Review of SEBI (Issue of Capital & Disclosure Requirements) Regulations, 2009

May 07, 2018 | by Avantis RegTech Legal Research Team

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General Compliance

The Securities and Exchange Board of India (SEBI) has placed a Consultation Paper on “Review of SEBI (Issue of Capital & Disclosure Requirements) Regulations, 2009" on the website for public comments.

SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 (ICDR Regulations) were notified in the year 2009 vide notification dated August 26, 2009. Between 2009 - till date, numerous amendments have been made to the ICDR Regulations. Different types of offerings to raise funds in the primary market have been introduced. SEBI has also issued various informal guidance/ interpretative letters regarding interpretation of various provisions of the ICDR Regulations. Further, there have been changes in market practices and regulatory environment over a period of time.

A need was thus felt to review and realign the ICDR Regulations with these developments and to ensure that they reflect the best practices adopted globally. In view of the same, the Securities and Exchange Board of India (SEBI) constituted the Issue of Capital & Disclosure Requirements Committee (ICDR Committee) under the Chairmanship of Shri Prithvi Haldea in June, 2017, to review the ICDR Regulations with the following objectives:

a)      To simplify the language and complexities in the regulations;

b)      To incorporate changes/ new requirements which have occurred due to change in market practices and regulatory environment;

c)      To make the regulations more readable and easier to understand.

Few of the key recommendations proposed are as follows:

                             i.      To align the definitions of Promoter and Promoter Group with the Companies Act, 2013;

                           ii.      To restrict the disclosures of group companies to information related to related party transactions and do away with the requirements pertaining to financial information, litigations etc.

                         iii.      To increase the threshold for filing of Draft Letter of Offer for rights issue from the current size of Rs. 50 lakh to Rs. 10 crore and above.

                          iv.      To enable Issuers to undertake public issues whose directors were debarred by the Board in the past and such directors have completed the debarment period.

                            v.      In case of IPOs, to do away with the requirement that the aggregate of the proposed issue and all previous issues made in the same financial year not to exceed five times the issuer’s pre-issue networth.

                          vi.      To allow foreign venture capital funds to contribute towards minimum promoter’s contribution, in addition to Alternative Investment Funds.

                        vii.      To decrease the requirement of announcing floor price/ price band from 5 working days to 2 working days for IPOs.

                      viii.      To make applicable the provisions of Monitoring Agency requirements to issuances by banks, public financial institutions and insurance companies.

                          ix.      To allow extension of issue period, in case of IPOs and FPOs, even without modification in price band.

                            x.      To cap the Application size for Non Institutional Investors at total issue size less QIB portion.

                          xi.      To rationalize the requirements and contents of due diligence certificate.

                        xii.      To introduce a new section on “Prospectus Summary” in place of the Subsection “Prominent notes” to risk factors.

                      xiii.      To extend the requirement of disclosing the shareholding of ten largest shareholders to shareholders holding 1% and above.

                      xiv.      To reduce the disclosure of financials to latest 3 years on consolidated basis and to disclose the Standalone financials of the issuer company and the financials of the subsidiaries on the website of the issuer company.

                        xv.      To incorporate the principles governing disclosures of Indian Accounting Standards (IndAS) Financials.

                      xvi.      To rationalize the issue advertisements and also prescribe a format for advertisement on hoardings.

                    xvii.      To reduce the minimum application size for anchor investors from Rs. 10 Crore to 2 Crore for SME issues, in view of the smaller size of SME public issues. (xviii) To enable the provisions for SME FPO and Rights Issue

                  xviii.      To increase the maximum post issue face value capital for a SME public issue from Rs. 25 Crore to Rs. 50 Crore.

                      xix.      To merge the provisions of Institutional Placement Programme with those of Qualified Institutional Placement.

SEBI will examine the proposals of Primary Market Advisory Committee (PMAC) after receiving the public comments on the same. Specific comments/ suggestions as per the format given below would be highly appreciated.

Name of the person/entity/ intermediary/ investor

Name of the Organization

Sr. No.

Pertains to Regulation/ Sub Regulation/ Schedule/ Clause/ Sub‐ Clause (as applicable)

Proposed/ suggested changes







Comments in the above format may please be mailed on or before May 25, 2018 to [email protected].

[PR No.: 12/2018]



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