SEBI relaxes lock-in provisions for insurance, mutual fund companies

The Securities and Exchange Board of India (SEBI) has exempted insurance companies and mutual funds from the provisions relating to sale and lock-in of their pre-preferential shareholding in the issuer company.

SEBI said the relaxation from the provisions of SEBI (Issue of Capital and Disclosure Requirements) Regulations has been made, as the two are investment vehicles representing the interests of the public at large.

''It has been decided to exempt insurance companies and MFs which are broad-based investment vehicles representing the interests of the public at large from the provisions of SEBI (ICDR) Regulations relating to sale and lock-in of their pre-preferential shareholding in the issuer company,'' SEBI chairman U K Sinha said after a board meeting today.

''As a matter of liberalisation, we have taken this measure, if there is broad-based investor base, for example the mutual funds and insurance companies which do not represent the interest of one particular investor, they have group of investors backing them and they take their decisions on professional consideration,'' he said.

At present, SEBI (ICDR) Regulations preclude companies from issuing preferential allotment to entities that have sold any of their holdings during the six month period prior to relevant date. Further, preferential share allotttees are required to lock in their entire pre-preferential holdings for a period of six months from the date of preferential allotment.

Sinha said the special exemption to participate in a fresh preferential issue would be granted even in cases where these are bought or sold in the last six months.