SEBI- Measures to further facilitate fund raising from capital markets in the backdrop of COVID-19 pandemic

In the wake of challenges for the Indian economy arising out of the Covid-19 pandemic and with a view to improving access to funding to the corporates through capital markets, SEBI has decided to grant certain temporary relaxations from the regulatory provisions related to rights/ public issuances by listed entities.

Rights Issues

1. Fast track Rights issuances

Towards expanding the universe of listed entities for the purpose of fast track rights issuances, SEBI has relaxed the following conditions:

• The eligibility requirement of average market capitalisation of public shareholding of INR 250 crores has been reduced to INR 100 crores.

• The requirement related to period of listing of equity shares of the issuer for at least three years has been reduced to listing for eighteen months only.

• The condition related to no audit qualifications on issuer’s audited accounts has been replaced with the requirement to disclose the impact of audit qualifications on issuer’s financials.

• Certain other eligibility conditions with respect to period of compliance with the provisions of the listing regulations, ongoing action initiated by SEBI against the issuer / promoters / directors and settlement of violation of securities laws have also been relaxed.

2. Minimum Subscription

To provide greater flexibility in fund raising, the threshold for minimum subscription requirements for a rights issue has been reduced from existing 90% to 75% of the offer size, subject to certain conditions.

3. Threshold for not filing draft letter of offer with SEBI 

To reduce the time involved in fund raising and ease compliance requirements, listed entities raising funds upto INR 25 crores in a rights issue will not be required to file draft offer document. The existing threshold in this regard is INR 10 crores.

SEBI Press Release