Monday, December 8, 2008

Amendments to SEBI (DIP) Guidelines - Now listed companies can offer Non-Convertible Debentures (NCDs) with warrants

SEBI has amended SEBI (DIP) Guidelines vide its circular dated December 8, 2008. The amendments are made in “Guidelines for Qualified Institutions Placement (QIP)”. It enables a listed company to make a combined offering of Non-Convertible Debentures (NCDs) with warrants. Qualified Institutional Buyers (QIBs) can subscribe to the combined offering of NCDs with warrants or to the individual instruments, i.e., either NCDs or warrants.
Usually, a holder of NCD with equity warrants is given an option to buy a specific number of shares from the company at a predetermined price within a definite time-frame.
The amended clause reads as follows: -
“13A.1.1 This Chapter shall apply to any issue of equity shares / fully convertible debentures (FCDs) / partly convertible debentures (PCDs) (/ nonconvertible debentures (NCDs) with warrants or any securities (other than warrants)), which are convertible into or exchangeable with equity shares at a later date (hereinafter referred to as “specified securities”), made to Qualified Institutional Buyers (QIBs) pursuant to this chapter, by a listed company which fulfills the following conditions:”
Full text of the circular is available in www.sebi.gov.in.

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