Sebi eases minimum lock-in duration for promoters after IPO

MUMBAI: In a significant move that may benefit many new-age technology firms and firms backed by financial investors, the Securities and Exchange Board of India (Sebi) on Friday decided to ease the post-listing lock-in norms for both promoters and financial investors.

“The board decided to relax the lock-in requirements as follows: The lock-in of promoters’ shareholding to the extent of minimum promoters’ contribution (i.e. 20% of post-issue capital) shall be for a period of 18 months from the date of allotment in the initial public offering (IPO)/further public offering (FPO) instead of the existing three years,” the market regulator said in a statement after its board meeting on Friday.

The new norms will, however, be available in select cases. The relaxations will be valid for an offer for sale (OFS), or where more than 50% of the fresh issue is for expenses other than capital expenditure requirements of a project. It will also be valid for combined offerings, which include a fresh issue of shares and an OFS, and where over 50% of the issue size, excluding the OFS portion, is used to finance expenses other than capex requirements of a project, Sebi added.

In all these cases, the promoter shareholding in excess of minimum promoter contribution shall be locked in for six months instead of the existing one-year period.

Besides, Sebi also relaxed the post-IPO lock-in requirements for other shareholders, such as private equity and venture capital funds and domestic high networth or family offices.

“The lock-in of pre-IPO securities held by persons other than promoters shall be locked in for a period of six months from the date of allotment in the IPO instead of existing one year,” it said.

Sebi also decided to rationalise the definition of the promoter group in cases where the promoter of the issuer company is a corporate body to exclude companies having common financial investors in order to simplify disclosure requirements at the time of an IPO.

These disclosures will continue to be made available on the website of the group companies.

The Sebi board agreed in principle to the proposal to shift from the concept of a promoter to ‘person in control’ or ‘controlling shareholders’ in a smooth, progressive and holistic manner.