Regulatory norms for listing of stock exchanges issued

Paving the way for the stock exchanges, including BSE and NSE, to get listed, markets regulator Sebi on Monday approved a new set of revised norms for the IPO and listing of the bourses.

A listed stock exchange should maintain 51 percent of shareholding of public category and ensure that holding of trading members, associates and agents does not exceed 49 percent.

Similarly, to ensure compliance that every shareholder is “fit and proper”, each applicant for shares in an initial public offer or in an offer for sale would be required to make declaration on the issue. Sebi will in due course issue necessary procedures to ensure continued compliance of the provisions post listing of a stock exchange.

The Securities and Exchange Board of India (Sebi) has paved the way for listing of BSE and the National Stock Exchange (NSE) by clarifying on some of the regulatory requirements that were believed to be acting as a hindrance.

In addition, Sebi also used the Forward Markets Commission’s guidelines for listing commodity bourses to tweak some of the rules for the stock exchanges.

Welcoming the Sebi move, a BSE spokesperson said, “Listing of exchanges are expected to bring additional transparency to the working of the exchanges”. We will be able to give detailed comments once the detailed regulations are published.

In another significant move to safeguard minority investors, Sebi proposed making it mandatory for listed firms to provide an exit to dissenting shareholders in case of changes to the objectives for which they had raised money. In order to effectively implement the provisions of listing of its associates on listed stock exchanges, Sebi will also amend the definition of associates.

The move would help the shareholders make an exit if they feel dissatisfied with any change in business plan of the concerned company after raising funds through IPOs, FPOs or any other capital-raising exercise. Entities such as stock exchanges, depositories and merchant bankers with net worth above Rs 100 crore will be eligible for applying as EBPs.

The Sebi board has accepted the proposals of KV Kamath committee on the viability of introducing a single clearing corporation (CC) or interoperability between different CCs.

“The key benefits of such an electronic platform… are improvement in efficiency and transparency of the price discovery mechanism vis-à-vis the extant over-the-telephone market coupled with possible reduction of cost and time taken for such issuances”, said the statement by Sebi.

Besides, Sebi also approved a proposal to issue public consultation on introduction of “Primary Market Debt Offering through private placement on electronic Book”.

Further, Sebi has proposed issue draft papers for revival of public issuance of convertible securities by listed entities.

The watchdog will also soon initiate a public discussion on the issuance and listing of so-called green bonds that invest in environment-friendly projects like renewable energy, waste management and clean water, among others.