SEBI Approves New Measures to Reform IPO Market Disclosure

The Securities and Exchange Board of India has approved many new measures to reform the initial public offering market in India. The regulators’ board has made it mandatory for the companies to disclose their intended acquisition target if the raised funds are used for such acts.

The rule comes out after many new-age technology companies mentioned the use of fresh funds for acquisition purposes in their draft red herring.

The regulator has also limited the number of existing shareholders without a track record intending to IPO can sell their shares under offer for sale. SEBI also mentioned that investors with more than 20% stake before the IPO are only allowed to sell half of their shares.

The regulator has made it mandatory for a credit rating agency to act as a monitoring agency, which will monitor if the raised funds are used for the purpose that they were raised for. SEBI also said that this monitoring will continue till 100 percent of the funds are used.