Theranautilus Secures $1.2 Mn in Seed...
19 Nov 2024
SEBI has proposed easing rights issue norms, including halving process timelines from T+20 to T+10 from board approval to issue closure, and T+3 from closure to trading. Additionally, promoters and promoter groups may be allowed to renounce their rights in favor of selective investors with prior disclosures.
Yash Ashar from Cyril Amarchand Mangaldas noted that SEBI's move to clarify renunciation and allow institutions to backstop issues aligns with global practices, potentially making rights issues a quicker and more common capital-raising method in India.
The proposal also suggests that any unsubscribed portion could be allotted to selective investors, provided upfront disclosures are made, potentially reducing underwriting needs and aiding better pricing. SEBI also proposed shifting the role of intermediaries, such as merchant bankers and registrars, to the issuer or stock exchanges, allowing companies to conduct rights issues without these intermediaries.
Moreover, SEBI recommended that stock exchanges and depositories create a system for real-time application validation within six months of the proposals' implementation. However, Kunal Sharma of Singhania & Co cautioned that these changes might prioritize issuer convenience over investor protection, raising risks related to disclosures and investor safeguards.
These recommendations follow SEBI's study showing that ₹15,110 crore was raised through rights issues in FY24, significantly lower than the ₹68,972 crore raised through QIPs and ₹45,155 crore through preferential allotments.
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