SEBI eases fund-raising norms for firms

The Securities and Exchange Board of India (SEBI) has allowed listed companies to raise funds as part of its attempts to make it easier for listed companies to raise funds in the current volatile scenario, at shorter intervals while also giving promoters the go-ahead to increase their stakes by a higher quantum without triggering an open offer.

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Key-Points:

This is a significant move as the earlier regulations mandated a minimum gap of six months between two such issuances.

The capital markets regulator has allowed companies to make two qualified institutional placements (QIPs) with a gap of just two weeks between them.

The promoters can increase their stakes in their companies through preferential allotments by up to 10% without triggering an open offer.

The twin moves would help in enhancing liquidity in the market as companies would be able to better time fund-raising while promoters could also acquire shares at a time when valuations were quite low compared with the historic highs.

Any company that had been listed for 18 months was permitted to raise funds through a fast- track rights issue. The eligibility had earlier been set at three years.

The minimum subscription requirement to make an issue successful was lowered from the earlier 90% of the offer size to 75%.