Synopsis
The Securities and Exchange Board of India (SEBI) has announced a reduction in the timeline for completing rights issues from 126 days to 23 days, effective April 7. This change aims to facilitate faster capital raising by companies.Key Takeaways
- SEBI has cut rights issue completion time to 23 days.
- Allotment flexibility for specific investors introduced.
- Rights issues must stay open for 7 to 30 days.
- New regulations effective from April 07, 2025.
- Upcoming board meeting to discuss major regulatory changes.
Mumbai, March 12 (NationPress) In an effort to assist companies in expediting their capital-raising processes, the Securities and Exchange Board of India (SEBI) has officially reduced the timeframe for finalizing rights issues from 126 days to 23 days, effective April 7.
In a recent circular, the capital markets watchdog has also introduced flexibility in the allotment process for certain investors participating in the rights issue.
“Under the new framework, as stated in the revised Regulation 85 of the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 (SEBI ICDR Regulations), it is mandated that Rights Issues must be completed within 23 working days from the date the Board of Directors of the Issuer approves the Rights Issue,” SEBI mentioned.
“According to Regulation 87 of the SEBI ICDR Regulations, and considering the updated timelines, it is specified that the Rights Issue shall remain open for subscription for a minimum duration of seven days and a maximum of thirty days,” it added.
The process of validating application bids for subscribing to shares in the Rights Issue, along with the finalization of the basis for allotment, will be conducted by the Stock Exchanges and Depositories in collaboration with the Registrar to the issue.
This circular's provisions will take effect from April 07, 2025, and will apply to Rights Issues approved by the Board of Directors from the date this circular becomes effective, as per the markets regulator.
In other news, during the upcoming first board meeting under the new Chairperson Tuhin Kanta Pandey, SEBI is expected to deliberate on several significant regulatory proposals.
The agenda includes discussions on UPI-like protections for demat accounts, ensuring the independence of clearing corporations, broadening the criteria for qualified institutional buyers (QIBs), and revisions to fee structures for research analysts.
To bolster investor security, SEBI has proposed a system akin to the Unified Payments Interface (UPI) for demat accounts.
