Unprofitable firms may be allowed to tap markets
Mumbai: The Securities and Exchanges Board of India, today stipulated that unprofitable companies without a profit track-record can tap the markets through the book-building route. Besides, they will also have to ensure that 60 per cent of their issue is subscribed to by qualified institutional buyers.

Simultaneously, in an attempt to ensure that fly-by-night operators do not raise money from the public and vanish, Sebi has tightened the lock-in norms, under which all pre-IPO shares will now be subject to year's lock-in. All shares issued on preferential basis, except towards an acquisition through stock swap, will be subject to year's lock-in.

The Sebi board has also approved more powers for the regulator through an ordinance till such time concerned legislation was brought in. Issuers will not need to give future financial forecasts and merchant bankers will have to justify the pricing of the issue.

The Sebi also decided to put a year's lock-in on all shares issued on a preferential basis by a listed company to any person. The only exemption to this would be for preferential issues which involved share swap for acquisition. This will be over and above the lock-in on 20 per cent of the total capital of the company held by the promoter.
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