Sebi issues a new structure to complete the right issue process within 23 working days

On Tuesday, the Market Regulator Securities and Exchange Board India F India (SEBI) made the issue of rights within 23 working days from the date of its approval by the Board of Director of the company. This step has come between Sebi’s objective to make the issues of rights more attractive for the purpose of raising funds raising.

In a circular issued today, it directed all stakeholders about this when placing the systems and infrastructure necessary for stock exchanges and depositors to monitor and implement new norms.

In the rights issue, the application of the application bids received for the finalization on the basis of allocation and allocation on the basis of allotment will also be made with the Registrar on this issue.

They will also have to develop a system for automatic validation of applications by investors within a period of six months from the date of the implementation of this circular.

The circular further clears that the issue of rights will be opened for a period of at least seven days and for a maximum of thirty days of subscription.

The provisions of this circular will be implemented from April 7, 2025.

If the Issuer is giving the right issue of convertible debt instruments, where the shareholder approval is required, then the notice for the second board meeting for the purpose of determining the purpose will be given on the date of obtaining the shareholders and the remaining timeline will be arranged today.

Generally, the proper hard work process and the preparation of the Draft Letter of Offer (DLOF)/Offer (LOF) took about 50-60 days, which extended the process of rights issues.

In a consultation paper released in August Gust 2024, SEBI sought suggestions on reducing the timeline involved in the process. The issue was placed before the Primary Market Advisory Committee (PMAC) at a meeting for its consideration and recommendations on July 22, 2024.

The consultation paper invited feedback on other issues, such as reviewing the role of mediators involved in the Rights Issue process, reducing the timeline involved in the process, enabling selective investors to allocate and putting sufficient checks and balance.

According to a SEBI data, in the financial year 2023-24, Rs 15,110 crore was raised by 67 rights issues. In FY 23 and FY 22, Rs 6,751 crore and Rs 26,327 crore respectively. 73 and 43 were raised by issues.

Companies were able to collect a significant amount of quantity through the preferential allocation of QIP and stock. In FY 24, companies have paid Rs. The QIP route got 68,972 while collecting 45,155 crore.

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