The Evolution Of Rights Issues In India: A Deep Dive Into SEBI’S2025 ICDR Amendments And Revised Timelines
The Securities and Exchange Board of India (“SEBI”), through its SEBI (Issue of Capital and Disclosure Requirements) (Amendment) Regulations, 2025 (“Amended ICDR”), has introduced a comprehensive overhaul of the Rights Issue framework for companies listed on Indian stock exchanges. This strategic revamp marks a significant shift in the capital-raising landscape for listed companies, aiming to streamline the process further, enhance investor participation, and improve overall market efficiency. In addition to the regulatory amendments, SEBI has also issued a circular (SEBI/HO/CFD/CFD-PoD-1/P/CIR/2025/31) dated March 11, 2025 revising the Rights Issue timelines — a move that fundamentally reshapes the execution and planning of rights issues in India. These developments collectively signify a new era for rights issues, with far-reaching implications for both issuers and investors.
RIGHTS ISSUE LANDSCAPE FOR LISTED COMPANIES PRIOR TO SEBI (ICDR) (AMENDMENT) REGULATIONS, 2025
Before the recent amendments, listed companies had several avenues for raising capital — such as Preferential Issue, Rights Issue, Qualified Institutional Placement (QIP), and Follow-on Public Offer (FPO). However, the quantum and frequency of fund raising through Rights Issues are significantly lower compared to other modes, particularly Preferential Issues. Notably, Rights Issues offer a key benefit to existing shareholders by allowing them to subscribe at a discount to the prevailing market price.
Once a company’s board resolved to raise funds via a Rights Issue, the issuer and merchant banker were required to determine the applicable disclosure format under the SEBI (ICDR) Regulations, 2018 — either Part B (short format) or Part B-1 (long format) of Schedule VI. Following this, the preparation of the Draft Letter of Offer (DLOF) and completion of due diligence would typically take 3–4 months, making the process cumbersome and time-intensive.
After submission of the DLOF, SEBI would provide its observations. Subsequent to obtaining in-principle approvals from stock exchanges, the terms of the issue e.g., entitlement ratio, issue period etc. were decided. Subsequently, the Letter of Offer (LOF) could be filed, and the issue could be opened for subscription. However, a substantial portion of the disclosures in the DLOF/LOF were based on information already publicly available, rendering the process less efficient.
Additionally, prior to the amendment, Rights Issues of less than ₹50 crore technically fell outside the applicability threshold of SEBI ICDR Regulations. However, companies were still required to prepare offer documents in accordance with the same regulations.
There were two routes available for undertaking a Rights Issue — Normal Route and Fast Track Route:
- Under the Normal Route, the average timeline from board approval to listing and trading was approximately 317 days.
- For Fast Track Issues, this timeline was reduced to about 126 days.
This timeline included roughly 18 days for the issue period and another 7–8 days for post-issue formalities like listing and trading.
Moreover, pre-amendment regulations lacked specific timelines for various activities in the Rights Issue process, leading to delays and uncertainty.
In terms of flexibility:
- Promoters were not allowed to renounce their Rights Entitlements (REs) outside the promoter group if the issue had not met the minimum subscription criteria or in the case of Fast Track Issues.
- The regulations were also silent on the allotment of under-subscribed portions to any investors other than eligible RE holders, limiting issuers’ options in case of shortfall.
CHANGES INTRODUCED BY SEBI (ICDR) (AMENDMENT) REGULATIONS, 2025
- All listed companies, irrespective of the size of the Rights issue, now fall within the scope of SEBI ICDR Regulations. (Reg 60 of Amended ICDR)
- Irrespective of issue size, listed companies undertaking a Rights Issue are now required to appoint a SEBI-registered credit rating agency as a Monitoring Agency. (Reg 82 of Amended ICDR)
- The Draft Letter of Offer (“DLOF”) / Letter of Offer (“LOF”) is now to be prepared only in the shorter disclosure format i.e., Part B of Schedule VI of SEBI ICDR Regulations. (Reg 70 of Amended ICDR)
- Filing of DLOF with SEBI for obtaining observations is no longer required. The final LOF is only to be filed with SEBI for information and dissemination on its website. (Reg 71 of Amended ICDR)
- The concept of Fast Track Rights Issue has been eliminated. There will no longer be different categories of Rights Issues such as Fast Track or Non-Fast Track. (Omitted Reg 99 and 100 of Amended ICDR)
- The employee reservation portion has been discontinued. (Reg 74 of Amended ICDR)
- The requirement of preparing, filing, and distributing the Abridged Letter of Offer has been removed. Now, the Letter of Offer shall be accompanied by the Application Form distributed by the issuer instead of Abridged Letter of Offer. Consequently, Part F of Schedule VI of SEBI ICDR Regulations (Format of Abridged Letter of Offer) has been entirely omitted. (Reg 75 and 77 of Amended ICDR)
- A new category of investors has been introduced — Specific Investors.
A Specific Investor means any investor eligible to participate in the rights issue of the issuer and:
(a) whose name is disclosed by the issuer as per Reg 84(1)(f)(i) of Amended ICDR;
(b) whose name is disclosed by the issuer as per Reg 84(1)(f)(ii) of Amended ICDR
(Reg 77B of Amended ICDR)
- The details of Specific Investors must be disclosed in the pre-issue advertisement (published at least two days before the issue opening), including:
-
- The name(s) of the Specific Investor(s) (i.e., renouncees), the name(s) of the promoter(s)/promoter group (i.e., renouncer), and the number of Rights Entitlements renounced, where the promoter(s)/promoter group is renouncing their rights. (Reg 84(1)(f)(i) of Amended ICDR)
-
- The name(s) of the Specific Investor(s) where the issuer intends to allot any under-subscribed portion of the issue in terms of Reg 90(2)(d) of Amended ICDR. (Reg 84(1)(f)(ii) of Amended ICDR)
- In addition to renunciation within promoter group, promoters or promoter group are now permitted to renounce their Rights Entitlements in favour of Specific Investors as disclosed in the pre-issue advertisement, if the issuer or any of its promoters or directors is a wilful defaulter or a fraudulent borrower. (Reg 62 of Amended ICDR)
- If Specific Investors details are disclosed in the pre-issue advertisement as intending to apply, such investors must submit their applications before 11:00 A.M. on the first day of issue opening. The issuer must disclose by 11:30 A.M. on the same day to the stock exchange(s) whether the applications have been received or not. Once applied, Specific Investors are not permitted to withdraw their applications. (Reg 77B of Amended ICDR)
- If the details of Specific Investors are disclosed in the pre-issue advertisement with respect to allotment of any under-subscribed portion, then such investors must submit applications along with application money before finalisation of basis of allotment. (Reg 77B of Amended ICDR)
- A stricter timeline has been introduced for commencement of issue — the issue must open within 14 trading days from the date of the Board of Directors approving the Rights Issue, replacing the earlier timelines of 12 months from SEBI observations (Non-Fast Track Rights Issue) or 12 months from record date (Fast Track Issue). (Reg 85 of Amended ICDR read with SEBI Circular no. SEBI/HO/CFD/CFD-PoD-1/P/CIR/2025/31 dated March 11, 2025)
Note: This timeline pertains to the start of the issue, not the duration of the issue period.
- The issue period (i.e., the number of days investors can apply) remains between a minimum of 7 days and a maximum of 30 days as per Companies Act, 2013. However, SEBI has amended the language by replacing “a minimum period of seven days and for a maximum period of thirty days” with “such period as may be specified by the Board from time to time”.
- Similar to IPOs, shares allotted under Rights Issues will now commence trading on the third trading day after the issue closure date. (SEBI Circular no. SEBI/HO/CFD/CFD-PoD-1/P/CIR/2025/31 dated March 11, 2025)
- Post-Issue responsibilities of Lead Managers have now been shifted to the designated stock exchange and the issuer. (Reg 93 of Amended ICDR)
- An exception has been introduced, allowing the issuer to issue securities pursuant to a stock appreciation right scheme in addition to an employee stock option scheme during the period between filing of LOF and listing/refund, as applicable. Other than this, issuers are prohibited from issuing specified securities by way of public issue, rights issue, preferential issue, QIP, bonus issue, or otherwise during this period. (Reg 97 of Amended ICDR)
- Part B of Schedule VI of SEBI ICDR Regulations has been comprehensively revised. Some of the earlier Fast Track Rights Issue eligibility requirements are now incorporated into the disclosure requirements. Additionally, restatement of financial statements is no longer required.
- The requirement for mandatory appointment of Lead Managers has been taken out. However, there is no bar on appointing Lead Manager(s) for the Rights Issue. (Part IV of Chapter III of Amended ICDR)
REVISED TIMELINES
Since, the requirement of filing of DLOF with SEBI is discontinued with, the timeline for Rights Issue has been reduced.
| TABLE A | ||
| Indicative timeline of broad activities involved in Rights Issue from the date of approval of Board of Directors of the Issuer till the date of closure of Rights Issue | ||
| Sr. No. | Broad activities performed during Rights Issue Process | Timelines (Working Days) |
| 1. | 1st Board meeting for approval of rights issue | T
(T being the date of Board of Directors of the Issuer approving the Rights Issue) |
| 2. | Notice for 2nd Board meeting to fix record date, price, entitlement ratio etc.
Subject to Board’s/ shareholders’ approval* |
T* |
| 3. | Application by the issuer for seeking in-principle approval along with filing of Draft Letter of Offer with Stock Exchanges | T+1 |
| 4. | Receipt of in-principle approval from Stock Exchanges | T+3 |
| 5. | 2nd Board meeting for fixing record date, price, entitlement ratio etc. | T+4 |
| 6. | Filing of Letter of Offer with Stock Exchanges and SEBI | T+5 to T+7 |
| 7. | Record Date | T+8 |
| 8. | Receipt of BENPOS on Record date (at the end of the day) | T+8 |
| 9. | Credit of Right Entitlements (REs) | T+9 |
| 10. | Dispatch / Communication to the shareholders of Letter of Offer | T+10 |
| 11. | Publication of advertisement for completion of dispatch | T+11 |
| 12. | Publication of advertisement for disclosing details of specific investor(s) | T+11 |
| 13. | Issue opening and commencement of trading in REs
(Issue to be kept open for minimum 7 days as per Companies Act, 2013) |
T+14 |
| 14. | Validation of Bids | T+14 to T+20 |
| 15. | Closure of REs trading
(3 working days prior to issue closure date) |
T+17 |
| 16. | Closure of off-market transfer of REs | T+19 |
| 17. | Issue closure | T+20 |
| *If the Issuer is making a Rights Issue of convertible debt instruments, wherein shareholder’s approval is required, then the notice for 2nd Board meeting to fix record date, price, entitlement ratio etc. would be given on the date of receiving shareholders’ approval and the remaining timeline would be adjusted accordingly. | ||
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| TABLE B | ||
| Indicative timeline of broad activities involved in Rights Issue from the date of closure of Rights Issue till the date of listing and trading | ||
| Sr. No. | Broad activities performed during Rights Issue Process | Timelines (Working Days) |
| 1. | Issue closure | T
(T being the date of closure of issue) |
| 2. | Suspension of RE ISIN (immediately on issue closure) | T |
| 3. | RTA obtains bid file from Stock Exchanges (SEs) | T |
| 4. | Reverting for correction files to SCSBs for ASBA bids | T |
| 5. | Receiving rectified/final bid data from SEs | T |
| 6. | Receipt of final certificate from the SCSBs | T |
| 7. | Co-ordination with SCSBs for pending final certificates for ASBA application | T |
| 8. | Complete reconciliation of valid ASBA, REs holding and technical rejection. | T |
| 9. | Basis of allotment to be carried out by RTAs in coordination with Designated Stock Exchange (DSE) | T+1 |
| 10. | Stock Exchange to approve the basis of allotment | T+1 |
| 11. | Transfer of funds from ASBA accounts to allotment account for allottees and refund account and unblocking of accounts for non-allottees | T+1 |
| 12. | Listing application to be made to SEs | T+1 |
| 13. | Instructions to dispatch of allotment and refund/unblocking intimations | T+2 |
| 14. | Receiving in-principle listing approval for corporate action | T+2 |
| 15. | Submit application with depositories for credit to respective demat shareholder account | T+2 |
| 16. | Receipt of credit confirmation from NSDL/CDSL | T+2 |
| 17. | Filing Documents with SEs for trading approval | T+2 |
| 18. | Publication of basis of allotment advertisement in newspaper and submission of same with SEs | T+2 |
| 19. | Receipt of trading approval from SEs | T+2 |
| 20. | Shifting of shares from temporary ISIN to live ISIN | T+2 |
| 21. | Transfer of funds from Rights escrow account to Issuer’s monitoring account | T+2 |
| 22. | Commencement of trading of shares issued pursuant to rights issue | T+3 |
| 23. | Submission of media compliance report with SEBI | T+3 |
INTRODUCTION OF “SPECIFIC INVESTOR” CONCEPT UNDER AMENDED ICDR REGULATIONS
The amended SEBI ICDR Regulations have introduced a new concept — “Specific Investor”. Under this framework, SEBI has eased restrictions on renunciation of Rights Entitlements (REs) by promoters. The amendment now permits promoters or the promoter group to renounce their REs in favour of any specific investor(s), subject to upfront disclosures of such renunciations in the pre-issue advertisement.
To ensure transparency and commitment from both promoters and specific investor(s), the following compliance measures have been prescribed:
- Promoters must renounce their REs to specific investor(s) prior to the issue opening.
- Such specific investor(s) must apply for the renounced REs through ASBA by 11:00 A.M. on the first day of the issue opening period.
- The issuer is required to report these applications to the stock exchanges by 11:30 A.M. on the same day for public dissemination.
- Once an application is submitted by the specific investor(s) against renounced REs, withdrawal of such application shall not be permitted.
Additionally, SEBI has allowed issuers to allot any under-subscribed portion of the rights issue to specific investor(s) at their discretion, provided full disclosures regarding such investors are made upfront in the pre-issue advertisement. The application shall be made by such specific investor(s) before finalisation of basis of allotment.
Further, SEBI has also permitted renunciation of REs by the promoters or promoter group in favour of specific investor(s) even in cases where the issuer or any of its promoters/directors is classified as a wilful defaulter or fraudulent borrower.
CONCLUSION
SEBI’s 2025 amendments to the ICDR Regulations, along with the revised timelines, reflect a fundamental shift in the capital-raising playbook for listed companies. By eliminating procedural redundancies, standardizing disclosures, introducing Specific Investors, and enforcing stricter timelines, the regulator has clearly moved towards making Rights Issues more time-efficient, transparent, and investor-friendly. This structural reset brings Rights Issues at par with other fundraising mechanisms, potentially reviving their relevance in a market that has long tilted towards preferential allotments and QIPs.
From a practical lens, these changes are not merely regulatory fine-tuning — they signal a shift in how regulatory governance is envisioned in a developed market environment. The amendments are designed to eliminate friction in execution and provide issuers with better predictability. At the same time, SEBI’s focus on disclosure and upfront transparency ensures that investor safeguards remain intact.
In my view, this transformation balances speed with accountability. It empowers issuers with greater autonomy while mandating structured disclosures and timelines. If implemented effectively, the new framework could restore Rights Issues as a competitive and credible capital-raising tool — especially in an era where stakeholder inclusivity and shareholder value creation are becoming central to corporate governance.
The challenge now lies not in regulation, but in adoption — how companies and market intermediaries embrace this evolved framework will determine whether Rights Issues truly move from being a legacy instrument to a mainstream strategy in modern capital markets.
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