SEBI Proposes Framework for Price Discovery of Listed Investment Companies

On 19th April 2024, the Securities and Exchange Board of India (SEBI) unveiled draft norms to establish a framework for price discovery of shares of listed Investment Companies (ICs) and Investment Holding Companies (IHCs).

Key Points

Special Call-Auction Mechanism: SEBI proposed a special call-auction mechanism without price bands for ICs and IHCs trading at a significant discount to their book value.
Co-ordination Among Stock Exchanges: Stock exchanges will collaborate to implement the special call-auction mechanism for eligible companies, as recommended by SEBI.
Criteria for Eligibility: SEBI outlines criteria for identifying ICs and IHCs eligible for the special call auction, including listing duration and compliance with regulations.
Identification Process: Stock exchanges will initiate the identification process for eligible companies, ensuring compliance and adherence to specified criteria.
Prior Notice: Initiation of special call-auction will be preceded by a 7-day notice period to stakeholders, facilitating transparency and preparedness.
Criteria for Eligibility: Eligible companies must meet specific criteria, including listing duration, compliance with regulations, and asset allocation in other listed companies.
Stakeholder Feedback: SEBI invited feedback from stakeholders by May 10, 2024, to refine and finalize the proposed norms for price discovery.