Sops for small investors as Sebi tweaks IPO norms

Sops for small investors as Sebi tweaks IPO norms

Unveiling a slew of steps aimed at reforming the primary market, Sebi Chairman UK Sinha said the retail investors in IPOs would be assured of a minimum number of shares.

In wide-ranging changes to various regulations, Sebi on Thursday made it easier and more cost effective to invest and raise funds through IPOs but investments in mutual funds could become more expensive.

The market regulato r also made it mandatory for all the investment advisers providing their services for a fee to get themselves registered, while putting checks and balances against possible misuse of funds garnered from investors through initial public offers (IPOs) and mutual funds (MFs).

Announcing the longest list of decisions taken at a single board meeting in recent years, Sebi Chairman U K Sinha said the retail investors in IPOs would also be assured of a minimum number of shares and the companies would be required to announce their price band at least five days in advance.

Regarding e-IPO, Sinha said it has been decided that these facilities would be provided in more than 1,000 places through broker terminals to provide electronic or physical filling of IPO forms.

Sinha said that systems have been designed for this and brokers would be compensated for this.

Regarding ASBA (Application Supported by Blocked Amount), wherein the money lies in applicant's account till shares are allotted, Sinha said this facility would be made available in a larger number of places and in all bank branches.

The minimum application limit in IPOs has also been raised from Rs 5,000-7,000 to Rs 10,000-15,000, he said.

The Sebi also decided to recommend to the government provisions of tax benefits to equity MF investors under the proposed Rajiv Gandhi Equity Savings Scheme (RGESS).

Talking to the reporters after Sebi board meeting, Sinha said some "very very far-reaching reforms" were discussed and approved by the board, which includes steps for expanding the reach of IPOs and MFs across the country through measures including, electronic public offers (e-IPOs).

Among various decisions, the Sebi allowed MFs flexibility in using their fund expense charges and said a committee was being set up to frame a national mutual fund policy.

However, in another decision that could make it expensive for investors to put money in mutual funds, the Sebi decided that any service taxes would be charged to ultimate investor, and not to the fund house as is the current practice.

Besides, the AMCs would be allowed to charge additional expense ratio (the charge levied by fund houses towards fund management fees and other expenses) for catering beyond a threshold limit in the smaller cities.

Published on: Aug 16, 2012, 11:04 PM IST
Posted by: Surajit Dasgupta, Aug 16, 2012, 11:04 PM IST