Will the Minister of Finance be pleased
to state :
Whether the Government have received
representation from Investors Organisation regarding
change in rules for approval of public issues by
SEBI;
If so, the points raised by the
Investor's Organisation;
The Government response thereon;
and
The steps taken by the Government
to make the public issues norms more strict and
strong in the interest of small investors ?
Answer
Minister of State in the
ministry of Finance ( Shri Balasaheb
Vikhe Patil )
The Government has received
suggestions from Investors' Associations on
various issues related to capital markets, which
include, inter alia, stricter entry norms for
companies wishing to raise funds from the capital
market; uniform entry norms for listed and unlisted
companies; higher disclosure standards; monitoring
of funds raised; and education of investors.
The Government and the market
regulator, the Securities and Exchange Board
of India (SEBI) are committed to promoting better
investor awareness of the risk-return trade-offs
in capital market instruments and in improving
protection of investors. In this context Government
constantly reviews relevant Acts, rules and
regulations.
SEBI has strengthened entry norms
to provide that IPOs of issue size upto 5 times
the pre-issue networth shall be allowed only
if the company has track record of profitability
and networth as specified in the SEBI Guidelines;
others can make IPOs only through the book building
route, in which case 60% of the issue size shall
be allocated to `Qualified Institutional Buyers'
(QIBs). IPOs and public issues by listed companies
of more than 5 times the pre-issue networth
shall be allowed only through the book building
route, with 60% of the issue size allocate to
QIBs. The lock in provisions applicable in respect
of initial public offers have also been rationalised.
Further, all companies making
public or rights issue of debt instruments have
to obtain credit rating, The appraising agency
has to bring in the required contribution before
the opening of the issue.
