Giving more flexibility to fund raisers in the capital market, the Securities and Exchange Board of India (Sebi) on Monday introduced pure auction as an additional book building mechanism and relaxed certain requirements of fast-track issues. In a bid to boost transparency, it also asked listed companies to disclose balance sheets every six months and tweaked the rules relating to employees quota in share offerings.

Introducing the pure auction system, Sebi said that for follow-on public offers (FPOs), bidders would initially be free to bid at any price above the floor price and allotment would be on price-priority basis and at differential prices. However, in such cases, retail individual investors would be allotted shares at the floor price. “If the issuer desires to place a cap either in terms of number of shares or percentage to issued capital, this may be permitted so that a single bidder does not garner all shares on offer,” Sebi chairman CB Bhave said after a board meeting here on Monday.

In the case of fast-track issues, it reduced the average market capitalisation of public shareholding of the issuer to Rs 5,000 crore from Rs 10,000 crore and pegged the annualised trading turnover to free float for companies whose public shareholding is less than 15 per cent of the issued capital. It also allowed flexibility in case the clause relating to composition of board of directors has not been complied with in one or more quarters.

In another important decision, Bhave said listed companies will disclose their balance sheet every six months. “Taking note that internationally most jurisdictions require disclosure of balance sheet items on an interim basis whereas in India companies disclose only interim financial results, the board decided to mandate half-yearly disclosure of balance sheet items with audited figures or un-audited figures with limited review,” Sebi said.

... contd.