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SEBI eases Fund-raising norms for firms

  • IASbaba
  • June 18, 2020
  • 0
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SEBI eases Fund-raising norms for firms

Part of: GS-Prelims and GS-II – Statutory Bodies & GS-III – Economy

In News:

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

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