SEBI Changes Anchor Investment Norms, VC/PE Shareholding Disclosures

28 November, 2011

Securities market regulator SEBI has tweaked the anchor investment norms that will affect institutional investment including those from private equity firms in an IPO-bound firm and has also mandated a separate disclosure for venture capital and PE firms as against the promoters. Here are the key changes:

Review of policy on anchor investors: The concept of anchor investors was introduced in June 2009 as a class of committed investors who can be relied upon to anchor an issue of capital in all market conditions, adverse or otherwise. To make the concept more effective, SEBI has decided to prescribe a minimum allotment size of Rs 5 crore and maximum number of such anchor investors, slab-wise.

Disclosures where funds are shown as promoters: Considering the constraints in disclosure by an investee companies regarding funds (such as venture capital funds), which are shown as one of the promoters of such investee companies, it has been decided to specify a separate set of disclosures for them.

Business responsibility reports: In order to assess fulfilment of the environmental, social and governance responsibilities of listed entities, it has been decided to mandate listed entities to submit Business Responsibility Reports as a part of their annual reports, describing measures taken by them along with the key principles enunciated in the National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of Business, framed by the Corporate Affairs Ministry. To start with, the requirement will be applicable to top 100 companies in terms of market capitalisation and would be extended to other companies in a phased manner.

Tenure for conversion of warrants issued along with public/rights issues: Currently, the Regulations are silent on the tenure of warrants offered along with public/rights issues. It has been decided to specify a maximum tenure of 12 months for warrants issued along with public/rights issue of securities to avoid possible misuse. The issuer would also be required to provide disclosures about utilisation of funds so raised, both in the offer document and on a continuous basis.

Review of networth for debenture trustees: SEBI has also approved amendment to Regulation 7A of the SEBI (Debenture Trustee) Regulations, 1993, to increase the networth requirement of debenture trustees from the existing Rs 1 crore (which was fixed in 2003) to Rs 2 crore. It has also given its approval to grant a time period of two years to existing debenture trustees, from the date of notification of Regulations to the new level.

 


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SEBI Changes Anchor Investment Norms, VC/PE Shareholding Disclosures

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