SEBI eases Fund-raising norms for firms

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