Impact of SEBI (ICDR) Amendment Regulations, 2025 on right issue of listed Entity

“(oa) “financial year” shall have the same meaning as assigned to it under sub-section (41) of section 2 of the Companies Act, 2013;”

In clause (b), after the words and symbol “by a listed issuer;” the words and symbol “where the aggregate value of the issue is fifty crore rupees or more;” shall be omitted.

(The first proviso shall be omitted)

(b) outstanding stock appreciation rights granted to employees pursuant to a stock appreciation right scheme, which are fully exercised for equity shares prior to the filing of the red herring prospectus (in case of book-built issues) or the prospectus (in case of fixed price issues), as the case may be, disclosures regarding such stock appreciation rights and the scheme and the total number of equity shares resulting from the exercise of such rights are made in the draft offer document and offer document.

(the existing clause (b) shall be re-numbered as clause (c))

This broadens the scope of regulatory compliance, ensuring that smaller rights issues are also governed under the same framework.

The change enhances investor protection by enforcing uniform regulatory scrutiny on all rights issues, rather than only on those exceeding ₹50 crores.

Filing Requirement

The draft letter of offer is now required to be filed with the stock exchange(s) instead of SEBI in the first instance.

The final letter of offer must be filed with both SEBI and the stock exchanges instead of just the stock exchanges.

This restructuring aligns the review process with market practices by ensuring that stock exchanges are directly involved in scrutinizing offer documents at an earlier stage.

SEBI’s role is now emphasized at the stage of filing the final letter of offer, ensuring comprehensive regulatory review before the issue proceeds.

This ensures dual-level oversight, first at the stock exchange level for preliminary compliance, and subsequently at SEBI for final approval.

By making the stock exchange the primary recipient of the draft letter of offer, issuers may benefit from quicker turnaround times in the approval process.

This decentralized approach allows stock exchanges to take a more active role in scrutinizing rights issues before final SEBI approval.

(i) general corporate purposes, and

(ii) such objects where the issuer company has not identified acquisition or investment target, as mentioned in objects of the issue in the draft offer document and the offer document,

shall not exceed thirty five per cent. of the amount being raised by the issuer:

Provided that the amount raised for such objects where the issuer company has not identified acquisition or investment target, as mentioned in objects of the issue in the draft offer document and the offer document, shall not exceed twenty five per cent. of the amount being raised by the issuer:

Provided further that such limits shall not apply if the proposed acquisition or strategic investment object has been identified and suitable specific disclosures about such acquisitions / investments are made in the draft offer document and the offer document at the time of filing of offer documents.

(i) general corporate purposes, and

(ii) such objects where the issuer company has not identified acquisition or investment target, as mentioned in objects of the issue in the draft letter of offer and the letter of offer,

shall not exceed thirty five per cent. of the amount being raised by the issuer:

Provided that the amount raised for such objects where the issuer company has not identified acquisition or investment target, as mentioned in objects of the issue in the draft letter of offer and the letter of offer, shall not exceed twenty-five per cent. of the amount being raised by the issuer:

Provided further that such limits shall not apply if the proposed acquisition or strategic investment object has been identified and suitable specific disclosures about such acquisitions / investments are made in the draft letter of offer and the letter of offer at the time of filing of offer documents.

(in sub-regulation 2A, the words “draft offer document and the offer document”, wherever they appear, shall be substituted with the words “draft letter of offer and the letter of offer” respectively;)

(in sub-regulation 3, after the words “renunciation within the promoter group”, the words and symbol “or to the specific investor(s) as disclosed by the issuer in terms of these regulations” shall be inserted.)

The amendment expands this by allowing renunciation to specific investors, provided these investors are disclosed in the offer documents as per SEBI regulations.

Enhanced Flexibility for Capital Raising

This change offers more flexibility to promoters of companies classified as wilful defaulters or fraudulent borrowers by enabling them to bring in external investors.

It ensures that such issuers are not completely restricted from raising funds through a rights issue, thereby allowing potential restructuring opportunities. The amendment ensures that any renunciation to specific investors is disclosed in advance in the offer documents.

This prevents arbitrary or opaque transfers, ensuring that only pre-approved, disclosed investors are allowed to receive renounced rights. It enhances investor protection by ensuring that only credible investors participate in such renunciations.

By limiting renunciations to only specific disclosed investors, SEBI prevents the misuse of renunciation rights while still enabling fresh capital infusion.

This amendment helps distressed issuers find potential backers without violating market discipline.

(2) Where the issue is managed by more than one lead manager, the rights, obligations and responsibilities, relating inter alia to disclosures, allotment, refund and underwriting obligations, if any, of each lead manager shall be predetermined and be disclosed in the draft letter offer and the letter of offer as specified in Schedule I:

(3) At least one lead manager to the issue shall not be an associate (as defined under the Securities and Exchange Board of India (Merchant Bankers) Regulations, 1992) of the issuer and if any of the lead manager is an associate of the issuer, it shall disclose itself as an associate of the issuer and its role shall be limited to marketing of the issue.

However, it raises concerns about regulatory oversight and consistency, as the structured safeguards previously provided by lead managers are now absent.

Second proviso shall be omitted

the symbol “;” shall be substituted with the symbol “:”

 i. in sub-regulation (2), the words, symbols and figures “Part B or Part B-1 of Schedule VI, as applicable” shall be substituted with the words and figure “Part B of Schedule VI”;

ii. sub-regulations (3) and (4) shall be omitted;

Streamlining disclosure requirements by referencing only Part B of Schedule VI instead of Part B or Part B-1.

Eliminating lead managers’ statutory responsibilities for due diligence and ensuring issuer compliance.

While these changes may simplify and expedite rights issues, they increase risks for investors as issuers now have unchecked control over disclosures.

(4) The lead manager(s) shall call upon the issuer, its promoters and its directors to fulfil their obligations as disclosed by them in the draft letter of offer and letter of offer and as required in terms of these Regulations.

Sub-regulation (6) Change:

Risk Disclosure Reduction → Investors using the abridged letter of offer will no longer see if an issuer or its promoters are wilful defaulters or fraudulent borrowers, reducing transparency and investor protection.

Sub-regulation (7) Change:

Process Understanding Reduction → Retail investors relying on the abridged letter of offer will no longer have direct access to instructions on crediting and renouncing rights entitlements, potentially leading to confusion and lower participation in rights issues.

While SEBI may have intended to simplify the ALO, these changes reduce critical investor awareness and transparency, potentially harming informed investment decisions.

Provided that the issuer shall, in case of fast track issue, file a letter of offer and pay fees as specified in Schedule III with the Board.

(2) The lead manager(s) shall submit the following to the Board along with the draft letter of offer:

a) a certificate, confirming that an agreement has been entered into between the issuer and the lead manager(s) and includes content specified in Schedule II;

b) a due diligence certificate as per Form A of Schedule V;

c) in case of an issue of convertible debt instruments, a due diligence certificate from the debenture trustee as per Form B of Schedule V;

d) A certificate confirming compliance of the conditions specified in Part F of Schedule VI, if applicable.

(3) The issuer shall also file the draft letter of offer with the stock exchange(s) and shall submit to such stock exchange(s), the Permanent Account Number, bank account number and passport number of its promoters where they are individuals, and Permanent Account Number, bank account number, company registration number or equivalent and the address of the Registrar of Companies with which the promoter is registered, where the promoter is a body corporate.

(4) The Board may specify changes or issue observations, if any, on the draft letter of offer within thirty days from the later of the following dates:

(a) the date of receipt of the draft letter of offer, as applicable, under sub-regulation (1); or

(b) the date of receipt of satisfactory reply from the lead manager(s), where the Board has sought any clarification or additional information from them; or

(c) the date of receipt of clarification or information from any regulator or agency, where the Board has sought any clarification or information from such regulator or agency; or

(d) the date of receipt of a copy of in-principle approval letter issued by the stock exchanges.

(5) If the Board specifies any changes or issues observations on the draft letter of offer the issuer and lead manager(s) shall carry out such changes in the draft letter of offer and shall submit to the Board an updated draft letter of offer complying with the observations issued by the Board and highlighting all changes made in the draft letter of offer before filing the letter of offer with the stock exchanges.

(6) If there are any changes in the draft letter of offer in relation to the matters specified in Schedule XVI, an updated letter of offer or a fresh draft letter of offer, as the case may be, shall be filed with the Board along with fees specified in Schedule III.

(7) The lead manager(s) shall submit the following documents to the Board after issuance of observations by the Board or after expiry of the period stipulated in sub-regulation (4) of regulation 71 if the Board has not issued observations:

(a) a statement certifying that all changes, suggestions and observations made by the Board have been incorporated in the letter of offer;

(b) a due diligence certificate as per Form C of Schedule V, at the time of submission of the letter of offer with stock exchange(s);

(c) a due diligence certificate as per Form D of Schedule V, in the event the issuer has made a disclosure of any material development by issuing a public notice.

(8) Copy of the letter of offer shall also be filed with the Board and the stock exchanges through the lead manager simultaneously with filing of the letter of offer with the designated stock exchange.

(9) The draft letter of offer and letter of offer shall also be furnished to the Board in a soft copy.

(1) The issuer shall file the draft letter of offer with the stock exchange(s) and shall submit to such stock exchange(s) the following:

a. the Permanent Account Number, bank account number and passport number of its promoters where they are individuals, and Permanent Account Number, bank account number, company registration number or equivalent, and the address of the Registrar of Companies with which the promoter is registered, where the promoter is a body corporate,

b. in case of an issue of convertible debt instruments, a due diligence certificate from the debenture trustee as per Form B of Schedule V.

(2) The issuer shall file letter of offer with the stock exchanges/ the designated stock exchange.

(3) The issuer shall file a letter of offer with the Board for information and dissemination on Board’s website along with fees specified in Schedule III.

The issuer Company itself need to introduce safeguards to ensure disclosure and due diligence requirement as well as to prevent misuse of this relaxed regulatory framework to the detriment of investors.

(2) The issuer shall, within two days of filing of the draft letter of offer with the Board, make a public announcement in one English national daily newspaper with wide circulation, one Hindi national daily newspaper with wide circulation and one regional language newspaper with wide circulation at the place where the registered office of the issuer is situated, disclosing to the public the fact of filing of the draft letter of offer with the Board and inviting the public to provide their comments to the Board, the issuer or to the lead manager(s) in respect of the disclosures made in the draft letter of offer.

(3) The lead manager(s) shall, after expiry of the period stipulated in sub-regulation (1), file with the Board, details of the comments received by them or the issuer from the public, on the draft offer document, during that period and the consequential changes, if any, that are required to be made in the draft offer document.

(5) Stock exchanges shall provide copies of the draft letter of offer to the public as and when requested and may charge a reasonable sum for providing a copy of the same.

(ii. in sub-regulation (4), the words and symbol “issuer and the lead manager(s) shall ensure that the letters of offer” shall be substituted with the words “issuer shall ensure that the draft letter of offer and letter of offer”;

iii. in sub-regulation (5), the words and symbol “lead manager(s) and the” shall be omitted.)

(In regulation 73, in sub-regulation (1), the words and symbols “,in consultation with the lead manager(s),” shall be omitted.)

Provided that in the event of under-subscription in the employee reservation portion, the unsubscribed portion may be allotted on a proportionate basis, for a value in excess of two lakhs rupees, subject to the total allotment to an employee not exceeding five lakhs rupees.

While this simplifies the process for issuers, it reduces incentives for employee participation and removes a potential benefit that employees previously enjoyed. The amendment reflects SEBI’s broader effort to streamline regulations and create a more uniform rights issue framework.

In regulation 75,

i. in the marginal note, the words “Abridged letter” shall be substituted with the word “Letter”;

ii. sub-regulation (1) shall be omitted;

iii. in sub-regulation (2), the word “abridged” shall be omitted.

(2) The letter of offer, along with application form, shall be despatched through registered post or speed post or by courier service or by electronic transmission to all the existing shareholders at least three days before the date of opening of the issue.

(3) The letter of offer shall also be provided by the issuer to any existing shareholder who makes a request in this regard.

In regulation 77,

i. in sub-regulation (1), the words and symbol “lead manager(s)” shall be substituted with the word “issuer”;

ii. in sub-regulation (2), the word “abridged” shall be omitted;

iii. in sub-regulation (3), the words and symbol “or lead manager(s)” shall be omitted.

Key Takeaways:

(1) Issuers now have full responsibility for making issue materials available before the issue opens.

(2) Full letter of offer must be sent instead of an abridged version, enhancing transparency.

(3) Lead managers are no longer required to provide issue documents to shareholders upon request.

(4) Retail investors may struggle with a full-length letter of offer instead of a simplified abridged version.

While these changes streamline regulatory processes, SEBI may need to monitor investor accessibility issues and ensure issuers comply with their expanded responsibilities.

(2) Allotment of specified securities shall be made in the dematerialised form only.

77B. (1) For the purpose of this chapter, specific investor would mean any investor who is eligible to participate in rights issue of the issuer and –

(a) whose name has been disclosed by the issuer in terms of sub-clause (i) of clause (f) of sub-regulation (1) of regulation 84 of these regulations;

(b) whose name has been disclosed by the issuer in terms of sub-clause (ii) of clause (f) of sub-regulation (1) of regulation 84 of these regulations.

(2) The application by the specific investor(s) in terms of clause (a) shall be made on the first day of issue opening before 11 A.M. and the issuer shall disclose to the stock exchange(s) whether such specific investor(s) have made the application or not, for dissemination on the first day of issue opening by 11:30 A.M.

(3) No withdrawal of the application(s) shall be permitted when the application by the specific investor(s) is received in terms of clause (a).

(4) The application in terms of clause (b) shall be made by the specific investor(s) along with the application money before the finalisation of basis of allotment.”

After regulation 77A and before regulation 78, the regulation 77B shall be inserted

Issuers must disclose pre-identified investors, reducing uncertainty about participation which may have following implication:

(1) Certain specific investors must submit applications by 11 A.M. on the first day and their participation must be disclosed by 11:30 A.M.

(2) Ensures that key investors commit early, improving market confidence in the issue.

(3) Helps retail and institutional investors assess early participation levels before deciding.

(4) Specific investors cannot withdraw their applications once submitted which reduces last-minute volatility in rights issues and ensures that strategic investors remain committed to the issue, may result into discourage speculative participation, as investors must be certain before applying.

(5) Alignment with Regulation 84 (Disclosure Requirements) : Issuers must disclose names of specific investors in compliance with Regulation 84, which enhances transparency, as investors will know in advance who the major participants in the rights issue are.

(6) Ensuring Payment Before Finalization of Allotment: Specific investors under Clause (b) must pay before finalization of allotment which Reduces default risk, ensuring that the issuer receives funds before confirming allotments.

(7) Streamlines the allotment process, making it more predictable.

The insertion of Regulation 77B introduces a structured framework for specific investors in rights issues, bringing greater transparency, predictability, and commitment to the process. Overall, this amendment is a proactive step toward making rights issues more transparent and structured, benefiting both issuers and investors.

It will provide Greater flexibility for issuers in structuring underwriting agreements with Potential cost savings if issuers find more competitive underwriting options.

Overall, this change reduces regulatory burden on lead managers but places a higher responsibility on issuers to ensure their rights issues are successfully subscribed.

Small and mid-sized issuers are now subject to the same scrutiny as large issuers.

This amendment removes the ₹100 crore threshold, making fund utilization monitoring mandatory for all rights issues.

Stronger investor protection through third-party monitoring.

Prevention of fund misuse, enhancing market transparency.

Increased accountability for all issuers, regardless of size.

Higher compliance costs for small issuers, making rights issues less appealing.

Administrative burden on companies that previously did not need monitoring.

Overall, this change strengthens transparency and investor trust but increases regulatory costs for smaller issuers.

Clause (c) of sub-regulation (1) in Regulation 84

Clause (e) &(f)  of sub-regulation (1) in Regulation 84

Sub-regulation (2) in Regulation 84

a statement that if the shareholders entitled to receive the rights entitlements have neither received the original application forms nor are in a position to obtain the form; they may make an application through the form available on the website of Registrar, stock exchanges or lead managers or in writing on a plain paper to subscribe to the Rights Issue along with a format specifying therein the necessary particulars such as name, address, ratio of rights issue, issue price, number of equity shares held, ledger folio numbers, depository participant ID, client ID, number of equity shares entitled and applied for, additional shares if any, and the amount to be blocked with SCSB along with the application

e) a statement to the effect that if the shareholder makes an application using the application form as well as plain paper, both the applications shall be liable to be rejected at the option of the issuer.

(3) An announcement regarding closure of issue shall be made only after the lead manager(s) is satisfied that at least ninety per cent. of the offer through letter of offer has been subscribed and a certificate has been obtained to that effect from the registrar to the issue:

Provided that such an announcement shall not be made before the date on which the issue is to be closed except for issue closing advertisement made in the format prescribed in these regulations.

a statement that if the shareholders entitled to receive the rights entitlements have neither received the original application forms nor are in a position to obtain the form; they may make an application through the form available on the website of Registrar, stock exchanges or in writing on a plain paper to subscribe to the Rights Issue along with a format specifying therein the necessary particulars such as name, address, ratio of rights issue, issue price, number of equity shares held, ledger folio numbers, depository participant ID, client ID, number of equity shares entitled and applied for, additional shares if any, and the amount to be blocked with SCSB along with the application

After clause (e), the following clause shall be inserted, namely:

“(f) details of the specific investor(s):

i. name of the specific investor(s) (i.e. renouncees), name of the promoter(s)/promoter group (i.e. renouncer) and number of rights entitlements renounced, where the promoter(s)/promoter group is renouncing their rights entitlements in terms of sub-regulation (3) of regulation 62 and clause (b) of sub-regulation (1) of regulation 86 of these Regulations;

ii. name of the specific investor(s), where the issuer intends to allot any under- subscribed portion of rights issue in terms of clause (d) of sub-regulation (2) of regulation 90 of these regulations.”

(3) An announcement regarding closure of issue shall be made only after the issuer is satisfied that at least ninety per cent. of the offer through letter of offer has been subscribed and a certificate has been obtained to that effect from the registrar to the issue:

Provided that such an announcement shall not be made before the date on which the issue is to be closed except for issue closing advertisement made in the format prescribed in these regulations.

in sub-regulation (3), the words and symbol “lead manager(s)” shall be substituted with the word “issuer”.

(1) Greater transparency in renunciations and under-subscription allocations.

(2) Faster decision-making as issuers handle compliance directly.

(3) Less oversight, as lead managers no longer verify subscription levels before closure.

(4) Limited investor access, as lead managers’ websites will no longer host application forms.

Overall, this change streamlines the rights issue process but increases issuer responsibility, making strict regulatory enforcement essential to prevent non-compliance.

Opening of the issue

85. Subject to the compliance with the provisions of the Companies Act, 2013, a rights issue may be opened within such period as may be specified by the Board from time to time.

(1) Greater flexibility for issuers to time their offerings.

(2) SEBI can adapt rules dynamically based on market conditions.

(3) Prevents rushed issuances that may lead to poor investor participation.

(4) Uncertainty for issuers—they may not know exactly how long they have unless SEBI specifies a clear timeframe.

Overall, this modernizes the regulation by allowing a more adaptable approach to rights issue timing, benefiting both issuers and investors.

(1) Greater flexibility for promoters in ownership restructuring.

(2) More opportunities for issuers to attract strategic investors.

(3) Increased transparency through mandatory disclosure of renouncees.

(4) Risk of undisclosed control changes if not properly monitored.

(5) Possibility of preferential allotments to select investors.

Overall, this change balances flexibility with transparency subject to ensure strict compliance and disclosure requirements to prevent misuse.

(1) More flexible rights issue timelines, adjusted based on market conditions.

(2) SEBI gains regulatory control, reducing risks of manipulation.

(3) Issuers can benefit from extended or shortened windows as needed.

Overall, this change modernizes the regulation by making rights issue durations more adaptable, subject to ensure clarity and consistency in setting timelines.

“(d) Allotment to any specific investor(s) disclosed by the issuer in terms of these regulations before opening of the issue, provided that there is an under-subscribed portion after making full allotment as per clauses (a), (b) and (c).”

(2) More streamlined process by eliminating lead managers from allotment verification.

(3) Increased transparency by requiring issuers to disclose specific investors upfront.

(4) Reduced oversight in allotment fairness due to the removal of lead managers.

These changes enhance efficiency and flexibility but reduce independent oversight subject to ensure strict enforcement of disclosure norms to prevent any misuse in under-subscription allotments and allotment finalization processes.

in sub-regulation (3), the words and symbol “lead manager(s) and” shall be omitted.

i. in sub-regulation (1), the words and symbol “and lead manager(s)” shall be omitted;

(2) Lead managers face lower regulatory risks and costs.

(3) Streamlines compliance procedures, making the process more efficient.

(4) Higher risk of non-compliance by issuers, as no third party (lead managers) will oversee the process.

(5) Investors may have fewer safeguards in case issuers fail to meet post-issue obligations.

This amendment represents a fundamental shift in regulatory responsibility, moving post-issue compliance entirely to issuers. While this increases efficiency and flexibility, it removes an independent layer of oversight that previously ensured transparency.

ii. in sub-regulation (2), the words and symbol “lead manager(s)” shall be substituted with the word “issuer”;

iii. in sub-regulation (3), the words and symbol “and the lead manager(s) shall ensure the same” shall be omitted.

(1) Lead managers are relieved of post-issue compliance burdens, making their role more focused on structuring and execution.

(2) Stock exchanges now play a bigger regulatory role, ensuring better enforcement and more impartial oversight.

(3) Issuers retain full responsibility for post-issue processes, making them directly accountable for compliance.

(4) Investors may experience delays in grievance resolution if exchanges do not act promptly.

(5) Underwriting compliance must be strictly monitored to prevent defaults and funding gaps for issuers.

This is a strategic regulatory shift aimed at centralizing oversight with stock exchanges, reducing compliance burdens on lead managers, and making issuers directly accountable.

(4) The issuer shall be responsible for and co-ordinate with the registrars to the issue and with various intermediaries at regular intervals after the closure of the issue to monitor the flow of applications from self-certified syndicate banks, processing of the applications including application form for ASBA and other matters till the basis of allotment is finalised, credit of the specified securities to the dematerialised accounts of the allottees, as applicable and unblocking of ASBA accounts/ despatch of refund orders are completed and securities are listed, as applicable.

(4) The issuer shall be responsible for and co-ordinate with the registrars to the issue and with various intermediaries at regular intervals after the closure of the issue to monitor the flow of applications from self-certified syndicate banks, processing of the applications including application form for ASBA and other matters till the basis of allotment is finalised, credit of the specified securities to the dematerialised accounts of the allottees, as applicable and unblocking of ASBA accounts/ despatch of refund orders are completed and securities are listed, as applicable.

(6) In case there is a devolvement on underwriters, the lead manager(s) shall ensure that the notice for devolvement containing the obligation of the underwriters is issued within ten days from the date of closure of the issue.

(7) In case of undersubscribed issues that are underwritten, the lead manager(s) shall furnish information to the Board in respect of underwriters who have failed to meet their underwriting devolvement in the format specified in Schedule XVIII.

(6) In case there is a devolvement on underwriters, the designated stock exchange shall ensure that the notice for devolvement containing the obligation of the underwriters is issued within ten days from the date of closure of the issue.

(7) In case of undersubscribed issues that are underwritten, the designated stock exchange shall furnish information to the Board in respect of underwriters who have failed to meet their underwriting devolvement in the format specified in Schedule XVIII.

(2) Lead managers are relieved from post-issue obligations, reducing their compliance risks.

(3) Stock exchanges now ensure compliance with fund release, providing more regulatory oversight.

These changes streamline compliance by shifting responsibilities directly to issuers and stock exchanges.

(1) The issuer shall ensure that all transactions in securities by the promoters and promoter group between the date of filing of draft letter of offer or letter of offer, as the case may be, and the date of closure of the issue shall be reported to the stock exchange(s), within twenty-four hours of such transactions.

(2) The issuer shall also ensure that any proposed pre-issue placement disclosed in the draft letter of offer shall be reported to the stock exchange(s), within twenty-four hours of such pre-issue transactions (in part or in entirety).

By requiring issuers to report these placements within twenty-four hours, SEBI aims to provide investors with up-to-date information, thereby strengthening investor protection and promoting fair practices in the capital markets.

These changes reflect SEBI’s commitment to adapting regulatory frameworks to evolving market dynamics and ensuring that issuers adhere to stringent disclosure norms.

By assigning the responsibility of submitting post-issue reports directly to the issuer, SEBI aims to ensure that the entity with the most comprehensive access to relevant information is accountable for timely and accurate reporting.

This shift is expected to improve the quality and reliability of post-issue disclosures, thereby strengthening investor protection and promoting fair practices in the capital markets.

These amendments reflect SEBI’s commitment to adapting regulatory frameworks to evolving market dynamics and ensuring that issuers adhere to stringent disclosure norms.

By allowing issuances under stock appreciation right schemes, issuers have more options for employee compensation and incentives.

The removal of the specific clause for fast-7track issues and the consolidation of the regulation under a single clause simplify the regulatory framework, making it more straightforward for issuers to understand and comply with the requirements.

Shifting the filing requirement from SEBI to the stock exchanges may expedite the processing and approval of issues, potentially reducing the time to market for issuers.

These changes reflect SEBI’s efforts to adapt to evolving market practices and to promote ease of doing business while maintaining necessary regulatory oversight.

a) the equity shares of the issuer have been listed on any stock exchange for a period of at least three years immediately preceding the reference date;

b) the entire shareholding of the promoter group of the issuer is held in dematerialised form on the reference date;

c) the average market capitalisation of public shareholding of the issuer is at least two hundred and fifty crore rupees 132[in at least one of the recognized stock exchanges with nationwide trading terminal, where its securities are listed;]

d) the annualised trading turnover of the equity shares of the issuer during six calendar months immediately preceding the month of the reference date has been at least two per cent. of the weighted average number of equity shares listed during such six months‘ period:

Provided that for issuers, whose public shareholding is less than fifteen per cent. of its issued equity capital, the annualised trading turnover of its equity shares has been at least two per cent. of the weighted average number of equity shares available as free float during such six months‘ period;

e) the annualized delivery-based trading turnover of the equity shares during six calendar months immediately preceding the month of the reference date has been at least ten per cent. of the annualized trading turnover of equity shares during such six months‘ period;

f) the issuer has been in compliance with the equity listing agreement or the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, as applicable, for a period of at least three years immediately preceding the reference date:

Provided that if the issuer has not complied with the provisions of the listing agreement or the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, as applicable, relating to composition of board of directors, for any quarter during the last three years immediately preceding the reference date, but is compliant with such provisions at the time of filing of letter of offer, and adequate disclosures are made in the letter of offer about such non-compliances during the three years immediately preceding the reference date, it shall be deemed as compliance with the condition;

Provided further that imposition of only monetary fines by stock exchanges on the issuer shall not be a ground for ineligibility for undertaking issuances under this regulation;

g) the issuer has redressed at least ninety five per cent. of the complaints received from the investors till the end of the quarter immediately preceding the month of the reference date;

h) that no show-cause notices, excluding proceedings for imposition of penalty, have been issued by the Board and pending against the issuer or its promoters or whole-time directors as on the reference date.;

In cases where against the issuer or its promoters or whole-time directors,

i) show-cause notice(s) has been issued by the Board or the Adjudicating Officer, in a proceeding for imposition of penalty; or

ii) prosecution proceedings have been initiated by the Board;

necessary disclosures in respect of such action(s) along-with its potential adverse impact on the issuer shall be made in the letter of offer.;

i) if the issuer or the promoter or the promoter group or the director of the issuer has settled any alleged violations of securities laws through the settlement mechanism of the Board in the past three years immediately preceding the reference date, then the disclosure of such compliance of the settlement order, shall be made in the letter of offer;

j) the equity shares of the issuer have not been suspended from trading as a disciplinary measure during last three years immediately preceding the reference date;

k) there shall be no conflict of interest between the lead manager(s) and the issuer or its group companies in accordance with the applicable regulations.

l) the promoters and promoter group shall mandatorily subscribe to their rights entitlement and shall not renounce their rights, except to the extent of renunciation within the promoter group or for the purpose of complying with minimum public shareholding norms prescribed under the Securities Contracts (Regulation) Rules, 1957; m) for audit qualifications, if any, in respect of any of the financial years for which accounts are disclosed in the letter of offer, the issuer shall provide the restated financial statements adjusting for the impact of the audit qualifications.

Further, for the qualifications wherein impact on the financials cannot be ascertained the same shall be disclosed appropriately in the letter of offer.

This amendment aims to create a more streamlined and uniform regulatory framework for rights issues, eliminating the bifurcation between standard and fast-track routes. By doing so, SEBI seeks to simplify the process for issuers while maintaining robust investor protection measures.

These changes reflect SEBI’s ongoing efforts to adapt to evolving market dynamics and to promote efficiency and transparency in capital-raising activities.

The removal of the fee for filings made within one year after the expiry of SEBI’s observation letter may encourage issuers to adhere more strictly to prescribed timelines, ensuring a more efficient and timely capital-raising process.

“(2) In case of Rights Issue, the issuer shall file the letter of offer with the Board at its Head Office in the address given at clause (1) above.”

By directing issuers to file the respective Letter of offer at SEBI’s Head Office, the amendment ensures a uniform and streamlined filing process.

This change aims to enhance procedural clarity and efficiency in the filing of offer documents related to Rights Issues.