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SEBI panel seeks to cut initial public offer costs

The Securities and Exchange Board of India in its board meeting today accepted most of the recommendations of the informal group on primary markets headed by Shankar Acharya and recommended some important suggestions for immediate implementation in order to reduce cost in initial public offer of shares.

The SEBI board felt that primary issues should be compulsorily made through the depository mode after a specified date and allow 100 per cent book building in respect of issues of Rs 250 million and above.

Considering the recommendations of the informal group, the SEBI board also suggested that the number of mandatory collection centres in respect of issues above Rs 100 million be reduced to four metropolitan cities plus to the place where the regional stock exchange is situated.

This would be the minimum requirement and the issuers are free to appoint as many collection centres as they deem fit.

While some recommendations of the group are to be examined further at various levels including government, department of company affairs and the Reserve Bank of India, the SEBI board considered several other proposals.

These included extension of bank credit to market intermediaries, permission to buy back shares by corporates, expansion of trading terminals of BSE and NSE to about 1000 cities by 2000, granting specific relaxations to public issues by infrastructure companies, permitting marketing of primary issues through secondary market infrastructure, developing the concept of domestic depository receipt and permitting application for new issues in the newspapers subject to legal provisions.

UNI