PFRDA issue clarification on the guidelines for investment by pension funds in IPO/FPO

Sep 20, 2021 | by Avantis RegTech Legal Research Team

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Commercial Compliance

The Pension Fund Regulatory and Development Authority (PFRDA) on September 16, 2021 has issued clarification on the guidelines for investment by pension funds in IPO/FPO and/or OFS for which the guidelines were specifies in their earlier  Circular No.PFRDA/2021/32/REG-PF/4 dated July 27, 2021.

PFRDA clarified that if the Pension Fund has invested in equity shares of any company through an IPO and if the equity shares do not fulfil the market capitalization condition prescribed under investment guidelines post listing, a time period of maximum one year shall be provided to the PF for making decision on selling/holding such stock. At the time of completion of one year, if no decision to sell such stock was made by the Pension Fund, the said stock shall be sold by the Pension Fund if it does not fall in the last list of Top 200 stocks published by NPS Trust.

It is also clarified that the Pension Fund, who has received allotment in the IPO, can acquire fresh shares of the same company as long as the investment meets the conditions prescribed in Investment Guidelines/Circulars issued in this regard.

All the Pension Funds are called upon to note the above and ensure necessary compliance.

[Circular No. PFRDA/2021/39/REG-PF/5]

 


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