New Delhi, April 7 -- The Securities and Exchange Board of India (SEBI) has granted a one-time relaxation to companies planning to go public, citing rising geopolitical tensions in the Middle East.
In a circular issued on Tuesday, the market regulator extended the validity of its observation letters by nearly six months. Observation letters are the go-ahead given by SEBI for an IPO and are valid only for a limited period
Observation letters that were set to expire between April 1 and September 30 this year will now be valid till September 30. The extension is subject to an undertaking from the IPO's lead manager, confirming compliance with Schedule XVI of the ICDR Regulations when submitting the updated offer document to SEBI. Schedule XVI outlines key issue details such as the issuer's name, opening and closing dates, and offer price.
Under SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018, listing of securities has to be typically completed within 12-18 months
However, the regulator received industry representations, highlighting difficulties faced by issuers given the current geopolitical environment. The circular said companies are facing challenges "in mobilising resources and accessing the capital market" amid tensions in the Middle East. "This has led several issuers to defer, recalibrate or withdraw issuance plans, leading to potential lapses in observation letter validity and duplication of regulatory processes," it added.
The circular has been issued under Sections 11 and 11A of the SEBI Act, which empower the regulator to protect investor interest and promote the development and regulation of the securities market.
Further, through another circular, the regulator also relaxed the minimum public shareholding requirement for companies whose compliance deadlines fall between April 1 and September 30 this year. The circular said SEBI received industry representations seeking relief, citing "capital market volatility arising from ongoing geopolitical tensions in the Middle East."
Published by HT Digital Content Services with permission from VC Circle.