Following its board decisions of 16 December 2020, SEBI has amended the LODR Regulations, 2015 to recalibrate the Minimum Public Shareholding (MPS) norms for listed companies going through Corporate Insolvency Resolution Process under the I&B Code (CIRP); the ICDR Regulations, 2018 to do away with the applicability of Minimum Promoters’ Contribution and subsequent lock in requirements for issuers making a Further Public Offer (FPO); and the AIF Regulations, 2012 to provide certain exemptions to AIFs in respect of Investment Committee members, in terms of Regulation 20(6) of AIF Regulations, conditional upon capital commitment of at least INR 70 Crore from each investor accompanied by a suitable waiver. The amendments are effective from 8 January 2021.

The specific amendments made under each Regulation are as follows :

1. Amendments under LODR Regulations, 2015: Clause 16 of Schedule III, Part A which provides a list of events to be disclosed in relation to the CIRP of a listed corporate debtor is amended to prescribe additional disclosures such as specific details of resolution plan, assets post-CIRP, securities continuing to be imposed on the companies’ assets, proposed steps to be taken by the incoming  investor/acquirer for  achieving MPS; and quarterly disclosure of the status of achieving the MPS.

To refer to the (Listing Obligations and Disclosure Requirements) (Amendment) Regulations 2021, dated 8 January 2021, click here.

2. Amendments under ICDR Regulations, 2018: Regulation 112 (b) has been substituted to remove the requirement of Minimum Promoters’ Contribution for issuers making a Further Public Offer of specified securities, provided that:

• the equity shares of the issuer are frequently traded on a stock exchange for a period of at least three years,
• the  issuer has been in compliance with the LODR Regulations 2015 for a period of at least three years,
• the issuer has redressed at least ninety-five per cent of the complaints received from the investors, and

Where the promoters subscribe to the specified securities offered to the extent greater than the higher of the two options available in clause (a) of sub regulation (1) of regulation 113 (i.e. either to the extent of twenty per cent. of the proposed issue size or to the extent of twenty per cent. of the post-issue capital), the subscription in excess of such percentage shall be made at a price determined in terms of regulation 164 (Pricing of frequently traded shares) or the issue price, whichever is higher.

A proviso to Regulation 167(4) is inserted to provide that the lock-in period of one year from the trading approval applicable to equity shares issued on a preferential basis, pursuant to any resolution of stressed assets under a RBI specified framework or a resolution plan approved by NCLT under the I&B Code, will not apply to the extent to achieve 10 per cent. public shareholding.

To refer to the Issue of Capital and Disclosure Requirements) (Amendment) Regulations 2021, dated 8 January 2021, click here.

3. Amendments under AIF Regulations, 2012: Exemption from applicability of clause (i) and (ii) of Regulation 20(6) has been granted to those AIFs in which each investor other than the Manager, Sponsor, employees or directors of the AIF or employees or directors of the Manager, has committed to invest not less than seventy crore rupees (or an equivalent amount in currency other than Indian rupee) and has furnished a waiver to the AIF in respect of compliance with the said clauses. The format for waiver has been prescribed in a separate circular.

[Regulation 20(6) prescribes that the Manager shall be responsible for the investment decisions of the AIF. Clause (i) of sub-regulation (6) holds members of the Investment Committee equally responsible as the Manager for investment decisions of the AIF;  and clause (ii) of sub-regulation (6) prescribes that the Manager and members of the Investment Committee shall jointly and severally ensure that the investments of the AIF are in compliance with the provisions of these regulations, terms of the placement memorandum, agreement made with the investor, any other fund documents and any other applicable law].

To refer to the Alternative Investment Funds) (Amendment) Regulations 2021, dated 8 January 2021, click here.