SEBI eases fund raising for India Inc

The Securities and Exchange Board of India (SEBI) announced that it had decided to cut the timeline for Rights Issues, to enable companies to raise funds much faster from their shareholders than earlier. The Rights Issues can now be completed in 43 days as against 109 days earlier. SEBI is also undertaking a review of the entire Rights Issue process so as to curtail the time taken to complete the offerings. "This will reduce the market risk faced by investors and issuers and will ensure faster turnaround of money for investors," SEBI Chairman C.B. Bhave said during a media conference in Mumbai after a Board meeting.

The regulator also revised the pricing norms for qualified institutional placement (QIP) and preferential allotment to qualified institutional buyers (QIBs). The floor price for QIP will now be based on the 2-week average with the relevant date being the day on which the board meets to take the decision to open the QIP. The floor price is currently based on the higher of the average of the weekly high and low of the closing prices of the shares during the 2 weeks or 6 months preceding the relevant date. "In the current market volatility it will not be practically possible to sell shares as per the current pricing formula," Bhave said.

On the issue of Participatory Notes (PN), Bhave said that the regulator did discuss the issue and considered the data for the past 10 months, but decided to maintain a status quo on the matter. "Based on the data available with us, the board did discuss PNs, as decided earlier, but no decision has been taken," the SEBI chairman said while adding that the issue would be reviewed at a later stage.

Among other decisions approved at Wednesday’s meeting were carrying out amendments to submission and publication of financial results, besides procedural changes relating to scheme-wise annual report for mutual funds.