Sebi Eases Public Issue Norms to Boost Business Simplicity

The Securities and Exchange Board of India (Sebi) has removed the mandatory 1% security deposit requirement for companies prior to public issues, aiming to streamline business processes. This change follows a consultation process and leverages existing frameworks to address investor concerns in public issues.

The Securities and Exchange Board of India (Sebi) has announced a significant policy change, eliminating the necessity for issuer companies to pay a security deposit before launching a public issue. This move, effective immediately, is designed to enhance ease of doing business with Indian stock exchanges.

Previously, companies launching a public equity issue were required to deposit an amount equal to 1% of the issue size, a measure aimed at resolving potential investor grievances. Sebi released a circular marking the end of this requirement under the 2018 ICDR Regulations, viewed as redundant amid recent technological advancements.

The decision follows a consultation paper from February and reflects confidence in existing mechanisms, such as ASBA and UPI payment modes, which mitigate risks associated with investor complaints in today's market. Sebi believes these measures adequately address concerns once managed by the security deposit.

(With inputs from agencies.)