UPSC Articles
SEBI eases Fund-raising norms for firms
Part of: GS-Prelims and GS-II – Statutory Bodies & GS-III – Economy
In News:
- The Securities and Exchange Board of India (SEBI) has further eased fund-raising norms for firms.
Key takeaways
- SEBI has allowed companies to make two qualified institutional placements (QIPs) with a gap of just two weeks between them.
- The earlier regulations mandated a minimum gap of six months between two such issuances.
- Promoters can also increase their stakes in their companies through preferential allotments by up to 10% without triggering an open offer.
- The cap was earlier set at 5%.
- SEBI has, however, allowed this relaxation only for the current financial year.
- The twin moves would help in enhancing liquidity in the market while promoters could also acquire shares at a time when valuations were quite low compared with the historic highs.
Important value additions
The Securities and Exchange Board of India (SEBI)
- It is the regulator of the securities and commodity market in India owned by the Government of India.
- It was established in 1988 and given statutory status through the SEBI Act, 1992.
- SEBI is responsible to the needs of three groups:
- Issuers of securities
- Investors
- Market intermediaries
- Functions:
- Quasi-legislative – drafts regulations
- Quasi-judicial – passes rulings and orders
- Quasi-executive – conducts investigation and enforcement action
- Powers:
- To approve by−laws of Securities exchanges.
- To require the Securities exchange to amend their by−laws.
- Inspect the books of accounts and call for periodical returns from recognised Securities exchanges.
- Inspect the books of accounts of financial intermediaries.
- Compel certain companies to list their shares in one or more Securities exchanges.
- Registration of Brokers and sub-brokers
