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Thursday, January 22, 2015

Sebi mandates 25% upfront payment for partly paid public/rights issues

Stock market regulator Securities and Exchange Board of India (Sebi) today, 22 January 2015, announced that 25% of the issue price must be received upfront where partly paid shares are issued through public issue and rights issue. The balance consideration shall continue to be received within 12 months if the issue size is less than Rs 500 crore. Where the issue size exceeds Rs 500 crore and the issuer has appointed a monitoring agency, the period can be decided by the issuer as per the existing regulatory framework, Sebi said. In respect of warrants issued along with public or rights issue of specified securities, 25% of the consideration shall be received upfront by the issuer and tenure of such warrants shall be 18 months as against 12 months presently, Sebi said. 

The Sebi board also approved amendments to Issue and Listing of Debt Securities (ILDS) Regulations to incorporate express provisions for enabling "Consolidation and Re-issuance of Debt Securities" and "Call and Put options". By enabling consolidation and re-issuance of debt-securities, the illiquid and infrequently traded corporate bonds can be re-issued thereby leading to creation of a larger floating stock that can increase liquidity in the market, Sebi said in a press release. By enabling Call and Put options, the issuer and investors would have flexibility in redemption of debt securities. 

In order to further develop the securitisation market, the Sebi board has approved amendments to Securitised Debt Instruments (SDI) regulations to rationalize and clarify the role and responsibilities of trustee, allowing banks and public financial institutions to act as trustee without obtaining registration, terms of appointment and capital requirement for trustee, and providing for a summary term sheet. This is expected to enhance the confidence of investors in securitisation transactions, Sebi said. 
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