Source: www.sebi.gov.in
Attributable to its global ranking
for on ‘Ease to Business’ scale, India is increasingly being counted as a
favoured business destination in the world. In order to facilitate the carrying
out of business activities of varied nature, the Indian legal system allows a
number of business structures such as proprietorship, partnership, companies
and limited liability partnership. Incorporation of a company is a common mode
for business transactions in the country.
Companies
in India
Companies are the artificial legal
entities having existence independent from its shareholders. Incorporated for
the purpose of carrying out business activities as stated in its Memorandum of
Association, the companies are often confronted by the requirement of capital
with view to expand its operations and earn greater profits. The raising of
capital for the said purpose is required to be done in accordance with the Companies
Act, 2013 (hereinafter referred to as the “Companies Act”).
Investment
in India
The Government is regularly devising schemes
that boost the Indian market. The fastest growing economy not only encourages
progress of business in India but also makes it an attractive investment
option. With a view to secure investment for the Indian business sector, the
Government has been making efforts with the help of introduction of investor
friendly policies.
Regulated framework
Governed under the provisions of the Securities
and Exchange Board of India Act, 1992 (hereinafter referred to as the “SEBI
Act”), the Securities and Exchange Board of India (hereinafter referred to as
the “SEBI”) is the market regulator of India which aims to protect the
interests of investors in securities and to promote the development of, and to
regulate the securities market and for matters connected there with or
incidental thereto.
Initial
Public Offering
One of the mediums for the
companies to raise capital is through initial public offer means an offer of
specified securities by an unlisted issuer to the public for subscription and
includes an offer for sale of specified securities to the public by any
existing holders of such specified securities in an unlisted entity. It serves
as the largest source of funds for a company to meet expenses for its projects
and go public by being listed on a Stock Exchange.
IPO timeline reduction
SEBI, in its endeavour to provide an efficient
mechanism for raising funds, has been continuously striving to regulate the
process and methodologies associated with public issue fund raising process. In
the said regard, the regulator issued a circular for streamlining the process
of public issue of equity shares and convertibles dated November 1, 2018.[1]
With a view to free up the locked investor
funds faster so as to benefit both issuers as well as investors, SEBI has
initiated the process to reduce the timeline for public issues from the current
6 days to 3 days in a phased manner by making it mandatory for
intermediaries to provide retail investors the option of bidding through the
Unified Payments Interface as a payment mechanism with Application Supported
Block Amount for applications in public issues.
In the second phase, the current mechanism of
physically submitting bid forms from the intermediaries to the banks would be
discontinued after 3 months. The said process would be effective April 1, 2019
onwards.
Subsequent third phase provides that final
reduced timeline will be made effective using the Unified Payments Interface
mechanism.
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