Sebi has just issued a consultation paper to review the regulatory framework of promoter and promoter group. It is indeed remarkable that the regulator in these tough times is not just focused on business as usual, but is exhibiting resilience by working on progressive issues that can have a long-term impact.
The consultation paper covered two very significant issues – first, the proposed reduction in lock-in periods for minimum promoters’ contribution and that of other shareholders in public issue; second, shifting from the concept of ‘promoter’ to the concept of ‘person in control’.
Promoter shareholding lock-in conditions
At present, Sebi prescribes a minimum promoters’ contribution of 20% to be locked in for three years from the date of listing. Additionally, any other pre-IPO capital is required to be locked in for one year, except some exempt categories.
Given the rapid increase in Covid-19 cases, the Railways operated Oxygen Express trains to transport liquid medical oxygen and oxygen cylinders for patients across India, using ‘green corridors’ for expeditious delivery. A ‘green corridor’ is a demarcated, cleared-out special route created for an ambulance or a vehicle to escape traffic congestion and to reach the destination in the shortest possible time.
While ‘green corridors’ have been in use for a few years across cities and states to help transport donated or harvested organs to patients, in these trying times, the same are being used across the nation to enable faster movement of medical equipment and to ensure speedy supply of medical facilities to the patients without any loss of critical time.
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Recently, Prime Minister Narendra Modi openly acknowledged the contribution of wealth creation in growth and reduction of poverty by pointing out at “India’s ethos of respecting wealth creators”. I must say that this ethos is not new for us as a society. Even 5,000 years ago, Lord Krishna treated ‘wealth creation’ as one of the main four ‘Purusharthas’, the duties of a human being. He himself created the very opulent and new city of Dwarka, which was comparable only with Amravati of Kuber.
When Prime Minister Narendra Modi first took charge of the central government in 2014, many of us were convinced that it was India’s moment – there were high expectations of growth through policy liberalization, reduced government involvement, a big push towards privatization and a more stable policy framework. Indeed, later there was disappointment on many of these fronts, not because of the absence of resolve to make the change but due to the complexity of the situation at han
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This year’s Budget proposed to create a regulatory framework to set up development finance institutions (DFIs) with a mandate to act as a provider, enabler and catalyst for infrastructure financing. Now that the government has announced its intention to make an enabling regulatory framework for setting up of DFIs in the private sector, the discourse has moved to the structure and function of such DFIs.
For a developing country like India, financing of greenfield infrastructure projects is indeed a challenge. Financing of such projects by DFIs is not a new concept in the Indian context; the earlier DFIs were created during the pre-economic liberalisation era. During that period, given the controlled nature of the economy and a protected industry, lending to industry was relatively simpler.