Sebi mightmake SME listings easier
SAMIE MODAK
Mumbai, 18 February
The Securities and Exchange Board of India ( Sebi) is willing to make
it easier for small companies to list on the dedicated small and
medium enterprises ( SME) platforms of stock exchanges, by relaxing
certain criteria such as on underwriting and market making.
The regulator wants the platform to be more cost- efficient for
issuers. It also wants to bring down the obligation on investment
bankers ( i- bankers) to attract more participants in this space.
"Sebi is open to review of the SME guidelines, to address the needs of
various stakeholders, including merchant bankers, investors and
issuers.
We are happy to think completely out of the box for bringing in
further measures," said S Raman, executive director, Sebi, today at
the ' Emerge Stakeholders Conclave' organised by the National Stock
Exchange ( NSE).
He said Sebi was open to revisiting requirements like those on market
making or underwriting for i- bankers.
Many i- banks have stayed away from taking SME mandates as Sebi has
prescribed strict obligations on them. Currently, investment bankers
have the responsibility of market making for a minimum period of three
years for SME initial public offerings ( IPOs). Also, the issues have
to be fully underwritten by i- bankers and they have to underwrite 15
per cent of the issue size through their own account.
Raman said the underwriting obligation for SME IPOs could be removed.
However, issues won't be able to go through if they failed to garner
aminimum of 90 per cent subscription.
He said Sebi is also mulling whether the market making requirement
could be brought down from three years to about a year.
"Sebi has had intense discussions with exchanges and bankers in the
last two months. There could be some relaxations made soon," said
Abhay Bongirwar, managing director and chief executive officer, IDBI
Capital.
The regulator could also prescribe a lower dilution requirement for promoters.
Under the current norms, issuers have to dilute a minimum of 25 per
cent equity through SME IPOs. Raman said, "A lot of issuers have
expressed a desire to divest as little as possible, so that once the
company starts growing, the issuer can sell the stake at a higher
level." He said Sebi might consider the pre- issue shareholding of
private equity and venture capital investors as public holding as long
as it isn't " promoter holding in disguise".
The regulator has also got feedback from market players to reduce the
minimum investment size for retail investors. For SME issues, the
minimum size for retail is ₹ 1 lakh, unlike other IPOs where it is ₹
10,000- 15,000. I- bankers said the minimum investment size was
deliberately kept higher for SME IPOs to keep away very small
investors, given the high degree of volatility.
Launched almost a year earlier, the SME platform for smaller companies
— having capital of less than ₹ 25 crore — is yet to take off. Only
two companies have listed on Emerge, the NSE'S dedicated platform for
SMEs, and about a dozen on the Bombay Stock Exchange.
The exchange platform for smaller companies has proved to be
successful in a lot of markets globally. For instance, Canada's TSX
Venture Exchange has trading in nearly 2,500 companies. London's AIM
and South Korea's Kosdaq have a little over 1,000 companies each
listed. Stricter regulatory requirements and heavy expenses for
marketing of issues have kept a number of small companies away from
using the SME platform for listing.
Aims at lower costs for issuers, reducing the obligation on investment
bankers; says willing to think ' out of the box' on more ways
--
CS A RENGARAJAN,, B.Com ,FCS, LLB, PGDBM
Company Secretary, Chennai
CONVENOR, CHENNAI WEST STUDY CIRCLE ICSI-SIRC
email csarengarajan@gmail.com
http://www.csarengarajan.blogspot.com
http://companysecretarytalent.blogspot.com/
http://companysecretarybenevolentfund.blogspot.com/
http://csvacancies.blogspot.com/
mobile 093810 11200
CS Benevolent Fund is a collective effort towards extending the much
needed financial support to the community of Company Secretaries in
times of distress Let us lend support and join for noble cause.
SHARING KNOWLEDGE SKY IS THE LIMIT
This mail and its attachments (if any) are confidential information
intended for persons to whom the email is planned for delivery by the
sender. If you have received this mail in error please notify the
sender of the error by forwarding the email and its attachments (if
any) and then deleting the mail received in error and the relevant
email trail in this connection without making any copies or taking any
prints.
------------------------------------
receive alert on mobile, subscribe to SMS Channel named "aaykarbhavan"
[COST FREE]
SEND "on aaykarbhavan" TO 9870807070 FROM YOUR MOBILE.
To receive the mails from this group send message to aaykarbhavan-subscribe@yahoogroups.comYahoo! Groups Links
<*> To visit your group on the web, go to:
http://groups.yahoo.com/group/aaykarbhavan/
<*> Your email settings:
Individual Email | Traditional
<*> To change settings online go to:
http://groups.yahoo.com/group/aaykarbhavan/join
(Yahoo! ID required)
<*> To change settings via email:
aaykarbhavan-digest@yahoogroups.com
aaykarbhavan-fullfeatured@yahoogroups.com
<*> To unsubscribe from this group, send an email to:
aaykarbhavan-unsubscribe@yahoogroups.com
<*> Your use of Yahoo! Groups is subject to:
http://docs.yahoo.com/info/terms/
No comments:
Post a Comment