Sebi eases norms for rights issues

In a move that will streamline the rights issue process, the Securities and Exchange Board of India (Sebi) today rationalised the disclosure requirements for rights issues. A rights issue is further issuance of capital by listed entities to existing shareholders.

“In order to encourage listed companies to look at rights issues as a viable form of raising capital by reducing the overall cost of such issuances and to make the process faster, it has been decided to rationalise the disclosure requirements for rights issues”, said Sebi.

It has also made ASBA (application supported by blocked amount) applicable for all rights issues. ASBA is a mode of application wherein investor’s funds leave his bank account only on allocation of shares in public issues. The process is already functional for public issues. ASBA for rights issues will co-exist with the current process of use of cheque/demand draft as a mode of payment.

Sebi has reduced the time period for finalisation of the basis of allotments in rights issues to 15 days from 42 days. The guidelines will be applicable for all rights issues where offer documents have been filed on or after the circular.