SEBI eases rights issue norms
13 August 2008
Mumbai: The Securities and Exchange Board of India (SEBI) has eased the pricing norms for qualified institutional placements (QIP) and also reduced the time required for completing rights issues.
Under the new norms for QIP issues, pricing will be based on two-week's average price as against six months' average price at present, SEBI chairman CB Bhave told reporters on the after a board meeting.
The market regulator has allowed companies to sell shares based on the average price of two weeks preceding the offer and can complete a rights issue within 43 days instead of the current 109 days.
''In the current market volatility it will not be practically possible to sell shares as per the current pricing formula," Bhave said.
SEBI, Bhave said, is also undertaking a review of the entire rights issue process so as to curtail the time taken to complete the offerings.
SEBI also gave extended time for companies to announce their consolidated results to two months after the end of the quarter. Mutual Funds will have to declare annual results within four months of the year-end, Bhave said.
SEBI, which considered the data on participatory notes (PN) for the past 10 months, however, left the norms unchanged.