SEBI MAY GET POWER TO MONITOR USE OF IPO FUNDS

The new companies bill will give SEBI the power to look into the power to look into the end use of Initial Public Offering (IPO).In an official discussion SEBI said that according to the Section 55A of company’s act, it has only the power to look into the issues of IPO and not beyond that. But some changes are about to be made in this regard. According to SEBI guidelines, at present the monitoring agency is required only for IPO’S of over rs. 500 cr. As the cost involved is high, but now in order to enhance the level of transparency it has suggested that all the companies with IPO’s of even less than rs 500cr should also be monitored. The monitoring agency involved here are the banks or the other financial institutions who will be appointed by the company itself who is going for an IPO. It has been left to SEBI to change its guidelines and also see that all the IPO have a monitoring agency .These steps are being taken because there were complaint about the
mis-utilisation of the money in the IPO’s of less than rs500 cr.
As a solution all IPO’S should have a monitoring agency that will give its report to SEBI and all the shareholders on the use of IPO money. This will help in avoiding the use of money in illegal activities such as terrorism, smuggling or some of the personal use. If it is properly inforced then it will create a positive impact on the market and will also boost the investor’s confidences.
Beside these the government should setup Fund Utilization and Monitoring Agency Authority of India that will look into the use of all the fund raising activities.