SEBI allows discount to retail investors

MUMBAI: Market regulator SEBI, on Friday, allowed companies to offer a discount to retail investors in public issues and simplified the procedure for firms to come out with a follow-on offering or a rights issue to raise funds.

However, such discounts will have to be within 10 per cent of the price at which shares are issued to other categories of investors like qualified institutional buyers, high net worth individuals, SEBI said in a circular.

"SEBI has been receiving requests to permit issuance of shares to retail individual investors at a price lower than that being offered to other categories. It has now been decided to permit companies making public issues to do so," the regulator said.

The market watchdog also permitted listed companies to come out with follow-on offer or rights issue without the requirement to file draft offer document with SEBI and stock exchanges.

These companies will now have to file only a copy of red herring prospectus in case of book building issue and prospectus in case of fixed price issue with the Registrar of Companies or the letter of offer with the bourse and SEBI.

However, such companies have to fulfil certain conditions in this regard - companies must be listed for a minimum of three years, their average market value must be at least Rs 10,000 crore and annualised trading turnover in the last six months must be two per cent of listed shares.

SEBI also reduced the minimum requirement to apply for Indian Depository Receipts to Rs 20,000 from the current Rs 2,00,000. This is subject to the condition that at least half the issue is subscribed to by Qualified Institutional Buyers.