Mumbai: The Securities and Exchange Board of India (Sebi) on Thursday proposed draft norms for initial public offerings (IPOs) in electronic form and fast track follow-on public offerings (FPOs) and rights issues in an effort to minimize the listing timeline, boost retail participation and make it easier for companies to raise money.

To enable electronic-IPOs, Sebi proposed allowing investors to submit applications to a registered stock broker, depository participant (DP) or registrar and transfer agent (RTA) and self-certified syndicate bank (SCSB).

Depositories can access the stock exchange platform and, in turn, provide the same to their DPs or RTAs, Sebi proposed. Investors, however, will continue to have the option of submitting applications supported by blocked amount (ASBA) to SCSB or stock broker.

To begin with, DPs and RTAs will be allowed to accept only ASBA applications. However, they may be enabled to accept non-ASBA applications in future, Sebi said. Once the e-IPO comes into force, the post issue timelines will be halved from T+12 days (trading day plus 12 days) to T+6 days, Sebi said. When the process gets stabilized, timelines can be further shortened to T+2 or 3 days, it said.

The suggested changes will be applicable for retail and employee reservation categories. The market regulator said the proposal may be used for debt issues as well.

According to the proposal, investors can also fill their application forms online and submit it on the website of trading members, DPs or RTAs or SCSBs (in case of ASBA). If filed online, the investor will not be required to physically sign any paper which, in turn, will help eliminate the cost of printing application forms.

On receipt of the IPO application, the stock broker or DP or RTA or bank will have to submit the application on the bidding platform. Once the bid is entered in the bidding platform by a stock broker, the clearing corporation will block funds from the cash collateral of the stock broker.

In the second discussion paper, Sebi proposed to fast track FPOs and rights issues and make it easier for listed entities to raise money from the public.

The discussion paper proposed to extend the fast-track route to companies that have an average market capitalization of public shareholding between 250 crore and 3,000 crore, subject to fulfilment of certain additional conditions.

A fast track issuance does not require any draft offer document to be filed with Sebi and the issuer can open the issue immediately after filing the red herring prospectus.

Currently, the route is open to firms that have an average market capitalization of public shareholding of at least 3,000 crore and want to do a rights issue or a FPO.

The additional conditions proposed by Sebi require promoters mandatorily subscribing to their rights entitlement and that the shares should not have been suspended (except for corporate actions) from trading in the past three years.

Among other conditions, the annualized delivery-based trading turnover requirement has been proposed at 10% of the total paid-up capital and the issuer promoter group and the directors of the issuer should not have settled any alleged violation of securities laws through the consent mechanism with Sebi in the last three years.​

Comments on the proposal can be submitted till 30 January.

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