On August 17, Go Digit filed preparatory IPO documents with the capital markets regulator. Cricketer Virat Kohli and his wife Anushka Sharma are the firm’s investors.
The presented main share sale of Canada-based Fairfax Group-backed Go Digit General Insurance Ltd has been put on hold by capital markets regulator SEBI.
However, the Securities and Exchange Board of India did not provide the extra information.
On August 17, Go Digit filed preparatory IPO documents with the capital markets regulator. Cricketer Virat Kohli and his wife Anushka Sharma are the firm’s investors.
According to the draft papers, the company’s proposed IPO included a fresh issuance of common stock worth Rs 1,250 crore and provide to sell of 10.94 crore common stocks by a promoter and existing shareholders. The profits from the new issuance were to be used to augment the company’s cost basis, maintain solvency levels, and for common commercial purposes.
It said in an update on the regulator’s website on Monday that “issuance of observations kept in suspension” studying Go Digit’s IPO. However, on September 16, the data was updated. The SEBI regularly issues its views on IPO paperwork within 30 days, which is a sign that it has approved an IPO.
Go Digit provides auto insurance, health insurance, travel insurance, property insurance, marine insurance, liability insurance, and other insurance products. It is one of the first non-life insurers in India to be fully cloud-based, and it has developed Application Programming Interface (API) integrations with several service providers.
The Bengaluru-based company has a track record of delivering growth, with Gross Written Premium (GWP) of Rs 5,268 crore, Rs 3,243 crore, and Rs 2,252 crore in fiscal years 2022, 2021, and 2020, respectively, and a Compound Annual Growth Rate (CAGR) of 53% from fiscal 2020 to fiscal 2022. The book-running lead managers for the problem are ICICI Securities, Morgan Stanley India Company, Axis Capital, Edelweiss Financial Services, HDFC Bank, and IIFL Securities.
In the earlier month, private sector lender HDFC Bank announced that it would obtain a 9.94% stake in Go Digit.
About SEBI: Its Functions & Objectives:
Securities and Exchange Board of India is the full name of the firm.
The Securities and Exchange Board of India is a statutory regulatory firm set up by the Government of India to oversee the Indian securities market and protect the interests of investors in securities.
It rules the operation of the stock market, mutual funds, and other financial institutions.
What is the SEBI, and what are its functions?
The Securities and Exchange Board of India is a statutory regulatory firm set up by the Government of India in 1992 to oversee the Indian securities market and protect the interests of stock market investors.
Why was SEBI established?
SEBI’s Mission: It was founded to keep an eye out for unfair practices and to protect investors from them. The firm was established to convince the needs of the three categories listed below:
Issuers: It seeks to provide investors with a marketplace where they can raise funds efficiently and fairly.
Intermediaries: It works to create a professional and competitive market for intermediaries.
Investors: It safeguards and provides the right information to investors.
SEBI’s Objectives
The main aim of SEBI is to protect the interests of all parties involved in trading. It also looks after the operation of the stock market. SEBI’s goals are as follows:
- To monitor the stock exchange operation.
- To protect the rights of investors.
- Regulatory laws and self-regulation must be balanced to combat fraudulent practices.
- Establish a code of ethics for brokers, underwriters, and other intermediaries.
SEBI’s Authority
SEBI performs the following functions to achieve its goals: protective, regulatory, and developmental functions. It conducts the following activities as part of its safeguarding functions:
- It monitors pricing manipulation.
- It prohibits insider trading.
- It forbids unfair and deceptive commercial activities.
- It encourages a fair code of behavior in the security industry.
- Educating investors on how to analyze investment possibilities takes time and effort effectively.
SEBI undertakes the following duties as part of its regulatory functions:
- It has developed a code of performance, rules, and regulations to govern brokers, underwriters, and other intermediaries.
- It also looks after corporate takeovers.
- It regulates and registers the functions of share transfer agents, stockbrokers, merchant bankers, trustees, and other stock market participants.
- It also controls and registers mutual funds.
- It carries out audits and investigations into the stock market.
SEBI performs the following activities as part of its developmental functions:
- It makes the training of intermediaries easier.
- The objective is to stimulate stock market activity using a flexible and adaptive approach.
SEBI Organization
SEBI’s Board of Directors is made up of 9 individuals. In addition, the Board is made up of the following individuals:
- One Chairman of the Board is chosen by the Indian Central Government.
- The Central Bank, or RBI, appoints one member of the Board.
- The Board has two representatives from the Union Ministry of Finance.
- The five Board members are chosen by the Indian Central Government.
- In addition to directing the Board, the Chairman of SEBI is in charge of the Communications, Vigilance, and Internal Inspection Department.
The firm structure incorporates four full-time employees. The full-time members are assigned several divisions to handle. Each department is led by its executive director. The executive directors are responsible for particular full-time members.
It has over 25 departments, including Foreign Portfolio Investors and Custodians (FPI&C), Corporation Finance Department (CFD), Information Technology Department (ITD), and Department of Economic and Policy Analysis (DEPA-I, II, & III).
The SEBI Act and the SEBI Guidelines:
As a non-statutory firm responsible for keeping an eye on the stock market functions, SEBI was founded in 1988. The SEBI Act of 1922 established SEBI as a free legal entity. The Act gave SEBI the authority to supervise and actively enact capital market laws.
The SEBI Act of 1992 addresses the following topics:
- SEBI Board members’ constitution and actions
- The Board’s Authority and Functions
- SEBI’s funding sources, like funds provided by the Union Government
- Penalty Guidelines and Legal Pathways
- SEBI’s judicial authority is defined.
- The Union Government’s authority to supersede SEBI.
SEBI also needs to follow a set of SEBI guidelines in areas such as:
- Employee Stock Option Plans
- Norms for Disclosure and Investor Protection
- Legal Procedures
- Anti-money laundering regulations
- Securities listing and delisting
- Opening of trading facilities in foreign countries
2015 SEBI LODR Regulations
One of the most important mandates for SEBI is the LODR (Listing Obligations and Disclosure Requirements) laws. The rules govern the transparency and announcement needs of publicly traded corporations. In addition to mandatory disclosure requirements, the legislation modifies the listing agreement that must be signed between the stock exchange & the company is listed.
The agreement includes terms and conditions for governance, disclosures, and the company’s listing status. However, the new LODR rule enacted in 2015 attempts to combine all past revisions into a single document, making it uniform across all parts of the capital market.
The SEBI (LODR) Regulations, 2015 include the following provisions:
- Disclosures and duties that the listed company’s compliance officers must admire
- All listed companies have the same listing responsibilities.
- Distinct Duties for different types of securities
- Distinguishing between the primary issuance and post-IPO standards
- Communication about the companies’ fundraising efforts
- Creating schedules for notifying specific events changes
- Including SMEs under the scope of the SEBI (LODR) Regulations
SEBI Announces New Margin Rules:
SEBI will impose new margin pledge regulations in September 2020. The rule is meant to increase transparency and prevent brokers from misusing their clients’ securities. The new margin regulations were supposed to go into effect on June 1, but because of the pandemic, the implementation date was pushed back to September 1.
It’s main motive all over the peak margin system exercise was to reduce market speculation to avert losses for private investors in turbulent markets.
SEBI’s new margin standards need the following:
The pledged stock will stay in the investor’s de-mat account. Because the stock is not changing hands, the pros of business events are passed straight to the investors.
Brokers are fined for failing to collect margins in advance for any buy or sale of securities. By moving the margin requirements from the afternoon to the morning, clients might now meet them by the end of the day.
Power of Attorney (POA) cannot be granted to the brokers to pledge. However, like the old system, brokers might ask POA from investors to accomplish decisions on their behalf.
For shares bought on margin, “Buy Today, Sell Tomorrow” (BTST) is no longer permissible. Instead, investors must honor the delivery of shares (the usual settlement period is T+2 days). Typically, investors would use intraday realized profits to meet margin requirements, but the new restrictions have changed. A BTST trade can only be initiated if the available net margin equals or exceeds 20% of the transaction value.
