SEBI Halves IPO Listing Time from 6 to 3 days!

On Wednesday, The Securities and Exchange Board of India (SEBI) slashed the period for listing of shares in public issue (IPO) from existing six (T+6) days to three (T+3) days, from the date of closure of the issue. “T” is the day the issue closes for the subscription. 

According to the SEBI, the revised timeline of T+3 days for listing shares will be implemented in two phases that are voluntary for all public issues commencing on or after September 01, 2023, and mandatory on or after December 01, 2023. 

The market regulator stated that this change in timeline will enable issuers to access the raised capital more quickly, thus improving the ease of doing business. Additionally, investors will have the opportunity for early credit and liquidity of their investments. 

The decision was made following thorough back-testing and simulations conducted by various stakeholders, including stock exchanges, sponsor banks, NPCI, depositories, and registrars, concerning the different activities involved in the public issue process. 

Under the existing timeline, the registrar finalised the basis of IPO allotment and submitted it for approval to the designated stock exchange on T+3. However, under the new timeline, this process will be completed on or before 6 PM on T+1. 

SEBI has introduced additional disclosure requirements to prevent potential regulatory circumvention, such as the minimum public shareholding requirement, and addressing concerns of potential misuse of the FPI (Foreign Portfolio Investor) route to bypass the requirements of Press Note 3. SEBI has mandated additional granular-level disclosures regarding ownership, economic interest, and control of FPIs holding over 50% of their Indian equity AUM in a single corporate group.

Furthermore, FPIs that hold equity AUM exceeding Rs 25000 Crore in the Indian markets, either individually or as part of an investor group, are also subject to these additional disclosure obligations. The decision to implement these measures comes in the aftermath of allegations made by Hindenburg Research against the Adani group. However, SEBI clarified that the work on these disclosure requirements for FPIs had been planned for a year and a half. 

Entities including government and government-related investors, pension funds, public retail funds, certain listed ETFs, corporate entities, and verified pooled investment vehicles that meet specific conditions are exempted from the requirement of making these additional disclosures. 

The board also approved the amendments to allow listed entities having outstanding listed non-convertible debentures (NCDs), as on December 31, 2023, to list their subsequent NCD issuances at the exchange. This new requirement will come into effect from January 1, 2024, and is expected to facilitate transparency in price discovery of non-convertible debt securities and better disclosures. 

If an entity with listed debt securities has outstanding unlisted NCDs as on December 31, the entity will have the option to list them, but it would not be mandatory, said SEBI.  

The board also approved the proposal for enabling entities having listed debt securities to delist such securities if it gets approval from 100% of the debt security holders. Entities having privately placed, listed debt securities wherein the number of debt security holders is less than 200, shall be eligible to delist their debt securities under this framework.