SEBI Abolished 1% Mandatory Security Deposit Requirements in Public Issues

Current Context: SEBI has abolished the 1% mandatory security deposit requirement for companies issuing public shares.

• Effective from November 21, 2024, this change is designed to ease the process of doing business.
• Companies previously had to deposit 1% of the issue size with stock exchanges, which was later returned post-issue.
• Market Reforms like ASBA and UPI payments have reduced investor complaints, making this security deposit less necessary.
• This move simplifies the fundraising process and encourages more companies to go public.

Question:

1 What has SEBI recently abolished for companies issuing public shares?

• A) The 1% mandatory security deposit requirement
• B) The minimum public offer size
• C) The lock-in period for promoters' shares
• D) The requirement for independent directors

Answer: A) SEBI has abolished the 1% mandatory security deposit requirement for companies issuing public shares.