The Securities and Exchange Board of India (SEBI) on November 16 published a consultation paper proposing a number of changes to the initial public offering (IPO) framework. The proposed changes include more scrutiny on how startups raising funds through an initial public offering (IPO) use that money including how they use it for future acquisitions or investments. This proposal comes on the heels of many tech startups going public in recent months including Zomato, Nykaa, Policybazaar, and Paytm. Zomato in fact announced last week that it is planning to invest nearly $1 billion in startups in the next couple of years presumably from funds raised through its IPO. Such investment plans have to be revealed before the IPO if the rules proposed below are incorporated into the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018. In addition to proposing additional scrutiny, SEBI also proposes extended lock-in periods for anchor investors and restrictions on how significant shareholders can offload in an IPO. Here are all the proposed changes. Using IPO funds to make future acquisitions or strategic investments Proposed regulation: The company issuing an IPO is required to broadly state how the funds raised from the fresh issue portion of the offering will be used. Many companies state "Funding of Inorganic Growth Initiatives" as one of their objectives, which covers future acquisitions and strategic investments. SEBI proposes that inorganic growth initiatives and general corporate purposes have a combined limit of up to 35 percent of the fresh issue size if the intended acquisition or strategic investment is unidentified…
- The Fine Line: Regulating Real Money Gaming in India #QuickTake February 4, 2023
- Join the Club: Along with Telegram, WhatsApp Also Faces Copyright Infringement Cases at Delhi HC February 4, 2023
- Microsoft Teams Premium to incorporate ChatGPT: 4 key take aways February 3, 2023
- Update: Supreme Court Asks Indian Govt to Produce Records Issued To ‘Block’ BBC Documentary February 3, 2023
- RTI: Nearly 5,000 URLs blocked under Section 69A in the first 10 months of 2022 February 3, 2023
MediaNama’s mission is to help build a digital ecosystem which is open, fair, global and competitive.
India's smartphone operating system BharOS has received much buzz in the media lately, but does it really merit this attention?
After using the Mapples app as his default navigation app for a week, Sarvesh draws a comparison between Google Maps and Mapples
The regulatory ambivalence around an instrument so essential to facilitate data exchange – the CM framework – is disconcerting for several reasons.
The provisions around grievance redressal in the Data Protection Bill "stands to be dangerously sparse and nugatory on various counts."
Please subscribe to MediaNama. Don't share prints and PDFs.
You May Also Like
Google has released a Google Travel Trends Report which states that branded budget hotel search queries grew 179% year over year (YOY) in India, in...
135 job openings in over 60 companies are listed at our free Digital and Mobile Job Board: If you’re looking for a job, or...
Twitter takes down tweets from MP, MLA, editor criticising handling of pandemic upon government request
By Aroon Deep and Aditya Chunduru You’re reading it here first: Twitter has complied with government requests to censor 52 tweets that mostly criticised...