Sebi Postpones IPO Relaxations Till March 2021

The Securities and Exchange Board of India (Sebi) has announced the extension of the special dispensations offered to companies that are looking forward to filing an IPO.

The regulator has revealed that the validity of Sebi observations for initial public offerings (IPOs) that were about to close between October 1, 2020, and March 31, 2021, would be stretching its closing date till March 31, 2021.

However, Sebi's observation for the IPOs is valid for a period of one year. Thus, an organization that obtains a final Sebi observation. For instance, if a company files IPO in November 2019 then it has to come out with an IPO by November 2020 else the company has to refile its offer document. Thereby, such organizations would now get an extended time frame until March 2021 to launch their IPO.
Alongside this, the Sebi has also permitted organizations to alter their fresh issue size by 50 percent till March 2021 without any need for refiling.

Usually, the company has an option to increase or decrease the fresh issue component by 20 percent. Thus, the regulatory had already announced these relaxations in April to help companies tide over the disruption caused due to COVID-19 pandemic.

According to the new norms, a company that has been listed on the stock exchanges for about 18 months could gather funds through a rights issue, in contrast to the existing norms that allowed the companies that were listed for at least three years to undertake a rights offer.

Moreover, the eligibility criteria of the average market capitalization of public shareholding of the issuer have been eased from Rs.250 crore to Rs.100 crore.