NEW DELHI: Markets regulator Sebi on Thursday abolished the requirement of a mandatory security deposit with the exchanges before a public issue in a bid to facilitate ease of doing business for issuer companies.
The move will be applicable with immediate effect, the Securities and Exchange Board of India (Sebi) said in a circular. Before this, any company that is looking to launch a public issue of equity shares has to deposit with the stock exchanges an amount equal to 1% of the issue size. The deposit was returned to the company after the public issue. In Feb, Sebi floated a consultation paper proposing that the requirement of 1% security deposit for public or rights issues should be done away with.
Sebi had stated that the requirement of 1% security deposit was put in place for public/rights issues so that an issuer resolves investor complaints relating to the transaction.