The Securities and Exchange Board of India (Sebi) on Monday issued notification increasing themaximumapplicationsizeforretail individual investors to Rs 2 lakh across all public issues from the present cap of Rs 1 lakh. This decision taken in the recently concluded board meeting will be applicable for all the forthcoming initial public offers.
Citing the overwhelming response from retail investors to the Coal India and PowerGrid issues, Kedar Deshpande, head of retail broking at Edelweiss, said, “Oversubscription levels will now go up further in good quality issues, as people who have the money will invest to the full extent”.
Additionally , the regulator has also notified changes in the Issuance of Capital Disclosure Requirement (ICDR) Regulations mandating an issuer company to give advertisement in a nationaldailyinformingthepublicabout filing the draft offer document with the regulator and inviting public comments with respect to the disclosures made in the draft document.
“Though the provision of inviting public comments existed for the past 78 years, hardly few investors knew about it,” said Prithvi Haldea, managing director of Prime Database. In order to make these provisions achieve their desired purpose, Haldea said the issuer companies should also be required to issue such advertisements on the websites of the stock exchanges and that of the market regulator prominently .
These (websites) are the places where investors visit frequently searching for various information, he said.
Jagannadham Thunuguntla, head of equity at SMC Capital, said the regulator’s decision will make the process of publicofferingmoreinteractiveand participative in nature.
“Thisisquitegoodintermsof bringing more transparency and protecting minority investors’ interest in a public offer,” he said.
The market regulator’s notification also requires merchant bankers to submit a compliance certificate in respectof newsreportappearinginprint or electronic media for the period between the date of filing the draft offer document with the regulator and the date of the closure of the issue.