Mumbai: Market regulator Securities and Exchange Board of India (Sebi) has relaxed investment norms by waiving the six-month lock-in period for insurance companies and mutual funds participating in preferential allotment of shares. 
“It has been decided to exempt insurance companies and mutual funds which are broad-based investment vehicles representing the interests of the public at large from the provisions of Sebi (ICDR) Regulations relating to sale and lock-in of their pre-preferential shareholding in the issuer company,” said a Sebi release on Saturday.
The decision was taken at a board meeting — the second in this month — held at New Delhi today.
This would come as a huge relief, as under the current Sebi Issue of Capital and Disclosure Requirements (ICDR) regulations, an insurance company or a mutual fund cannot participate in preferential allotment transactions before the six-month cooling off period.
Also, allottees are required to lock in their entire holdings for six months under the present norms.
The regulator has, however, maintained the post-allotment requirement of a lock-in of six months. In other words, shares allotted during a preferential allotment can be sold only after six months.
Interestingly, the recent past has seen the regulator relaxing certain norms for making it easier for companies to raise funds at a time when capital raising has turned extremely difficult. Even the government has found it impossible to proceed with its proposed R40,000-crore divestment programme.
Earlier this month, Sebi introduced the concept of Institutional Placement Programme (IPP), by which promoters could dilute their existing holding by way of fresh issue or offer for sale aimed only at the qualified institutional buyers (QIBs).
Meanwhile, Sebi has also decided to increase the minimum investment amount per client from R5 lakh to R25 lakh in a PMS — portfolio management scheme — while ensuring segregation of holdings in individual demat accounts in respect of unlisted securities also.
On the issue of reservation to convertible debt holders in rights/bonus issues, Sebi has decided that reservation will be available only to compulsorily convertible debt holders, since conversion in such cases is not at the option of the holders of these instruments.
Sebi has also amended the investment valuation norms for mutual funds to provide a fair treatment to existing investors and also to those that seek to purchase or redeem units at any point of time.
“In case debt and money market securities are not traded on a particular valuation day, then valuation through amortisation basis shall be restricted to securities having residual maturity of up to 60 days (currently 91 days), provided such valuation shall be reflective of the realisable value/fair value of the securities,”
said Sebi.
“It has been decided to exempt insurance companies and mutual funds which are broad-based investment vehicles representing the interests of the public at large from the provisions of Sebi (ICDR) Regulations relating to sale and lock-in of their pre-preferential shareholding in the issuer company,” said a Sebi release on Saturday. The decision was taken at a board meeting — the second in this month — held at New Delhi today.
This would come as a huge relief, as under the current Sebi Issue of Capital and Disclosure Requirements (ICDR) regulations, an insurance company or a mutual fund cannot participate in preferential allotment transactions before the six-month cooling off period.
Also, allottees are required to lock in their entire holdings for six months under the present norms.
The regulator has, however, maintained the post-allotment requirement of a lock-in of six months. In other words, shares allotted during a preferential allotment can be sold only after six months.
Interestingly, the recent past has seen the regulator relaxing certain norms for making it easier for companies to raise funds at a time when capital raising has turned extremely difficult. Even the government has found it impossible to proceed with its proposed R40,000-crore divestment programme.
Earlier this month, Sebi introduced the concept of Institutional Placement Programme (IPP), by which promoters could dilute their existing holding by way of fresh issue or offer for sale aimed only at the qualified institutional buyers (QIBs).
Meanwhile, Sebi has also decided to increase the minimum investment amount per client from R5 lakh to R25 lakh in a PMS — portfolio management scheme — while ensuring segregation of holdings in individual demat accounts in respect of unlisted securities also.
On the issue of reservation to convertible debt holders in rights/bonus issues, Sebi has decided that reservation will be available only to compulsorily convertible debt holders, since conversion in such cases is not at the option of the holders of these instruments.
Sebi has also amended the investment valuation norms for mutual funds to provide a fair treatment to existing investors and also to those that seek to purchase or redeem units at any point of time.
“In case debt and money market securities are not traded on a particular valuation day, then valuation through amortisation basis shall be restricted to securities having residual maturity of up to 60 days (currently 91 days), provided such valuation shall be reflective of the realisable value/fair value of the securities,”
said Sebi.
