SEBI relaxed the preferential allotment pricing norms for companies

Securities and Exchange Board of India (SEBI) has relaxed the preferential allotment pricing norms for companies while tightening the insider trading regulations as part of its attempts to minimise instances of unpublished, price-sensitive information getting leaked.

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Key-Points

SEBI has allowed companies to use the higher of volume-weighted average of preceding two weeks or 12 weeks for a preferential allotment.

It also amended the settlement proceeding norms to enable a faster disposal of cases while tweaking the Takeover Regulations as well.

Companies with frequently traded shares can take into account the average of the weekly high and low over the past 12 weeks or two weeks, whichever is higher, and price the preferential allotment above that mark.

While the existing pricing mechanism will continue, the relaxed pricing option will be available for all preferential allotments made between July 1 and December 31, 2020.

It also permitted automating the process of filing stock exchange disclosures and lifting restrictions on the trading window for transactions prescribed by SEBI.

Securities and Exchange Board of India

SEBI was established in 1992 and given Statutory Powers on 12 April 1992 through the SEBI Act, 1992.

SEBI is the regulator of the securities and commodity market in India owned by the Government of India.

Controller of Capital Issues was the regulatory authority before SEBI came into existence; it derived authority from the Capital Issues (Control) Act, 1947.

SEBI has three functions rolled into one body: quasi-legislative, quasi-judicial and quasi-executive.