In a significant move aimed at enhancing the ease of doing business for issuer companies, the Securities and Exchange Board of India (SEBI) has withdrawn the requirement for companies to deposit 1% of the issue size available for public subscription with the designated stock exchange. This change comes as part of the amendments to the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 (ICDR Regulations), effective from May 17, 2024.
Key Highlights of the Circular:
1. Dispensation of 1% Deposit Requirement: The requirement under regulation 38(1) of the ICDR Regulations for issuer companies to deposit 1% of the issue size with the designated stock exchange has been removed. This step is expected to simplify the process for companies looking to raise capital from the public.
2. Withdrawal of Master Circular: Following the amendment of the ICDR Regulations, the Master Circular no. SEBI/HO/OIAE/IGRD/P/CIR/2022/0151 dated November 07, 2022, which mandated the issuance of a No Objection Certificate (NOC) for the release of the 1% issue amount, has been officially withdrawn.
3. Standard Operating Procedure (SoP) for Existing Deposits: Stock exchanges are required to develop a joint standard operating procedure (SoP) for the release of the 1% security deposits that were made by issuers prior to the recent amendments in the ICDR Regulations.
4. Immediate Applicability: The provisions of this circular are applicable with immediate effect, ensuring a swift transition to the new regulatory framework.
5. Instructions to Stock Exchanges:
a) Stock exchanges must inform all listed companies about the provisions of this circular and ensure its dissemination on their websites.
b) Necessary amendments to relevant bye-laws, rules, and regulations should be made to implement the terms of this circular.
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