SEBI's ICDR Amendment: A Welcome change (but some additional clarifications would be welcome too!)

The Securities and Exchange Board of India ("SEBI") amended the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018 ("ICDR Regulations 2018") by way of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) (Third Amendment) Regulations, 2021 ("ICDR Amendment 2021/the Amendment") in August 2021.

The key aspects of the ICDR Amendment 2021 relate to the reduction of lock in period for promoters post an initial public officer ("IPO").

What the new provisions entail

As per the new provision 16(1)(a) of ICDR Regulations, the minimum promoter's contribution ("MPC") post an IPO has a lock-in period of 18 months (vis-à-vis the lock-in period of 3 years earlier). The rider is that if majority of the issue proceeds are proposed to be utilized for capital expenditure – the lock-in is for a period of 3 years. The same conditions also apply for promoters holding an excess of MPC