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SEBI proposes changes in the rights issue process

SEBI proposes changes in the rights issue process

The Companies Act, 2013 (2013 Act) and the Securities Exchange Board of India (SEBI) Issue of Capital and Disclosure Requirements (ICDR) Regulations, 2018 lay down general conditions and procedure for rights issue.

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The Companies Act, 2013 (2013 Act) and the Securities Exchange Board of India (SEBI) Issue of Capital and Disclosure Requirements (ICDR) Regulations, 2018 lay down general conditions and procedure for rights issue. Every listed issuer is required to comply with the requisite conditions before making rights issue within the stipulated timelines.

SEBI on 21 May 2019 issued a discussion paper on Review of Rights Issue Process to explore ways to make the rights issue process more efficient. Currently, the listed issuer requires 55 to 58 days for undertaking rights issue process through the fast track route. In this regard, SEBI proposed to reduce the timelines both in the pre issue opening phase and after issue closure such that the issuer and shareholders benefit from process efficiencies.

The discussion paper issued by SEBI evaluates means to reduce time between the announcement of terms of the issue and issue closing which would help in reducing price risks.

This issue of First Notes provides an overview of the proposals made by SEBI.

To access the text of the discussion paper issued by SEBI, please click here.
 

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