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Follow-On Public Offers

  • IASbaba
  • January 19, 2021
  • 0
UPSC Articles
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Follow-On Public Offers

Part of: GS Prelims and GS-III – Economy

In news 

  • SEBI recently relaxed the framework for follow-on public offers (FPOs). 
  • The move will help promoters of companies to raise funds more easily through this route.

Key takeaways 

  • The applicability of minimum promoters’ contribution norm and the subsequent lock-in requirements for the issuers making the FPO have been removed. 
  • Earlier, promoters were mandated to contribute 20% towards a FPO.
  • Besides, in case of any issue of capital to the public, the minimum promoters’ contribution was required to be locked-in for three years.
  • Relaxation would be available for those companies which are frequently traded on a stock exchange for at least three years. 
  • Also, such firms should have redressed 95% of investor complaints. 

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

Related articles:

  • Mutual Funds (MF) Risk-o-meter becomes effective: Click here
  • SEBI eases Fund-raising norms for firms: Click here

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