LIC Seeks Exemption from Sebi on Deposit Norm

The Life Insurance Crop of India (LIC) has sought exemption from the Securities and Exchange Board of India (Sebi) on deposits with exchanges for its upcoming public offering. Any company floating an initial public offering (IPO) has to deposit an amount equivalent to 1% of the issue size with stock exchanges. The security deposit, aimed at countering fraud, is returned to the issuer after the share sale.

“Our corporation vide its letter dated February 13, 2022, has sought an exemption under Regulation 300(1) of the Sebi ICDR Regulations from depositing one percent (1%) of the amount of securities offered for subscription to the public as security deposit,” LIC said in its offer document filed last week.

The state-owned insurer may have to deposit Rs.500-800 crore or more with exchanges, said people with direct knowledge of the matter. According to lawyers handling the issue, the 1% deposit will be a challenge for an IPO of LIC’s size.

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