SEBI vide its Circular SEBI/CFD/DIL/DIP/38/2009/08/20 dated August 20, 2009 has amended the SEBI (DIP) Guidelines, 2000 and effected the following changes. The new amendment that has been brought in follows SEBI’s decision of late last year to cut short the time period for allotment of shares in rights issue to 15 days from the previous 45 days.
Rationalized the disclosure requirements for rights issues: The reason being rights issues are further issuances of capital made by listed entities to existing shareholders who are in possession of basic information about the issuer company. According to the norms issuer companies are required to disclose only minimum information that will help in making the issuance process faster and also help in reducing cost.
Applications Supported by Blocked Amount (ASBA) in rights issues: SEBI extended the facility of ‘application supported by blocked amount’ (ASBA) to all rights issue which enables an investor to apply for an issue without making payment. Instead, the amount is blocked in investor’s personal account with the designated syndicate bank and only the required funds will be debited from the account upon allocation of shares. Currently SEBI had enabled the facility for applying through ASBA only in case of an initial public offer (IPO).
Utilisation of issue proceeds after finalization of the basis of allotment in the issue: Issuer company can now utilise the issue proceeds only after the basis of ‘allotment of rights share’ is finalised. Earlier, the issuer company was allowed to utilise the rights issue proceeds after satisfying the designated stock exchange that it’s rights offer had received minimum 90% subscription’.
A copy of the Circular is available here.
A copy of the amended DIP guidelines is available here.
Showing posts with label Rights Issue. Show all posts
Showing posts with label Rights Issue. Show all posts
Friday, August 21, 2009
Friday, June 19, 2009
'Anchor Investor’ allowed in public issues, Simplified disclosure norms for rights issues and Removal of the entry load on investors in MF schemes
SEBI vide its press release PR No.192/2009 dated June 18, 2009 has announced the decisions took by SEBI Board on the same day. Major decisions are as follows:-
1. ‘Anchor Investor’ allowed in public issues
An issuer making a public issue of shares through book building may allocate on a discretionary basis up to 30% of the QIB portion of the issue to anchor investors (AIs), who is a QIB. The minimum size of application by AIs would be Rs. 10 crore. There will be a lock-in of 30 days on the shares allotted to these investors from the date of allotment. No person related to the promoter/promoter group/BRLMs can apply as anchor investor.
2. Simplified disclosure norms for rights issues
Since rights issues are made to existing shareholders, who are in possession of basic information about the company and have been receiving reports regarding major developments in the company on a continuous basis, it has been decided to rationalize disclosures in rights issue offer document by doing away with or modifying existing disclosure requirements. Disclosures that have been done away with include summary of the industry and business of the issuer company, promise vs. performance with respect to earlier/ previous issues, ‘Management discussion and analysis’. The disclosures relating to financial statements, litigations, risk factors, etc. have been simplified.
3. Removal of entry load for the schemes, existing or new, of a Mutual Fund
4. Holding period for equity shares which are received on conversion of fully paid compulsorily convertible securities – Explained
Current guidelines state that a shareholder can make an offer for sale of the equity shares if he has held them for a period of at least one year. Board decided that in case equity shares which are received on conversion of fully paid compulsorily convertible securities, including depository receipts are being offered for sale, the holding period of such convertible securities as well as that of resultant equity shares together would be taken into account for the purpose of eligibility.
5. IPOs of unlisted companies should be listed on stock exchange with nationwide trading terminals
An unlisted company making an IPO should list the securities on at least one stock exchange having nationwide trading terminals. This aims at providing a liquid trading platform to investors in securities of the company.
6. Listed company cannot issue shares with superior voting rights
This is to avoid the possible misuse by the persons in control to the detriment of public shareholders.
7. Other decisions
• Measures to improve transparency in payment of commission to Mutual Fund distributors
• Rationalization of the fees of various intermediaries
1. ‘Anchor Investor’ allowed in public issues
An issuer making a public issue of shares through book building may allocate on a discretionary basis up to 30% of the QIB portion of the issue to anchor investors (AIs), who is a QIB. The minimum size of application by AIs would be Rs. 10 crore. There will be a lock-in of 30 days on the shares allotted to these investors from the date of allotment. No person related to the promoter/promoter group/BRLMs can apply as anchor investor.
2. Simplified disclosure norms for rights issues
Since rights issues are made to existing shareholders, who are in possession of basic information about the company and have been receiving reports regarding major developments in the company on a continuous basis, it has been decided to rationalize disclosures in rights issue offer document by doing away with or modifying existing disclosure requirements. Disclosures that have been done away with include summary of the industry and business of the issuer company, promise vs. performance with respect to earlier/ previous issues, ‘Management discussion and analysis’. The disclosures relating to financial statements, litigations, risk factors, etc. have been simplified.
3. Removal of entry load for the schemes, existing or new, of a Mutual Fund
4. Holding period for equity shares which are received on conversion of fully paid compulsorily convertible securities – Explained
Current guidelines state that a shareholder can make an offer for sale of the equity shares if he has held them for a period of at least one year. Board decided that in case equity shares which are received on conversion of fully paid compulsorily convertible securities, including depository receipts are being offered for sale, the holding period of such convertible securities as well as that of resultant equity shares together would be taken into account for the purpose of eligibility.
5. IPOs of unlisted companies should be listed on stock exchange with nationwide trading terminals
An unlisted company making an IPO should list the securities on at least one stock exchange having nationwide trading terminals. This aims at providing a liquid trading platform to investors in securities of the company.
6. Listed company cannot issue shares with superior voting rights
This is to avoid the possible misuse by the persons in control to the detriment of public shareholders.
7. Other decisions
• Measures to improve transparency in payment of commission to Mutual Fund distributors
• Rationalization of the fees of various intermediaries
Friday, December 5, 2008
SEBI Board meeting held on December 4, 2008
IPO and Rights Issues
(a) SEBI issues an "observation letter" for all offer
documents submitted by Cos proposing to hit Capital Market.
Earlier, the validity of the letter was 3 mths. In view
of the current market situtation SEBI has extended this validity to 1 YEAR.
(b) Entitlements in a Rights issue will now be made in
electronic mode (i.e. by way of a credit in the demat
accout) and these can be traded on exchanges. Further
the facility of ASBA (blocking of funds in the account of
the applicant till the allotment is finalised) has also
been extended to Rights issues
Mutual Funds - Following was decided
(a) No early exit will be allowed in any Close Ended
Scheme.
(b) Close ended schemes to be listed on Exchanges (to
provide exit route to investors)
(c) Maturity of the underlying assets not to go beyond
the date the scheme expires.
(d) Schemes approved earlier but not launched to be
amended accordingly
Other decisions
(a) SEBI to have a code to avoid conflict of interest
for the members of the Board
(b) Agenda and Minutes of SEBI Board meetings to be made
public (thru website)
(a) SEBI issues an "observation letter" for all offer
documents submitted by Cos proposing to hit Capital Market.
Earlier, the validity of the letter was 3 mths. In view
of the current market situtation SEBI has extended this validity to 1 YEAR.
(b) Entitlements in a Rights issue will now be made in
electronic mode (i.e. by way of a credit in the demat
accout) and these can be traded on exchanges. Further
the facility of ASBA (blocking of funds in the account of
the applicant till the allotment is finalised) has also
been extended to Rights issues
Mutual Funds - Following was decided
(a) No early exit will be allowed in any Close Ended
Scheme.
(b) Close ended schemes to be listed on Exchanges (to
provide exit route to investors)
(c) Maturity of the underlying assets not to go beyond
the date the scheme expires.
(d) Schemes approved earlier but not launched to be
amended accordingly
Other decisions
(a) SEBI to have a code to avoid conflict of interest
for the members of the Board
(b) Agenda and Minutes of SEBI Board meetings to be made
public (thru website)
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