Published On: Tue, Apr 21st, 2020

SEBI gives relaxations for rights issue amid Covid-19

Mumbai: In a bid to ease the sourcing of funds from the capital markets amid the coronavirus crisis, the SEBI on Tuesday announced a certain temporary relaxations for rights issue by companies.

These temporary relaxations are applicable for right issues that open on or before March 31, 2021

As per the security market regulator’s circular, eligibility requirement of average market capitalisation of public shareholding has been reduced to Rs 100 crore from Rs 250 crore.

Further, the requirement related to period of listing of equity shares of the issuer for at least three years has been reduced to a period of 18 months.

The regulator has also reduced the threshold for minimum subscription requirements for a rights issue to 75 per cent of the offer size from the existing 90 percent, subject to certain conditions.

Further, listed entities raising funds up to Rs 25 crore in a rights issue will not be required to file a draft offer document. The existing threshold is Rs 10 crore.

“Relaxation with respect to the minimum threshold required for not filing draft letter of offer with SEBI: In regulation 3(b), proviso to regulation 3 and in regulation 60, the words ‘ten crores’ shall be read as ‘twenty-five crores’,” said the circular.

These temporary relaxations are applicable for right issues that open on or before March 31, 2021, it said.

Tweeting about SEBI’s latest relaxations, Finance Minister Nirmala Sitharaman’s office said: “#SEBI has decided to take certain measures to further facilitate fund raising by corporates through capital markets in keeping with its ongoing efforts to ease processes in light of #COVID19. #IndiaFightsCorona.”

In the past couple of months, the Securities and Exchange Board of India (SEBI) has announced a slew of compliance and regulatory relief for the companies to help them tide over of the coronavirus crisis.

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