How has SEBI relaxed norms for lock-in of promoter quota?

SEBI has relaxed lock-in period with regard to pre-IPO shareholding from 36 months to 18 months in case of promoters to observe the 20% shareholding following the IPO. That means; promoters can now reduce their share below 20% after completion of 18 months of the IPO. For venture capitalists, the lock-in period has been reduced from 1 year to 6 months. This is likely to encourage more companies to go public.

Currently, the 20% minimum promoter shareholding is subject to 3-year lock-in while rest of the shareholding is locked for 1 year. The lock-in for this 20% minimum contribution stands reduced to 18 months if the IPO is entirely an offer for sale or where more than half of the issue proceeds are not meant for capex. This reduction of non-promoter shareholding lock-in is also likely to boost the sentiments of private equity investors.