SEBI vide Notification SEBI/LAD-NRO/GN/2024/178 on May 17, 2024, amended the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018. The said amendment shall come into force from the date of its publication in the Official Gazette.

The amendments are briefly detailed below:

1. Minimum Promoters Contribution: Regulation 14: The 1st proviso to Sub-regulation (1) is amended and now reads as follows:

   In case the post-issue shareholding of the promoters is less than 20%, alternative investment funds or foreign venture capital investors, scheduled commercial banks, public financial institutions, insurance companies registered with the Insurance Regulatory and Development Authority of India or any non-individual public shareholder holding at 5% of the post-issue capital or any entity (individual or non-individual) forming part of promoter group other than the promoter(s) may contribute to meet the shortfall in minimum contribution as specified for the promoters, subject to a maximum of 10% of the post-issue capital without being identified as promoter(s).

   
   

   Our Comments: The said amendment will now inter-alia permit promoter group entities other than the promoters and any non-individual shareholders holding more than 5% of the post-issue capital to contribute towards minimum promoters' contribution without being identified as a promoter, to meet any shortfall in the minimum promoters' contribution, subject to a maximum of 10% of the post-issue capital.

2. Securities Ineligible for Minimum Promoters Contribution Regulation 15:

   a. The clause (b) of Sub-regulation (1) is amended and now reads as follows:

   Specified securities acquired by the promoters and alternative investment funds or foreign venture capital investors or scheduled commercial banks or public financial institutions or insurance companies registered with Insurance Regulatory and Development Authority of India or any non-individual public shareholder holding at least five per cent. of the post-issue capital or any entity (individual or non-individual) forming part of promoter group other than the promoter(s) during the preceding one year at a price lower than the price at which specified securities are being offered to the public in the initial public offer.

   
   

   Our Comments: The said amendment has now made the specified securities acquired inter-alia by promoter group entities other than the promoters and any non-individual public shareholder holding at least 5% of the post-issue capital acquired during the preceding one year at a price lower than the price at which specified securities are being offered to the public in the initial public offer, ineligible for contribution towards meeting any shortfall in the post-issue shareholding of the promoters.

   b. The clause (i) of first proviso of clause (b) of Sub-regulation (1) is amended and now reads as follows:

   If the promoters and alternative investment funds or foreign venture capital investors or scheduled commercial banks or public financial institutions or insurance companies registered with Insurance Regulatory and Development Authority of India or any non-individual public shareholder holding at least five per cent. of the post-issue capital or any entity (individual or non-individual) forming part of promoter group other than the promoter(s), as applicable, pay to the issuer the difference between the price at which the specified securities are offered in the initial public offer and the price at which the specified securities had been acquired.

   
   

   Our Comments: The said amendment will allow the specified securities acquired inter-alia by promoter group entities other than the promoters and any non-individual public shareholder holding at least 5% of the post-issue capital acquired during the preceding one year at a price lower than the price at which specified securities are being offered to the public in the initial public offer, eligible for contribution towards meeting any shortfall in the post-issue shareholding of the promoters, if they pay to the issuer the difference between the price at which the specified securities are offered in the initial public offer and the price at which the specified securities had been acquired during the preceding one year.

   c. New clause (iv) has been inserted after the clause (iii) of first proviso of clause (b) of Sub-regulation (1) which reads as follows:

   “(iv) to equity shares arising from the conversion or exchange of fully paid-up compulsorily convertible securities, including depository receipts, that have been held by the promoters and alternative investment funds or foreign venture capital investors or scheduled commercial banks or public financial institutions or insurance companies registered with Insurance Regulatory and Development Authority of India or any non-individual public shareholder holding at least five per cent. of the post issue capital or any entity (individual or non-individual) forming part of promoter group other than the promoter(s), as applicable, for a period of at least one year prior to the filing of the draft offer document and such fully paid-up compulsorily convertible securities are converted or exchanged into equity shares prior to the filing of the offer document (i.e., red herring prospectus in case of a book built issue and prospectus in case of a fixed price issue), provided that full disclosures of the terms of conversion or exchange are made in such draft offer document;”

   
   

   Our Comments: The said amendment will allow equity shares arising from the conversion or exchange of fully paid-up compulsorily convertible securities, including depository receipts, that have been held by the entities in the newly inserted clause (iv) above and have been held for a period of at least one year prior to the filing of the draft offer document and are converted or exchanged into equity shares prior to the filing of the offer document (i.e., red herring prospectus in case of a book built issue and prospectus in case of a fixed price issue), if full disclosures of the terms of conversion or exchange are made in such draft offer document.

   d. The clause (c) of Sub-regulation (1) is amended and now reads as follows:

   Specified securities allotted to the promoters and alternative investment funds or foreign venture capital investors or scheduled commercial banks or public financial institutions or insurance companies registered with Insurance Regulatory and Development Authority of India or any non-individual public shareholder holding at least five per cent. of the post-issue capital or any entity (individual or non-individual) forming part of promoter group other than the promoter(s) during the preceding one year at a price less than the issue price, against funds brought in by them during that period, in case of an issuer formed by conversion of one or more partnership firms or limited liability partnerships, where the partners of the erstwhile partnership firms or limited liability partnerships are the promoters of the issuer and there is no change in the management:

   
   

   Our Comments: The said amendment has now made the specified securities allotted by issuer formed by conversion of one or more partnership firms or limited liability partnerships, inter-alia to promoter group entities other than the promoters and any non-individual public shareholder holding at least 5% of the post-issue capital during the preceding one year at a price less than the issue price, ineligible for contribution towards meeting any shortfall in the post-issue shareholding of the promoters.

3. Lock-in of specified securities held by the promoters Regulation 16:>

   The clause (a) of Sub-regulation (1) is amended and now reads as follows:

   Minimum promoters’ contribution including contribution made by alternative investment funds or foreign venture capital investors or scheduled commercial banks or public financial institutions or insurance companies registered with Insurance Regulatory and Development Authority of India or any non-individual public shareholder holding at least five per cent. of the post-issue capital or any entity (individual or non-individual) forming part of promoter group other than the promoter(s) referred to in proviso to sub-regulation (1) of regulation 14, shall be locked-in for a period of eighteen months from the date of allotment in the initial public offer:

   
   

   Our Comments: The said amendment requires the contribution made to minimum promoters’ contribution under Regulation 14(1), inter-alia by promoter group entities other than the promoters and any non-individual public shareholder holding at least 5% of the post-issue capital to be locked in for a period of 18 months from the date of allotment in the initial public offer.

4. Security Deposit Regulation 38:

   Regulation 38 regarding Security Deposit in case of Initial Public Offer on the Main Board has been omitted thereby removing the requirement of depositing an amount calculated at the rate of one per cent. of the issue size available for subscription to the public before the opening of the subscription list.

5. Period of Subscription in case of Initial Public Offer on Main Board Regulation 46:

   The Sub-regulation (3) is amended and now reads as follows:

   (3) In case of force majeure, banking strike or unforeseen circumstances, the issuer may, for reasons to be recorded in writing, extend the bidding (issue) period disclosed in the red herring prospectus (in case of a book-built issue) or the issue period disclosed in the prospectus (in case of a fixed price issue), for a minimum period of one working day, subject to the provisions of sub-regulation (1).

   
   

   Our Comments: The said amendment provides that in case of force majeure, banking strike or unforeseen circumstances, the issuer may extend the bidding (issue) period disclosed in the red herring prospectus or prospectus, as the case may be, for a minimum period of three working days, subject to the total bidding (issue) period not exceeding ten working days.

6. Security Deposit Regulation 80:

   Regulation 80 regarding Security Deposit in case of Rights Issue has been omitted thereby removing the requirement of depositing an amount calculated at the rate of one per cent. of the issue size available for subscription to the public before the opening of the subscription list.

7. Security Deposit Regulation 135

   Regulation 135 regarding Security Deposit in case of Further Public offer has been omitted thereby removing the requirement of depositing an amount calculated at the rate of one per cent. of the issue size available for subscription to the public before the opening of the subscription list.

8. Period of Subscription in case of Further Public Offer Regulation 142:

   The Sub-regulation (3) is amended and now reads as follows:

   (3) In case of force majeure, banking strike or unforeseen circumstances, the issuer may, for reasons to be recorded in writing, extend the bidding (issue) period disclosed in the red herring prospectus (in case of a book-built issue) or the issue period disclosed in the prospectus (in case of a fixed price issue), for a minimum period of one working day, subject to the provisions of sub-regulation (1).

   
   

   Our Comments: The said amendment has widened the scope by substituting the words “similar circumstances” with “unforeseen circumstances” of the instances where the issuer can extend the bidding period and has reduced the period for which the issuer can extend the bidding period in case of unforeseen circumstances to 1 (one) working day from 3 (three) working days.

9. Adjustments in pricing - Frequently and Infrequently traded shares Regulation 166:

   The existing regulation under Regulation 166 has been re-numbered as Sub-regulation (1) and new Sub-regulation (2) has been inserted which reads as follows:

   “(2) The effect on the price of the equity shares of the issuer due to material price movement and confirmation of reported event or information may be excluded as per the framework specified under sub-regulation (11) of regulation 30 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 for determination of the price for a preferential issue in accordance with regulations 164, 164A, 164B or 165 of these regulations.”

   
   

   Our Comments: The said amendment specifies that the unaffected price may be considered for the transaction under regulations 164, 164A, 164B or 165. In other words the effect on the price of the equity shares of the issuer due to material price movement and confirmation of reported event or information as per the framework specified under sub-regulation (11) of regulation 30 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 may be disregarded.

10. Regulation 176:

    New Sub-regulation (5) after Sub-regulation (4) has been inserted which reads as follows:

    “(5) The effect on the price of the equity shares of the issuer due to material price movement and confirmation of reported event or information may be excluded as per the framework specified under sub-regulation (11) of regulation 30 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 for calculation of the issue price under this regulation.”

    
    

    Our Comments: The said amendment specifies that the unaffected price may be considered for the transaction under regulation 176. In other words the effect on the price of the equity shares of the issuer due to material price movement and confirmation of reported event or information as per the framework specified under sub-regulation (11) of regulation 30 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 may be disregarded.

11. Security Deposit Regulation 197:

    Regulation 197 regarding Security Deposit in case of Initial Public Offer of Indian Depository Receipts has been omitted thereby removing the requirement of depositing an amount calculated at the rate of one per cent. of the issue size available for subscription to the public before the opening of the subscription list.

12. Period of Subscription in case of Initial Public Offer of Indian Depository Receipts Regulation 203:

    The Sub-regulation (3) is amended and now reads as follows:

    (3) In case of force majeure, banking strike or unforeseen circumstances, the issuer may, for reasons to be recorded in writing, extend the bidding (issue) period disclosed in the red herring prospectus (in case of a book-built issue) or the issue period disclosed in the prospectus (in case of a fixed price issue), for a minimum period of one working day, subject to the provisions of sub-regulation (1).

    
    

    Our Comments: The said amendment has widened the scope by substituting the words “similar circumstances” with “unforeseen circumstances” of the instances where the issuer can extend the bidding period and has reduced the period for which the issuer can extend the bidding period in case of unforeseen circumstances to 1 (one) working day from 3 (three) working days.

13. Minimum Promoters Contribution: Regulation 236: The 1st proviso to Sub-regulation (1) is amended and now reads as follows:

    In case the post-issue shareholding of the promoters is less than 20%, alternative investment funds or foreign venture capital investors, scheduled commercial banks, public financial institutions, insurance companies registered with the Insurance Regulatory and Development Authority of India or any non-individual public shareholder holding at 5% of the post-issue capital or any entity (individual or non-individual) forming part of promoter group other than the promoter(s) may contribute to meet the shortfall in minimum contribution as specified for the promoters, subject to a maximum of 10% of the post-issue capital without being identified as promoter(s).

    Our Comments: The said amendment will now inter-alia permit promoter group entities other than the promoters and any non-individual shareholders holding more than 5% of the post-issue capital to contribute towards minimum promoters' contribution without being identified as a promoter, to meet any shortfall in the minimum promoters' contribution, subject to a maximum of 10% of the post-issue capital.

14. Securities Ineligible for Minimum Promoters Contribution Regulation 237:

    a. The clause (b) of Sub-regulation (1) is amended and now reads as follows: Specified securities acquired by the promoters and alternative investment funds or foreign venture capital investors or scheduled commercial banks or public financial institutions or insurance companies registered with Insurance Regulatory and Development Authority of India or any non-individual public shareholder holding at least five per cent. of the post-issue capital or any entity (individual or non-individual) forming part of promoter group other than the promoter(s) during the preceding one year at a price lower than the price at which specified securities are being offered to the public in the initial public offer.

    Our Comments: The said amendment has now made the specified securities acquired inter-alia by promoter group entities other than the promoters and any non-individual public shareholder holding at least 5% of the post-issue capital acquired during the preceding one year at a price lower than the price at which specified securities are being offered to the public in the initial public offer, ineligible for contribution towards meeting any shortfall in the post-issue shareholding of the promoters.

    b. New clause (iv) has been inserted after the clause (iii) of first proviso of clause (b) of Sub-regulation (1) which reads as follows:

    “(iv) to equity shares arising from the conversion or exchange of fully paid-up compulsorily convertible securities, including depository receipts, that have been held by the promoters and alternative investment funds or foreign venture capital investors or scheduled commercial banks or public financial institutions or insurance companies registered with Insurance Regulatory and Development Authority of India or any nonindividual public shareholder holding at least five per cent. of the post issue capital or any entity (individual or non-individual) forming part of promoter group other than the promoter(s), as applicable, for a period of at least one year prior to the filing of the draft offer document and such fully paid-up compulsorily convertible securities are converted or exchanged into equity shares prior to the filing of the offer document (i.e., red herring prospectus in case of a book built issue and prospectus in case of a fixed price issue), provided that full disclosures of the terms of conversion or exchange are made in such draft offer document;”

    
    

    Our Comments: The said amendment will allow equity shares arising from the conversion or exchange of fully paid-up compulsorily convertible securities, including depository receipts, that have been held by the entities in the newly inserted clause (iv) above and have been held for a period of at least one year prior to the filing of the draft offer document and are converted or exchanged into equity shares prior to the filing of the offer document (i.e., red herring prospectus in case of a book built issue and prospectus in case of a fixed price issue), if full disclosures of the terms of conversion or exchange are made in such draft offer document.

15. Lock-in of specified securities held by the promoters Regulation 238:
    The clause (a) is amended and now reads as follows:

    minimum promoters’ contribution including contribution made by alternative investment funds or foreign venture capital investors or scheduled commercial banks or public financial institutions or insurance companies registered with Insurance Regulatory and Development Authority of India or any non-individual public shareholder holding at least five per cent. of the post-issue capital or any entity (individual or non-individual) forming part of promoter group other than the promoter(s) as applicable, shall be locked-in for a period of three years from the date of commencement of commercial production or date of allotment in the initial public offer, whichever is later;

    Our Comments: The said amendment requires the contribution made to minimum promoters’ contribution under Regulation 14(1), inter-alia by promoter group entities other than the promoters and any non-individual public shareholder holding at least 5% of the post-issue capital to be locked in for a period of 3 years from the date of commencement of commercial production or date of allotment in the initial public offer, whichever is later.

16. Security Deposit Regulation 259:

    Regulation 259 regarding Security Deposit in case of Initial Public Offer by Small and medium Enterprises has been omitted thereby removing the requirement of depositing an amount calculated at the rate of one per cent. of the issue size available for subscription to the public before the opening of the subscription list.

17. Period of Subscription in case of Initial Public Offer by Small and Medium Enterprises Regulation 266:
    The Sub-regulation (3) is amended and now reads as follows:

    (3) In case of force majeure, banking strike or unforeseen circumstances, the issuer may, for reasons to be recorded in writing, extend the bidding (issue) period disclosed in the red herring prospectus (in case of a book-built issue) or the issue period disclosed in the prospectus (in case of a fixed price issue), for a minimum period of one working day, subject to the provisions of sub-regulation (1).

    Our Comments: The said amendment has widened the scope by substituting the words “similar circumstances” with “unforeseen circumstances” of the instances where the issuer can extend the bidding period and has reduced the period for which the issuer can extend the bidding period in case of unforeseen circumstances to 1 (one) working day from 3 (three) working days.

18. Granting companies listed on the Innovators Growth Platform pursuant to an initial public offer, an option to trade under the regular category of the main board of the stock exchange: Regulation 292:
    a. Minimum Promoters Contribution Sub-regulation (4): The 1st has been amended and now reads as follows:

    Provided that in case the total capital held by the promoters is less than twenty per cent, alternative investment funds or foreign venture capital investors or scheduled commercial banks or public financial institutions or insurance companies registered with Insurance Regulatory and Development Authority of India or any non-individual public shareholder holding at least five per cent. of the post-issue capital or any entity (individual or non-individual) forming part of promoter group other than the promoter(s) may contribute to meet the shortfall in minimum contribution as specified, subject to a maximum of ten per cent of the total capital without being identified as promoter(s):

    Our Comments: The said amendment will now inter-alia permit promoter group entities other than the promoters and any non-individual shareholders holding more than 5% of the post-issue capital to contribute towards minimum promoters' contribution without being identified as a promoter, to meet any shortfall in the minimum promoters' contribution, subject to a maximum of 10% of the total capital.

    Lock-in period Sub-regulation (5): Clause (a) has been amended and now reads as follows:
    (a) The minimum promoters’ contribution including contribution made by alternative investment funds or foreign venture capital investors or scheduled commercial banks or public financial institutions or insurance companies registered with the Insurance Regulatory and Development Authority of India or any non-individual public shareholder holding at least five per cent. of the post-issue capital or any entity (individual or non-individual) forming part of promoter group other than the promoter(s), shall be locked in for a period of three years from the date on which trading approval in regular category of main board is granted, and any excess over and above the 20% of promoter’s holding shall be locked-in for a period of one year.

    Our Comments: The said amendment requires the contribution made to minimum promoters’ contribution under Regulation 4, inter-alia by promoter group entities other than the promoters and any non-individual public shareholder holding at least 5% of the post-issue capital to be locked in for a period of 3 years from the date on which trading approval in regular category of main board is granted, and any excess over and above the 20% of promoter’s holding shall be locked-in for a period of 1 year.

19. Extension of Issue Period Paragraph 9 of Schedule XIII:
    The Sub-paragraph (ii) is amended and now reads as follows:

    (ii) in case of force majeure, banking strike or unforeseen circumstances, the issuer may, for reasons to be recorded in writing, extend the bidding/issue period for a minimum period of one working day, subject to the total bidding/issue period not exceeding ten working days.

    Our Comments: The said amendment has widened the scope by substituting the words “similar circumstances” with “unforeseen circumstances” of the instances where the issuer can extend the bidding period and has reduced the period for which the issuer can extend the bidding period in case of unforeseen circumstances to 1 (one) working day from 3 (three) working days.

20. Nature of Changes in the Offer Document requiring filing of Updated Offer Document Schedule XVI:
    The item (i) in Sub-paragraph (f) of Paragraph (1) is amended and now reads as follows:

    “In case of a fresh issue: any increase or decrease in estimated issue size (in Rupee value) by more than twenty per cent. or”

    The item (ii) in Sub-paragraph (f) of Paragraph (1) is amended and now reads as follows:

    “In case of an offer for sale: any increase or decrease in either the number of shares offered for sale or the estimated issue size (in Rupee value) whichever is disclosed in the draft offer document, by more than fifty per cent.; or”

21. Nature of Changes in the Offer Document requiring filing of Updated Offer Document Schedule XVIA:
    The item (vi) in Sub-paragraph (a) of Paragraph (1) is amended and now reads as follows:

    ““In case of a fresh issue, any increase or decrease in the estimated issue size by more than fifty percent. (in Rupee value)”

    The item (vii) in Sub-paragraph (a) of Paragraph (1) is amended and now reads as follows:

    “In case of an offer for sale, any increase or decrease in the number of shares offered for sale or the estimated issue size (in Rupee value) whichever is disclosed in the draft offer document, by more than fifty percent.”
    The link to the aforesaid Notification is as follows:https://egazette.gov.in/(S(no0apfhwour5zgsunlmddxao))/ViewPDF.aspx