Home / Markets / Ipo /  Sebi reduces minimum lock-in period for promoters post IPO

Markets regulator Sebi on Friday relaxed lock-in period for promoters' investments after stock market listing of firm from 3 years to 18 months under certain conditions.

Sebi board also said that the decision simplifies compliance requirements for alternative investment funds.

Sebi approved relaxation of lock-in requirement for promoters shareholding in IPO/FPO subject to the below conditions:

-If the object of the issue involves only offer for sale, fundraising for other than for capital expenditure for a project.

-In case of combined offering (Fresh Issue + offer for sale), the object of the issue involves financing for other than capital expenditure for a project.

-Lock-in of pre-IPO securities held by persons other than promoters shall be for 6 months as against 1 year earlier.

The lock in of pre IPO securities held by persons other than promoters shall be locked in for a period of 6 months from the date of allotment in

-Holding period for VC Fund/AIF of category I & II or Foreign Venture Capital Investor shall be 6 months as against 1 year earlier.

SEBI also approved certain measures to reduce disclosure requirements at the time of IPO by the company. SEBI said that the definition of promoter group will be rationalized, in case where the promoter of the issuer company is a corporate body, to exclude companies having common financial investors.

Further, the disclosure requirements in the IPO offer documents with respect to group companies of the issuer company shall be rationalized to exclude disclosure of financials of top 5 list listed or unlisted group companies, SEBI said.

Among others, it has been decided to amend takeover regulations by doing away with certain disclosure obligations for acquirers and promoters.

"Certain disclosure obligations for the acquirers/ promoters, etc, pertaining to acquisition or disposal of shares aggregating to 5 per cent and any change of 2 per cent thereafter, annual shareholding disclosures and creation/ invocation/ release of encumbrance registered in depository systems under takeover regulations" would be done away with from April 1, 2022.

Sebi also approved proposal to facilitate ease of doing business in stock exchanges, other MIIs.

These decisions were taken during the meeting of Sebi's board here on Friday.

To bring the change into effect, it has approved the merger of SEBI (Issue of Sweat Equity) Regulations and SEBI (Share Based Employee Benefits) Regulation into a single regulation - SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021.

"The companies will have flexibility in switching the administration of their schemes from the trust route to the direct route and vice versa with the approval of the shareholders, subject to the condition that the switch is not prejudicial to the interest of the employees," Sebi said in a statement.

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