SEBI trims rights issue period to 15 days

The Securities and Exchange Board of India (SEBI) today trimmed the period for rights issue to 15 days from the current 45 days and extended the application supported by blocked amount (ASBA) facility offered to initial public offers to rights issues as well.

The capital market regulator, however, amended the 'rights issue' norms to restrict utilisation of issue proceeds by a company to post allotment of rights shares.

Earlier, the issuer company was allowed to utilise the rights issue proceeds after satisfying the designated stock exchange that its 'rights offer had received minimum 90 per cent subscription'.

SEBI said the amendment of the SEBI (Disclosure and Investor Protection) Guidelines 2000, is aimed at simplifying the rights issue process as well as making it more efficient and effective.

SEBI has reduced the time period taken for finalisation of basis of allotment in the rights issues to 15 days from the earlier period of 42 days from the date of closure of the issue. The regulator has suitably amended clause 8.19 of the SEBI (DIP) guidelines for this purpose.

SEBI said the move will encourage listed companies to look at rights issues as a viable form of capital raising by reducing the overall cost of such issuances and also to make the process of such issues faster.