Sebi extends regulatory approval validity for IPO, rights issue by 6 months

Sebi on Tuesday extended validity of regulatory approval for launching initial public offering and rights issue by six months in the wake of coronavirus pandemic.

The step comes following representations from various industry bodies, the Securities and Exchange Board of India (Sebi) said in a circular.

The validity of Sebi's observations, where the same have expired or will expire between March 1, 2020 and September 30, 2020, has been extended by 6 months from the date of expiry of such observation.

This is subject to an undertaking from lead manager of the issue confirming compliance with the ICDR (Issue of Capital and Disclosure Requirements) Regulations while submitting the updated offer document to Sebi, it said.

As per the norms, a public issue/rights issue needs to be opened within 12 months from the date of issuance of observations by Sebi.

Sebi's observation is necessary for any company to launch public issues.

The regulator said that an issuer, whose offer document for IPO, follow on public offer and rights issue is pending receipt of its observation, will be permitted to increase or decrease the fresh issue size by up to 50 per cent of the estimated issue size without requiring to file fresh draft offer document with the Sebi.

The relaxation is subject to no change in the objects of the issue, and the lead manager will need to ensure that all appropriate changes are made to the relevant section of DRHP, and an addendum in this regard shall be made public.

The relaxation on change in fresh issue size will be applicable for offer documents pending receipt of Sebi observations until December 31, 2020.

Under the norms, any increase or decrease in estimated fresh issue size by more than 20 per cent of the estimated fresh issue size require fresh filing of the draft offer document along with fees.

Sebi said it has decided to grant these one-time relaxations in view of the impact of COVID-19 pandemic.

The circular will come into force with immediate effect, it added.