Firms can't offer sops to debt subscribers: SEBI
27 December 2011
The Securities and Exchange Board of India (SEBI) has prohibited companies from offering incentives for public issues of debt securities.
According to a Bloomberg report today, the bourse regulator has said no person connected with a debt issue shall offer any incentive, direct or indirect, to any person for making an application for allotment of specified securities.
According to the report, SEBI has gathered from market participants that some brokers and distributors are passing on part of their brokerage and commission to the final investors for subscription of public issues of debt securities.
This was giving unfair advantage and bargaining power to a certain set of investors and distributors, and also adding to the cost of issuance for the company, SEBI said.
Meanwhile at an event in Chennai today, SEBI chairman U K Sinha said he has set up a group to monitor IPO processes.
''If business houses are not sending annual reports and not conducting AGMs, these are clear cut violations. I will ask my team to investigate all cases where AGMs have not been called and annual reports have not been sent,'' Sinha told a conference organised by the National Stock Exchange in Chennai.
Talking to reporters later, Sinha said SEBI is advising the mutual funds industry to launch fewer new schemes.
''SEBI is encouraging mutual funds to float less number of newer schemes. If there are schemes which are similar investment schemes, SEBI is encouraging them to merge them. We are working towards this,'' he said.