The Securities and Exchange Board of India (“SEBI”) has issued a circular dated January 19, 2021 bearing no. SEBI/HO/CFD/DIL1/CIR/P/2021/13 (“Circular”) to extend relaxations as provided under the point (iv) of the SEBI circular dated May 6, 2020 bearing no. SEBI/HO/CFD/DIL2/CIR/P/2020/78 (“May Circular”). The May Circular provided certain relaxations to listed entities in relation to rights issue opening unto July 31, 2020 under the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 (“ICDR Regulations”). Such relaxations were further extended upto December 31, 2020 by SEBI vide its circular dated July 24, 2020 bearing no. SEBI/HO/CFD/DIL1/CIR/P/2020/136 (“July Circular”).
In light of the COVID-19 pandemic and lockdown measures, the SEBI vide May Circular had granted one-time relaxations from strict enforcement of ICDR Regulations in relation to rights issue opening unto July 31, 2020 (which date was further extended upto December 31, 2020, by July Circular). The Regulation 76 of the ICDR Regulations mandates rights issues to be made only through Applications Supported by Blocked Amount (ASBA) mechanism. Point (iv) of the May Circular allowed the issuers, their lead manager, the registrar and other recognised intermediaries (as deemed fit by the issuer and the lead manager) to institute an optional mechanism (other than ASBA) to accept shareholders’ applications. However, such optional mechanism is required to be a non-cash mode method and it shall be ensured that no third party payments are allowed.
The relaxation mentioned in point (iv) of the May Circular is further extended by the Circular and shall be applicable for rights issues opening upto March 31, 2021 provided the issuer along with the lead manager(s) shall continue to comply with the following:
The Circular can be accessed here.
This update has been contributed by Pratish Panjabi (Partner) and Shivani Agarwal (Associate).
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