In a bid to make fundraising through rights issues faster and cost-effective, the Securities and Exchange Board of India (SEBI) rationalised norms and the eligibility criteria and regulations for such issues.
Post the amendments, the issuer shall be eligible to make truncated disclosures in terms of “where it has been filing periodic reports/statements/information in compliance with Listing Regulations as applicable” for the last one year, instead of the last three years as required earlier and also regarding “where three years have passed after change in management pursuant to the acquisition of control or Listing consequent to a scheme of arrangement”.
“SEBI has decided to amend SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 to rationalise eligibility criteria and disclosure requirements for Rights Issues’ with an objective to make the fundraising through this route easier, faster and cost-effective,” a SEBI statement said.
The SEBI has also increased the threshold, from Rs 10 crore to Rs 50 crore, for filing requirement of rights issue draft letter of offer with the Board for its observations.
In another relief, the regulator has decided that “mandatory 90 per cent minimum subscription criteria for rights issue shall not be applicable to those issuers where object of the issue involves financing other than financing of capital expenditure for a project, provided that the promoters and promoter group of the issuer undertake to subscribe fully to their portion of rights entitlement”.
The issuer shall be eligible to make Fast Track Rights Issue, in case of pending show-cause notices in respect to adjudication, prosecution proceedings and audit qualification, provided that necessary disclosures along with potential adverse impact on the issuer are made in the letter of offer, the SEBI said.