Director, Kotak Mahindra Capital
Company, who also played a crucial
role in this process said, “What has
been done is simplification. It makes
it easier for investors. So far, you had
(to submit) three years’ financials.
Now you are only going to give
consolidated (accounts). There is no
clutter. I feel that this is a good time
to simplify things as the Companies
Act, (modified), and Takeover
guidelines were amended.”
SEBI has now also asked for
disclosure of related parties in
accordance with the Accounting
Standard (AS). Though it was there
earlier, the market regulator has
now made it clear what disclosures
are needed as per the AS, which
have always been important from
the investor’s point of view.
“You have to look at it from
different perspectives. First, SEBI
has brought in harmonisation
through the changes in the
Companies Act, Indian GAAP
which were regulatory in nature but did not find a place in
the main regulation. The team got down to reviewing all
these and then incorporated the relevant clauses into the
regulations.
While doing this exercise, the panel realised that there
were many regulatory changes that were required given the
structure of the market, size of the IPOs, etc. These were
parked separately. “We submitted the new regulations to
SEBI in January. For the proposed regulatory changes, SEBI
decided to run these through the PMAC, which was done
in February 2018. After extensive deliberations, it approved
almost all the recommendations, which were then
incorporated into the new ICDR,” Haldea said.
SEBI then put this out for public comments in early May
2018 and then incorporated the valid ones. The final ICDR
was then taken to the SEBI board on June 21, 2018, where it
was approved, and is now awaiting notification.
Accounting, Takeover Guidelines
and others. Second, it has made
three years’ financial disclosures
(from the earlier provision of five
years) mandato ry for public or
rights issues, they have also made
it consolidated (financials) to be
disclosed in the offer document
while standalone financials to be
made available on the website.
These are all very good steps in the
right direction”, Ramesh said.
The requirement of announcing
the price band was also amended
by allowing the issuer to declare it
two - instead of five - working days
before the opening of the issue.
Given the volatile conditions of
market, these steps will help IPOs
achieve better price discovery.
Also, under AS 23, one has to
identify who are the related parties
of promoters, directors, and the
company. The market regulator has
brought in these disclosures and
has also introduced the concept of
material disclosure. Every investor
wants to evaluate the related parties
in a company in which he has made
an investment.
[email protected]
When the proposal of rewriting the regulations was being
discussed, there was a view from some quarters that the
market was comfortable with the extant regulations. The
merchant bankers were not complaining, the lawyers had not
complained, so what was the need to undertake overhauling
of the guidelines. But there was need for regulations that
were up to date, simple to understand and which can be used
not only by market practitioners who face difficulties, but can
also be easily understood by anyone who is interested in the
primary market.
SEBI now needs to simplify its regulations across all
segments of the market. There are at least 35-40 such
regulations. Whether the regulations are on stock brokers,
investment bankers or on stock exchanges or mutual funds,
surely all these regulations require re-writing. This will
complete the overhaul of IPO regulations and make it simple
for all investors.
www.outlookmoney.com July 2018 Outlook Money
61