SEBI announces steps to attract retail investors to market
The Securities and Exchange Board of India (SEBI), in its board meeting, has also decided to impose a transaction fee of Rs 100-150 on investments of Rs 10,000 in Mutual Fund to incentivise them to sell MF schemes to investors.
The regulator also announced the guidelines for Infrastructure Debt Fund (IDF) and simplified the Know Your Customer (KYC) registration process for investors in different segments of the financial market.
The investor form for the Initial Public Offer (IPO) henceforth be short and simple, SEBI chairman U K Sinha said, adding, the number of pages in the form will now come down by 50 percent.
"The IPO form is not investor friendly. It takes a lot of time to understand it. Taking all this into account, the whole form has been changed and this will lead to reduction in the size of the form," he told reporters after the meeting.
The form would carry information regarding the peer companies` Price-Earnings (PE) ratio and track record of lead managers of the IPO.
Currently the IPO forms run into 15-20 pages, although there are only 2-3 pages where particulars are needed to be filled in by the investors and the rest contain instructions, information about the company and the issue and details about bankers, registrars and bidding centres.
The SEBI board also decided on a uniform KYC norms for different market players and accept `Aadhar` or Unique Indentity card as one of the document as identity proof for bidding in IPO and FPO.
Currently, there are separate KYC norms for different segments, like FIIs, mutual funds and brokerage customers. The idea behind uniform KYC norms is to ensure seamless identification of customers in the securities market.
As regards to the Takeover Code, an entity buying 25 percent stake in a listed firm, will have to mandatorily make an open offer to buy additional 26 percent from public shareholders.
The new norms mark an increase in the open offer size for public shareholders from 20 percent currently, while the trigger for such offer has also been raised from 15 percent in the existing regulations.
Partly accepting the recommendations of a SEBI-appointed panel on the matter, SEBI also decided to abolish the non-compete fees that acquirers generally pay to the sellers in merger and acquisition deals.
Commenting on the changes in Takeover Code, industry chamber CII said, "This would enable more private equity investors to provide capital to the industry. However, abolition of non-compete fee may be a cause of concern".
As regards mutual funds, the new investors will now have to cough up an additional Rs 150 for investment of Rs 10,000 and above in mutual funds, while the charge will be Rs 100 for existing investors.
Investors are already paying a commission in some cases, besides up to 2.5 percent of their investment towards expanses of fund management.
The decision, SEBI said will help mutual funds penetrate into retail segment in smaller towns, the distributor would be allowed to charge Rs 100 as transaction charge per subscription. No charge can be made for investments below Rs 10,000.