IPO Markets: Sebi cuts post IPO lock-in for promoters to 18 months

Capital Markets regulator Securities and Exchange Board of India (Sebi) has reduced the minimum lock-in period for promoters' investment post an initial public offering (IPO) to 18 months from three years, under certain conditions. The move comes at a time when many companies are eyeing to list on the stock exchanges. In addition, the regulator has streamlined the disclosures requirements of group companies.

In a notification, Sebi said that if the object of the issue involves offer-for sale or financing other than for capital expenditure for a project, then the minimum promoters' contribution of 20 percent would be locked in for 18 months from the date of allotment in the IPO. Currently, the lock-in period is three years. Capital expenditure includes civil work, miscellaneous fixed assets, purchase of land, building and plant and machinery, among others.

Further, the lock-in period for the promoter shareholding in excess of the minimum 20 percent has also been reduced from the existing one year to six months. The regulator has also reduced the minimum lock-in of pre-IPO securities held by persons other than promoters to six months from the date of allotment. There is a lock-in period of one year at present.  Apart from this, the regulator has reduced the disclosure requirements at the time of IPO. The disclosure requirements in the offer documents, in respect of group companies of the issuer company, has been rationalized to exclude disclosure of financials of top 5 listed or unlisted group companies.

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