SEBI to Consider Changes to SME and Insider Rules at Board Meeting

SEBI is gearing up to introduce some new rules at its upcoming board meeting on December 18. These rules will impact SME companies looking to go public, angel funds, and unpublished price sensitive information (UPSI).

One of the key changes could be the increase in the minimum application size for SME IPOs to ₹2-4 lakh, attracting more informed investors who are willing to take on higher risks. Issuers will need to have an issue size of more than ₹10 crore and an operating profit of ₹3 crore for at least two out of three preceding financial years to be eligible for an initial public offer.

SEBI might also extend the lock-in period for minimum promoter contribution to five years from the current three years, and increase the minimum allottees in such IPOs to 200 from the existing 50. In cases where the fresh issue size exceeds ₹20 crore, appointing a monitoring agency will become mandatory.

Furthermore, SEBI is planning to broaden the scope of UPSI to include restructuring plans, proposed fundraising activities, and one-time bank settlements. The regulator might also propose an increase in the net worth requirement for investment bankers and clarify their roles and responsibilities.

For angel funds, SEBI may approve a proposal to restrict investments to accredited investors who meet specific net-worth criteria verified by a third-party agency. This change aims to prevent investors without the necessary risk appetite from investing in start-ups through angel funds.

Overall, these potential changes by SEBI are aimed at enhancing transparency, accountability, and investor protection in the financial markets. Stay tuned for updates on the outcomes of the board meeting and how these new norms will impact the finance industry.