AMENDMENTS TO DIP GUIDELINES
Reduction in timelines for rights issue
In order to mitigate risks and to enable listed companies to raise funds from its shareholders in a
more time effective manner, SEBI has decided to reduce the timeline taken for rights issues to 43 days from 109 days currently. The timeline includes starting from the notice period required for calling a board meeting of the issuer to consider the rights issue up to the period stipulated for completion of allotment and commencement of listing and trading of the shares so issued.
Definition of “Qualified Institutional Buyers (QIBs)”
Presently, Foreign Institutional Investors (FIIs) registered with SEBI are included in the definition of QIBs. These FIIs invest in securities in the primary market, either on their account or on behalf of their sub-account(s), in terms of the SEBI (FII) Regulations, 1995. It has been decided to exclude
sub-accounts falling in the categories of “foreign corporate” and “foreign individual” from the definition of QIBs.
Eligibility for making Qualified Institutions Placement (QIP)
Presently, the eligibility criteria for listed companies desirous of making QIP include a condition
that the equity shares of the same class of such companies shall have been listed on a stock
exchange having nationwide terminals, for a period of at least one year as on the date of issuance of notice to shareholders for considering the QIP. It is noted that companies, which have been listed during the preceding one year pursuant to approved scheme(s) of merger/demerger/ arrangement entered into by such companies with companies which have been listed for more than one year in
such stock exchange(s). Such companies may take into account the listing history of the listed companies with which they have entered into the approved scheme(s) of merger / demerger/arrangement.
Pricing norms for QI Placement
In order to facilitate eligible listed companies to raise funds through QIP route, it has been decided to modify the pricing guidelines for QIP by bringing the issue price of the securities offered closer to their market price. The pricing norms for QIPs and for preferential allotment will now be based on
the last two weeks’ average price. Earlier, it was the last 6 months’ average price or the last 2 weeks, whichever was higher.
Lock-in on shares on exercise of warrants issued on preferential basis
Presently, as per the guidelines on preferential allotment, warrants issued on preferential basis are subject to lock-in for a period of one year or three years, as the case may be and lock-in on shares allotted on exercise of such warrants is reduced to the extent such warrants have already been locked-in. It has been decided to subject the shares so allotted pursuant to exercise of warrants to full lock-in period of one year or three years, as the case may be, from the date of allotment of such shares.
Eligibility of shares for promoters’ contribution and offer for sale-Restructuring
Presently, the SEBI (DIP) Guidelines provide that only those shares, which are held by shareholders for a period of at least one year at the time of filing of draft offer document with SEBI, are eligible (i) to be offered for sale and (ii) to be included for the purpose of promoters’ contribution (except in cases where the shares have been issued at the same issue price during the preceding one year). It has been decided to permit offer for sale and inclusion in the promoters’ contribution of those shares which have been acquired pursuant to a restructuring exercise approved by High Court(s), in lieu of business and invested capital which had been in existence for a period of more than one year prior to the restructuring exercise.
Filing of offer documents at SEBI Regional Offices
At present, draft offer documents of issue size up to Rs.20 crores can be filed by lead merchant bankers with such Regional Office of SEBI under the jurisdiction of which the registered office of the issuer company falls. It has been decided to increase this limit to Rs.50 crores.
In order to mitigate risks and to enable listed companies to raise funds from its shareholders in a
more time effective manner, SEBI has decided to reduce the timeline taken for rights issues to 43 days from 109 days currently. The timeline includes starting from the notice period required for calling a board meeting of the issuer to consider the rights issue up to the period stipulated for completion of allotment and commencement of listing and trading of the shares so issued.
Definition of “Qualified Institutional Buyers (QIBs)”
Presently, Foreign Institutional Investors (FIIs) registered with SEBI are included in the definition of QIBs. These FIIs invest in securities in the primary market, either on their account or on behalf of their sub-account(s), in terms of the SEBI (FII) Regulations, 1995. It has been decided to exclude
sub-accounts falling in the categories of “foreign corporate” and “foreign individual” from the definition of QIBs.
Eligibility for making Qualified Institutions Placement (QIP)
Presently, the eligibility criteria for listed companies desirous of making QIP include a condition
that the equity shares of the same class of such companies shall have been listed on a stock
exchange having nationwide terminals, for a period of at least one year as on the date of issuance of notice to shareholders for considering the QIP. It is noted that companies, which have been listed during the preceding one year pursuant to approved scheme(s) of merger/demerger/ arrangement entered into by such companies with companies which have been listed for more than one year in
such stock exchange(s). Such companies may take into account the listing history of the listed companies with which they have entered into the approved scheme(s) of merger / demerger/arrangement.
Pricing norms for QI Placement
In order to facilitate eligible listed companies to raise funds through QIP route, it has been decided to modify the pricing guidelines for QIP by bringing the issue price of the securities offered closer to their market price. The pricing norms for QIPs and for preferential allotment will now be based on
the last two weeks’ average price. Earlier, it was the last 6 months’ average price or the last 2 weeks, whichever was higher.
Lock-in on shares on exercise of warrants issued on preferential basis
Presently, as per the guidelines on preferential allotment, warrants issued on preferential basis are subject to lock-in for a period of one year or three years, as the case may be and lock-in on shares allotted on exercise of such warrants is reduced to the extent such warrants have already been locked-in. It has been decided to subject the shares so allotted pursuant to exercise of warrants to full lock-in period of one year or three years, as the case may be, from the date of allotment of such shares.
Eligibility of shares for promoters’ contribution and offer for sale-Restructuring
Presently, the SEBI (DIP) Guidelines provide that only those shares, which are held by shareholders for a period of at least one year at the time of filing of draft offer document with SEBI, are eligible (i) to be offered for sale and (ii) to be included for the purpose of promoters’ contribution (except in cases where the shares have been issued at the same issue price during the preceding one year). It has been decided to permit offer for sale and inclusion in the promoters’ contribution of those shares which have been acquired pursuant to a restructuring exercise approved by High Court(s), in lieu of business and invested capital which had been in existence for a period of more than one year prior to the restructuring exercise.
Filing of offer documents at SEBI Regional Offices
At present, draft offer documents of issue size up to Rs.20 crores can be filed by lead merchant bankers with such Regional Office of SEBI under the jurisdiction of which the registered office of the issuer company falls. It has been decided to increase this limit to Rs.50 crores.
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