Sebi board likely to tighten SME listing norms

Late October the Sebi said it would come out with a discussion paper aimed at finalising some measurers to tighten the regulatory framework for SME IPOs.

In a stern action on December 3, the Sebi cancelled the issue by Trafiksol ITS Tech and ordered the company to refund the Rs 45 crore collected through the issue to investors within a week after an investigation had found malpractices including material misstatements in the prospectus and suspected collusion with a shell entity.

Sebi had also found that Trafiksol offered multiple and conflicting explanations for its engagement with the shell entity named TPV but failed to provide a single credible justification for engaging such an entity in the first place.

The 45-crore IPO of the a Noida-based firm that provides transportation systems and automation solutions for traffic and toll management projects was oversubscribed by over 345 times, attracting bids worth over Rs 10,000 crore. The issue was launched on September 10.

The market watchdog also directed the BSE to oversee the refund process, which will be completed within one week of the date of this order.

Among other proposals for post-listing include extending the applicability of provisions of related-party transactions under listing obligations and disclosure requirements regulations to listed SMEs, mandating disclosures on composition and meetings of their boards, and mandating quarterly submissions of financials and shareholding patterns.

The board may also review the definition of unpublished price-sensitive information under the prohibition of insider trading regulations, and allow for expanding it.