SEBI New Rules to Protect IPOs from Frauds

by Suryaa |

Stock Markets are generally subjected to profits and losses. But there's a danger of fraud as well. Many people lose their hard-earned money with these frauds. IPO Investors suffer huge losses in this regard. SEBI has changed the Rules of IPO Mutual Funds considering this fraud.

The meeting, chaired by SEBI Chairman Ajay Tyagi, mainly increased the lock-in period of anchor investors, from 30 days to 90 days, which is considered to be the most important for IPOs. It also set their withdrawal limit to 50 per cent.

Companies should use up to 25 percent of the funds raised from the IPO for expenses. Only 75% of the amount raised through IPO should be invested in business expansion.

The lock-in period has been reduced from three years to 18 months for promoters with a 20 per cent stake in the IPO, while the lock-in period has been reduced from one year to six months for promoters with more than 20 per cent stake.

Anchor investors can no longer sell their entire stake on the day of listing. Anchor investors can sell only 50 per cent of the total stake on the day of listing. Now the difference between the floor price and the IPO maximum price is at least 105 percent.

New Rules for Mutual Funds...

If the fund house wants to close any mutual fund scheme, they must first get permission from the unit holders. Fund Houses are required to comply with the Indian Accounting Standard from 2023-24. Part of this would be to hold a voting for investors to close the scheme. Each unit will have one vote. Results must be disclosed within 45 days. If investors vote against terminating the scheme, it will have to be restarted.

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