The Securities and Exchange Board of India (Sebi) has proposed a number of steps to increase the attractiveness of rights issues as a mode of fundraising. The measures include doing away with the requirement of filing a draft letter of offer (DLoF) with SEBI, rationalising the content of the letter of offer (LoF) by reducing the number of disclosures, reviewing the role of intermediaries, reducing the timelines and enabling allotment to select investors. A total of ₹15,110 crore was raised through rights issues in FY24, lower than ₹68,972 crore raised through qualified institutional placements and ₹45,155 crore raised through preferential allotments.Due diligence and preparing a detailed DLoF/LoF takes about 60 days. The longer timelines often prompt companies to opt for preferential issues, which take less time due to the absence of LoF filing and disclosures limited to issue objects and a number of securities to be issued. The requirement of appointing a merchant banker may be done away with and their activities may be outsourced to the issuer, registrar to the issue, and stock exchanges. Validation of applications and finalisation of the basis of allotment, presently carried out by the registrar to the issue, may be carried out by stock exchanges and depositories concurrently.The timelines for rights issues may be reduced to T+20 working days from the date of the board meeting approving the issue till its closure. Currently, non-fast-track rights issues take an average of 317 days from board approval to the date of trading, whereas fast-track rights issues take 126 days. The time between the closure of rights issues and listing/trading will be T+3 working days. The regulator may allow the promoter or promoter group to renounce their rights entitlement in favour of any selective investors except when the former are wilful defaulters or fraudulent borrowers. Rights issues of less than ₹50 crore may be brought under the purview of ICDR Regulations. Further, some checks and balances in the form of monitoring agencies may be put in place to protect the interest of the investors.SHARE
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https://www.thehindubusinessline.com/markets/sebi-to-ease-norms-for-rights-issues/article68547001.ece
