The Securities and Exchange Board of India (SEBI) has announced some important changes to help small and medium businesses get listed on the stock market. Here’s what you need to know:
– New Rules for IPOs: Now, companies must show they are profitable before they can offer their shares to the public. There will also be limits on how much existing shareholders can sell at once.
– Lock-In Period: Company owners (promoters) will have to keep their shares locked up for a certain period, which helps keep the stock stable.
– Merchant Bankers: These are the banks that help companies go public. They cannot manage a company’s IPO if the key staff owns too much of its shares, helping avoid conflicts of interest.
– Streamlined Fund Process: SEBI will set specific timelines for when new funds need to be used and make it easier for Asset Management Companies (AMCs) employees to comply with rules.
– New Agency for Risk Verification: There will be a new body created to check and confirm risk-return metrics for investment advisors and traders to ensure they are acting responsibly.
– Electronic Payments: To make buying and selling shares faster, SEBI will require everyone with a demat account to use electronic payments.
– Investment Banking Changes: SEBI is separating investment banks into two categories based on their size. Bigger banks need to meet higher revenue goals to keep their licenses.
– Expanded Definition of UPSI: The term “Unpublished Price Sensitive Information” (UPSI) has been broadened to include more important news that could affect stock prices.
– Improved Governance for Debt Issuers: New standard rules will help protect investors in debt instruments.
– Mandatory Reporting for ESG: Companies will need to share their Environmental, Social, and Governance (ESG) reports with both their investors and the public.
– High-Value Companies Defined: The threshold to be classified as a High-Value Debt Listed Entity has increased from ₹500 crore to ₹1,000 crore, which means only larger companies will be categorized this way.
– New Guidelines for Special Purpose Entities: There will be stricter rules around who can manage Special Purpose Distinct Entities for better accountability.
– AI Responsibility: Lastly, businesses using artificial intelligence tools must ensure they handle data responsibly and follow the rules to keep the market fair.
These new measures aim to build a safer and more trustworthy financial market for everyone.
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