The Securities and Exchange Board of India (SEBI) has notified relaxations to lock-in requirements for shareholdings of promoters and non-promoters under the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018.
The amendments, in effect from 31 August, reduce the lock-in period for promoters’ shareholding to 18 months from three years: If the object of the issue involves only an offer for sale of existing shares; if it is an issue of new shares, then less than 50% of the money raised should be used for capital expenditure for a project; or in case of a mix of share sale and new share issuance, then the end-use of less than 50% of the money raised from the issue of news shares should be for capital expenditure for a project, according to the SEBI.
In all cases, the promoter shareholding over the minimum promoter contribution will be locked in for six months, compared with one year previously. The non-promoter shareholders’ lock-in requirement has been reduced to six months against the earlier one-year lock-in requirement.
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The Business Law Digest is researched and written by Mithun Varkey.
