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Go-Digit to refile IPO papers after Sebi returns prospectus over employee stock plans

Synopsis

Such rights allow an employee to receive a bonus equivalent to the rise in the company's stock price over a certain period - something Indian regulations prohibit for companies going public.

Go-Digit to refile IPO papers after Sebi returns prospectus over employee stock plansAgencies
Fairfax and Virat Kohli-backed Go-Digit General Insurance will refile its draft papers for the initial public offer (IPO) after markets regulator Sebi had returned the prospectus.

The company said the regulator had raised certain compliance issues with employee stock plans in a private letter.

"The draft red herring prospectus has been returned in terms of Regulation 5(2) of the SEBI (ICDR) Regulations, 2018, which exempts rights granted under employee stock option plans to subsist at the time of filing a draft red herring prospectus, but does not similarly exempt employee stock appreciation rights," Go-Digit said in a statement.

It is the second such setback for Digit's listing ambitions. The company was last valued at $3.5 billion by Sequoia Capital.

Digit, founded in 2017 and backed by Indian investment firm TVS Capital Funds, Canadian billionaire Prem Watsa among others, is trying to expand in general insurance. Cricketer Virat Kohli and his wife actor Anushka Sharma are among the investors in the firm, according to the draft papers.

Last year, Go Digit filed a prospectus for an IPO, which comprises a fresh issue of Rs 1,250 crore and an offer for sale (OFS) of more than 10.94 crore equity shares by selling shareholders.

The insurance firm plans to utilise the net proceeds towards augmenting its capital base and maintaining the solvency levels.

In September last year, Sebi halted Go-Digit's IPO proposal because of certain compliance issues related to share issuances, but later restarted the review.

In a January 30 letter issued by the Sebi, the regulator said it was returning Go-Digit's IPO papers because the company did not comply with regulations by issuing so-called stock appreciation Rights to employees, according to news agency Reuters.

Such rights allow an employee to receive a bonus equivalent to the rise in the company's stock price over a certain period - something Indian regulations prohibit for companies going public.

Digit was found "not to be eligible for making an initial public offer", according to Sebi's letter.

The company's IPO is on hold until it changes its employee stock rights to stock option plans and refiles papers with the regulator.

(With inputs from agencies)



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Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

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