application. In its place, the regulator intends to introduce a standardised offer document summary, aimed at providing investors with clearer, more concise information.
The regulator has invited public comments on the proposed changes before moving ahead with amendments to the ICDR framework.
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