Sebi’s chairman, Damodaran is a self-confessed football fan. In football parlance, Sebi has scored three goals for retail investors with its new set of guidelines pertaining to the primary market. Two of these were excellent field goals of the kind that Maradonna scored when Argentina won the football World Cup around two decades ago. Sebi has also been allowed to add to its tally, albeit through a penalty shot.
Sebi released new guidelines last week opening up investment opportunities in IDR’s to retail investors, who were hitherto not part of the plan. Resultantly, the minimum ticket-size has also been reduced from Rs 2,00,000 to Rs 20,000. This will permit retail investors to get a slice of global companies that choose to seek dual listings in the Indian and overseas stock market.
The market regulator has also allowed listed companies to raise funds through fast track Follow-On Public Offers (FPOs) and rights issues. These issues can be made through follow-on and rights issues. Fast track issues would enable companies raise funds from investors with quick regulatory approvals, slashing the time required to raise funds.
To ensure against fly-by-night operators cashing in on this initiative, Sebi has detailed an eligibility criteria. This includes a certain minimum market-cap, trading turnover on the stock, track record of compliance with listing requirements and investor grievance redressal besides audit qualification impact limits.
Yet again, this opens up a fresh option, especially for large companies that need to raise funds in a short span of time. This simplification of procedures could also go a long way towards reducing the number of companies seeking funds in overseas markets rather than locally.
Retail investors stand to gain here too, as their chances of allotment are always better with larger issues and the pedigree of most of the companies coming through this route can be assumed to be better than those making IPOs and FPO’s through the conventional route.
Finally, the guideline making the PAN card mandatory for all equity investments in the primary market, though welcome, is a no-brainer and should have come long back. After stumbling and stuttering through the IPO scam and offering diagnosis’ deadlier than the disease, Sebi has finally done away with the inexplicable limit of Rs 50,000 for compulsory disclosure of the PAN Card number.
While this may not deter the seemingly well organised IPO scamsters, it certainly will render their efforts more cumbersome and leave a better audit trail that can be pursued, if the government is inclined to.
Overall then, Sebi has done well as the score-line suggests.
The author heads LOTUS KNOWLWEALTH and can be contacted at firstname.lastname@example.org