The Securities and Exchange Board of India, vide Circular dated 22nd January 2020, has simplified the rights issue process to make it more efficient and effective, by amending the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 (“ICDR Regulations”)and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“LODR Regulations”). This circular shall be applicable for all rights issues and fast track rights issue where Letter of Offer (LoF) is filed with the stock exchanges on or after February 14, 2020.
The new norms are aimed at significantly reducing the timeline for the completion of rights issue, which will ultimately benefit the shareholders.
Key Highlights of the Notification:
- The period for advance notice to stock exchange has been reduced from 7 working days to at least 3 working days (excluding the date of intimation and the record date), for the purpose of rights issue.
- Issuance of newspaper advertisement disclosing date of completion of dispatch and Intimation of same to the stock exchanges shall be completed within 2 days before the date of opening of the issue.
- The issuer shall disclose the process of credit of dematerialized Rights Entitlements in the demat account and renunciation thereof and the REs shall be credited to the demat account of eligible shareholders in dematerialized form.
- The regulator has stated that the shareholders holding shares in physical form will be required to provide details of demat account for credit of rights entitlements not later than two working days prior to the issue closing date.
- Investors holding REs in dematerialized mode shall be able to renounce their entitlements by trading on stock exchange platform or off-market transfer
- Further the withdrawal of application shall not be permitted by any shareholder after the issue closing date.
Click here to read the Notification
