Markets regulator Sebi on Monday approved a new set of norms to provide an exit route to the dissenting shareholders in case of a listed company diverting from its stated objective of raising funds from the public.
The new norms, which were approved by the Sebi’s board at a meeting here today, have been finalised after taking into account public comments on a draft paper issued in this regard last month.
The decision to start the consultation process was taken by the Securities and Exchange Board of India (Sebi) at its previous board meeting on November 30, 2015.
The move is aimed at helping the shareholders make an exit if they feel dissatisfied with any change in business plan of the company concerned after raising funds through IPOs, FPOs or any other capital-raising exercise involving public investors.
A company which has raised money from the public through prospectus and still has any unutilised amount out of the money so raised cannot change its objectives for which it raised the funds through prospectus unless a special resolution is passed.
Besides, dissenting shareholders or those who are not satisfied with the changes, would be provided an exit option.
In recent times, there have been many instances where investors were duped by illicit money pooling schemes that promised high return on investments.
Sebi’s decision follows a similar provision in the new Companies Act which provides that dissenting shareholders should be given an exit opportunity by promoters and controlling shareholders.
The new provisions would be applicable on prospective basis for issues which opened after April 1, 2014, the date of commencement of related provisions of the Companies Act, 2013.