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Easing the penal provisions for deemed public offers was "not an easy decision" for the markets regulator, and there is no possibility of any further relaxations in this space, Sebi Chairman UK Sinha said on Tuesday.
Recently, Sebi board had decided that unlisted companies raising funds through securities without having a public offer document will be exempted from penal action if they provide a refund option along with 15 percent interest rate at the time of issuance.
The relaxation would be applicable on entities that have raised funds by issuing securities to more than 49 persons, but up to 200 individuals in a financial year.
"Companies law has provided change from 50 to 200. It was not very easy for Sebi board to come to this decision. Because it has never in the past said that a particular type of offence will not be enforced. This is for the first time", Sinha said at an event organised by Association of Investment Bankers of India (AIBI) here.
He noted that the board saw the legislative intent and "when the new law said 200 we said anyone who has gone up to 200 maybe by honest mistake we will permit them to return the money to the investors and close the chapter".
"But to ask that 200 should be extended...that it should be free for all every where, I don't think we should argue on those lines", he said.
Under the Companies Act, 2013 - whose most provisions came into effect from April 1, 2014 - any offer or allotment of securities is considered as public issue if the number of allottees exceeds 200 in a financial year.
This provision replaced the cap of 49 persons in the Companies Act, 1956. On developing the country's bond markets, Sinha said there were issues both on the demand and the supply side.
"There is now focus on recovery of loans and focus on reduction in non performing assets maybe more and corporates would be incentivised to come to the bond market", he said.
While observing that on the demand side the mutual fund industry is playing a good role, Sinha said: "There are some issues with other sectoral regulators whether insurance, pension and may be even in banking industry, there are perhaps some changes required, some more decisions are required."
"These matters are discussed in the forum of regulators and the government", he said.
"In the last 2-3 years there has been some improvement but not to the desired level. For the development of bond market, Sebi has also started focusing on role credit-rating agencies (CRAs) and debenture trustees", he noted.
He also urged the investment bankers to look into start-up segment as well as participate in REITs issuances and municipal bonds, given that smart cities were being planned by the Central government.
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