Follow-on public offer eliminates the need for promoter’s minimum contribution

The board of market regulator SEBI has approved some changes related to the follow-on public offer of the capital market, including several mutual fund regulations, in today’s meeting. SEBI has lifted the lock-in ban for promoters’ minimum contribution and issue in the follow-on public offer (FPO). Till now promoters have to make a 20% contribution in the follow-on public offer. SEBI has also added some conditions for this, the first of which is that the shares of the issuer company have been trading continuously for the last three years and the second is that it should have at least 95% investor compliance clearance.

MF’s dividend payment timeline also reduced

According to the changes in the rules of Mutual Fund (MF) by SEBI, each scheme of a fund will have different assets and liabilities. Now the need to issue physical certificates of units of mutual funds has also been removed. The maximum limit of exit load of schemes and the timeline of dividend payment issued by them has also been reduced.

Relaxation in sponsor profitability criteria

In order to promote innovation in the mutual fund industry and to reach out to more and more investors, SEBI has decided that even if the sponsors of the fund are unable to meet the criterion of profitability, they will be considered sponsors provided they have a contribution in the net worth of the AMC (Rs. 100 crore to be the net worth). They will have to maintain this net worth of AMC until they earn a profit for five consecutive years.