Follow-On Public Offers
Part of: GS Prelims and GS-III – Economy
- 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.
- 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
- Market intermediaries
- Quasi-legislative – drafts regulations
- Quasi-judicial – passes rulings and orders
- Quasi-executive – conducts investigation and enforcement action
- 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