Saturday, March 14, 2009


Takeover Code amended –

SEBI has amended its take-over regulations by inserting a regulation (29A) providing relaxation from the strict compliance of certain clauses under chapter III of the regulations to companies whose boards were superseded by government. Chapter III relates to the timing, pricing and size of open offers by acquirer companies.

Bonus issue
In case of bonus issue of shares, SEBI has decided lowering timelines for their completion, from six months to 15 days, in cases where no shareholder approval is required.

Preferential Issue of Warrants
In case of preferential issue of warrants to promoters, the up-front payment has been raised to 25 per cent, from 10 per cent earlier.

Draft Red Herring Prospectus-validity
The validity of SEBI’s observations to a public issue has also been stretched to 12 months, from the earlier three months

Announcement of price band

At present, the floor price or price band in an initial public offer through the book building process is required to be disclosed in the Red Herring Prospectus registered with the Registrar of Companies, before the issue opening date. The amended DIP Guidelines permit the issuer making an initial public offer to announce the floor price or price band after the date of registration of the Red Herring
Prospectus with the Registrar of Companies, at least two working days before the issue opening date.

Differential Right Securities

The DIP Guidelines have now been amended to provide for the policy for considering relaxation from strict enforcement of requirements of rule 19(2) (b) of SCRR in case of proposal for listing of following securities by a listed issuer:-

  • Equity shares with differential rights as to dividend, voting or otherwise, offered through rights or bonus issue.
  • Warrants issued along with Non Convertible Debentures through Qualified Institutions Placement.


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