Background:
SEBI has issued the second amendment to the Issue of Capital and Disclosure Requirements (ICDR) Regulations, 2018 to further refine the definitions, disclosure norms, and eligibility requirements relating to capital issues, dematerialisation, financial disclosures, and governance structures.

1.Amendment in Regulation 2:

1. In regulation 2, in sub-regulation (1), in clause (ss), after sub-clause (xiii), the following sub-clause shall be inserted, namely, –

“(xiv) accredited investors as defined in clause (ab) of sub-regulation (1) of regulation 2 of the Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012, for the limited purpose of their investment in Angel Funds registered with the Board, under the Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012.”.

2.Amendment in Regulation 7:

1. In regulation 7, in sub-regulation (1), clause (c) shall be substituted with the following clause, namely, –

“(c) all its specified securities held by –

(i) the promoters,

(ii) the promoter group,

(iii) the selling shareholder(s),

(iv) the directors,

(v) the key managerial personnel,

(vi) the senior management,

(vii) qualified institutional buyer(s),

(viii) employees,

(ix) shareholders holding SR equity shares,

(x) entities regulated by Financial Sector Regulators,

(xi) any other categories of shareholders as maybe specified by the Board from time to time, are in the dematerialised form prior to the filing of the draft offer document;

Explanation – For the purposes of this clause, –

(i) the term “employee” shall mean a person designated as an employee by the issuer, who is exclusively working in India, and employees of its holding, subsidiary or associate company;

(ii) “financial sector regulator” shall mean an authority or body constituted under any law for the time being in force to regulate services or transactions of financial sector and includes the Reserve Bank of India, the Securities and Exchange Board of India, the Insurance Regulatory and Development Authority of India, the Pension Fund Regulatory Authority, the International Financial Services Centre Authority, the Insolvency and Bankruptcy Board of India and such other authorities as may be specified by the Board;”.

3. Amendment in Regulation 8:

In regulation 8, in the third proviso, the existing clause b) shall be substituted with the following clause, namely, –

“b) if the equity shares or equity shares arising out of conversion of fully paid-up compulsorily convertible securities are offered for sale where such equity shares or fully paid-up compulsorily convertible securities were acquired pursuant to any scheme approved by a High Court or approved by a Tribunal or the Central Government under sections 230 to 234 of the Companies Act, 2013, as applicable, in lieu of business and invested capital, which had been in existence for a period of more than one year prior to approval of such scheme;”.

4. Amendment in Regulation 15:
In regulation 15, in sub-regulation (1), in sub-clause (ii) of the proviso to clause (b), after the words “by the promoters” and before the words “in lieu”, the words and symbols “or alternative investment funds or foreign venture capital investors or scheduled commercial banks or public financial institutions or insurance companies registered with Insurance Regulatory and Development Authority of India or any non-individual public shareholder holding at least five per cent. of the post-issue capital or any entity (individual or non-individual) forming part of promoter group other than the promoter(s), as applicable” shall be inserted.

5. Amendment in Regulation 105:

In regulation 105, in the third proviso, the existing clause b) shall be substituted with the following clause, namely, –

“b) if the equity shares or equity shares arising out of conversion of fully paid-up compulsorily convertible securities are offered for sale where such equity shares or fully paid-up compulsorily convertible securities were acquired pursuant to any scheme approved by a High Court or approved by a Tribunal or the Central Government under sections 230 to 234 of the Companies Act, 2013, as applicable, in lieu of business and invested capital, which had been in existence for a period of more than one year prior to approval of such scheme;”

6. Amendment in Regulation 230:

In regulation 230, in sub-regulation (1), clause (d) shall be substituted with the following clause, namely, –

“(d) all its specified securities held by –

(i) the promoters,

(ii) the promoter group,

(iii) the selling shareholder(s),

(iv) the directors,

(v) the key managerial personnel,

(vi) the senior management,

(vii) qualified institutional buyer(s),

(viii) employees,

(ix) shareholders holding SR equity Shares,

(x) entities regulated by Financial Sector Regulators,

(xi) any other categories of shareholders as maybe specified by the Board from time to time, are in the dematerialised form prior to the filing of the draft offer document;

Explanation – For the purposes of this clause, –

(i) the term “employee” shall mean a person designated as an employee by the issuer, who is exclusively working in India, and employees of its holding, subsidiary or associate company;

(ii) “financial sector regulator” shall mean an authority or body constituted under any law for the time being in force to regulate services or transactions of financial sector and includes the Reserve Bank of India, the Securities and Exchange Board of India, the Insurance Regulatory and Development Authority of India, the Pension Fund Regulatory Authority, the International Financial Services Centre Authority, the Insolvency and Bankruptcy Board of India and such other authorities as may be specified by the Board;”.

7. Amendment in Regulation 237:

In regulation 237, in sub-regulation (1), in sub-clause (ii) of the proviso to clause (b), after the words “by the promoters” and before the words “in lieu”, the words and symbols “or alternative investment funds or foreign venture capital investors or scheduled commercial banks or public financial institutions or insurance companies registered with Insurance Regulatory and Development Authority of India or any non-individual public shareholder holding at least five per cent. of the post-issue capital or any entity (individual or non-individual) forming part of promoter group other than the promoter(s), as applicable” shall be inserted.

8. Amendment in Regulation 292A:
In regulation 292A,

1. in clause (e),

1) in sub-clause (ii), the word “state” shall be substituted with the word “State”;

2) the existing sub-clause (iii) shall be renumbered as sub-clause (iv);

3) after the existing sub-clause (ii), the following new sub-clause shall be inserted, namely,-  “(iii) a Trust registered under the Registration Act, 1908 (16 of 1908) with the relevant Sub-Registrar in those States that have not enacted the law governing public trust;”

4) the existing sub-clause (iv) shall be renumbered as sub-clause (vi);

5) after the renumbered sub-clause (iv), the following new sub-clause shall be inserted, namely,-

“(v) a charitable society registered under the Societies Registration Act of the relevant State;”

6) in the renumbered sub-clause (vi),

1. 1. the word “incorporated” shall be substituted with the word “registered”;
   2. after the symbols, words and numerals “Companies Act, 2013 (18 of 2013)” and before the symbol “;”, the symbols, words and numerals “including a company registered under section 25 of the repealed Companies Act, 1956” shall be inserted;

7) the existing sub-clause (v) shall be renumbered as sub-clause (vii);

B. the existing clause (g), shall be substituted with the following clause, namely, –

“(g) “Social Impact Assessment Organization” means any entity which has 

(i) employed Social Impact Assessor(s) with a track record of minimum three years in conducting social impact assessment;

or

(ii) employed at least two full time Social Impact Assessors, each with a minimum experience of three years, in conducting social impact assessment, who shall sign the social impact assessment report;”.

9. Amendment in Regulation 292E:

In regulation 292E, in sub-regulation (2),

1. 1. In clause (a) –

1) the words “be indulged” shall be substituted with the word “indulge”;

2) the existing sub-clause (xvii) shall be renumbered as sub-clause (xviii);

3) after the existing sub-clause (xvi), the following new sub-clause shall be inserted, namely, – “(xvii) the activity provided under Schedule VII of the Companies Act, 2013;”;

B. The existing clause (b), shall be substituted with the following clause, namely, –

“(b) the Social Enterprise shall target underserved or less privileged population segments or regions recording lower performance in the development priorities of the Central or State Governments, or such other target segments as may be specified by the Board from time to time;”;

C. In clause (c), before the words “Social Enterprise” the words “For Profit” shall be inserted.

10. Amendment in Regulation 292F:
In regulation 292F, in sub-regulation (1),

1. 1. in the first proviso,

1) the words “choose to” shall be omitted;

2) after the words “through it” and before the symbol “.”, the words “for a maximum period of two years from the date of registration or such duration as may be specified by the Board” shall inserted;

2. after the existing first proviso, the following new proviso shall be inserted, namely,- “Provided further that upon expiry of the period of two years from the date of registration or such duration as may be specified by the Board, the Not for Profit Organization shall have at least one listed project for which funds have been raised through the Social Stock Exchange, failing which it shall cease to be registered.”.

11. Amendment in Schedule VII:

1. A. Clause (2) replaced to cover definitions and abbreviations in categories such as issue terms, issuer terms, etc.
   B. Clause (5) replaced with detailed risk factor disclosures, including past occurrences and mitigation measures.
   C. Clause (7) heading amended to “Objects of issue and use of issue proceeds”.
   D. Clause (8) replaced with comprehensive capitalization statement requirements.
   E. Clause (10) omitted.
   F. Clause (11) renumbered as (10) and substituted to include detailed financial information across three audited balance sheets.
   G. Clause (12) omitted.
   H. Clauses (13) and (14) renumbered as (11) and replaced with business and industry descriptions.
   I. Clause (16) renumbered as (13) and replaced with board and senior management details.
   J. Clause (19) renumbered as (16) and replaced with litigation disclosures, thresholds, and adverse impact information.
   K. Clauses (15), (17), (18), (20), (21), (22), (23) renumbered accordingly.
   L. New clause (21) inserted:
   “The issuer may include additional details in the placement document wherever it may deem fit.”