Follow-On Public Offers

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