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Companies getting IPO proceeds over INR100 crore (INR1 billion) will now need to appoint a monitoring agency checking use of the capital by the companies. The threshold is applicable on funds raised through issue of fresh shares and Offer For Sale (OFS) has been kept out of the purview of the regulation.
The Securities and Exchange Board of India (SEBI) announced the decision which will also be applicable on follow on public offers (FPOs) and rights issues. The monitoring agency could be a bank or a public financial institution. Current regulations require appointment of such monitoring agency in cases where IPO proceeds are more than INR500 crore.
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When you set up a monitoring committee there are certain costs of compliance. It (threshold) has been reduced because it has been observed that it is the smaller issues which have been misused. The threshold is to ensure compliance cost are okay
– SEBI chairman Ajay Tyagi
The capital market regulator has also mandated the monitoring agency to submit its report to the issuer (company in question) every quarter. Under current regulations, the monitoring agency is required to file its report on half yearly basis. The report will need to be published on the company’s website while another copy needs to go to stock exchanges. SEBI has introduced a “maximum timeline of 45 days” for submission of the report on use of IPO proceeds from the end of the quarter in conjunction with the submission of the quarterly results.
Talking to reporters, the new SEBI chief also said the much awaited NSE IPO will need some more time as it has sought some additional information on the issue. The NSE IPO will be one of the biggest public offers in India in recent years.