Sebi eases norms for preferential allotment of shares

The Securities and Exchange Board of India ( Sebi) has exempted companies whose boards have been superseded by the government from the preferential allotment guidelines. The move is aimed at helping companies like Satyam Computers.

Investors who have sold shares of such companies in the past six months will still be eligible for preferential allotments. This facility is not allowed in case of other companies.

Also, companies like Satyam will not require shareholder approval for preferential allotments. The regulator has also relaxed the 15 day-period for completing allotments.

The regulator has also amended its disclosure and investor protection norms, under which it has altered preferential issue norms allowing companies to list warants alongwith non-convertible debentures via qualified institutional placements. It has also raised the upront amount payable for warrants alloted on preferential basis from the existing 10 per cent to 25 per cent. . The regulator has mandated that the instruments allotted on preferential basis have to be locked-in for one year.

Further, Sebi has lowered the timeline for completing bonus issues from six months to 15 days where no shareholder approval is required and 60 days where the company requires shareholder approval. Also listed companies are now required to submit any significant changes made to the offer document to at least one month before filing the document to the registrar of companies or the stock exchanges.