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Article on Procedure for Rights Issue by Listed Companies contains Certain Key aspects pertaining to Rights Issue and Sequence Of Events for Rights Issue by Listed Companies.

Certain Key aspects pertaining to Rights Issue

1) Entities not eligible to make a rights issue –

  • any of its promoters, promoter group or directors of the issuer are debarred from accessing the capital market by SEBI*
  • any of the promoters or directors of the company is a promoter or director of any other company which is debarred from accessing the capital market by SEBI*
  • any of its promoters or directors is a fugitive economic offender

 *  The restrictions above will not apply to the persons or entities mentioned therein who were debarred in the past by SEBI and the period of debarment is already over as on the date of filing of the draft letter of offer with SEBI.

2) all its existing partly paid-up equity shares have either been fully paid-up or have been forfeited.

3) The Company shall ensure that all transactions in shares by the promoters and promoter group between the date of filing of the 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 exchanges within 24 hours of such transactions. [Reg 95 of SEBI ICDR Regulations, 2018]

4) As per Reg 10(4) of SEBI SAST Regulations, 2011, acquisition of shares by a person leading to an increase in his/her holding beyond 5% of the Paid up Share Capital will be exempt from making an Open Offer if –

Procedure for Rights Issue by Listed Companies

  • Rights Issue Price < Ex-Rights Price and
  • the acquirer has not renounced any of his entitlements in such rights issue

5) Promoters may renounce their shares in favour of both promoter/promoter group and public shareholders. However, where the issuer or any of its promoters or directors is a wilful defaulter or a fraudulent borrower, the promoters or promoter group of the issuer shall not renounce their rights except to the extent of renunciation within the promoter group.

6) In respect of any acquisition made by any acquirer which breaches the limits as specified under Reg 3 of SEBI SAST Regulations, 2011 but which is exempt from making an Open Offer as per Reg 10(4) SEBI SAST Regulations 2011, the shareholder has to –

  • file a report with the stock exchanges not later than 4 working days from the acquisition,
  • submit a report with SEBI along with a non-refundable fee of Rs. 1,50,000/-* within 21 working days of the date of acquisition

* As on date

7) Promoter’s intention has to be carefully structured and incorporated in the Issue Materials so as not to trigger Open Offer.

8) Care should be taken to ascertain the shareholders holding shares on repatriable and non-repatriable basis at the beginning of the due diligence process.

9) If the company has foreign shareholders, then sectoral FDI limits are required to be checked at the time of processing the applications of foreign shareholders.

10) In case of Partly Paid-up issue, company shall ensure that the outstanding subscription money is called within 12 months from the date of allotment in the issue and if any applicant fails to pay the call money within 12 months, the equity shares on which there are calls in arrear along with the subscription money already paid on such shares shall be forfeited.

11) The Letter of Offer shall be prepared in accordance with format specified in PART B of Schedule VI of SEBI ICDR Regulations except for the following cases where the Letter of Offer shall be prepared in accordance with format specified in PART B 1 of Schedule VI of SEBI ICDR Regulations –

  • The periodic reports, statements and information have not been filed in compliance with the listing agreement or the SEBI LODR Regulations, 2015, for the last one year immediately preceding the date of filing the letter of offer with the designated stock exchange in case of a fast track issue and in any other case, the date of filing the draft letter of offer with the SEBI/Exchange;
  • the issuer does not have a proper investor grievance-handling mechanism;
  • Where the management has undergone any change pursuant to the provisions of SEBI SAST Regulations, 2011, and is making a rights issue for the first time subsequent to such change and a period of 3 full years has not elapsed since such a change;
  • Where the shares have been listed consequent to the relaxation granted by the SEBI under rule 19(7) of the SCRR, 1957 for listing of its shares pursuant to a scheme sanctioned by a High Court under sections 391 to 394 of the Companies Act, 1956 or approved by a tribunal under sections 230-234 of the Companies Act, 2013, as applicable, and is making a rights issue for the first time subsequent to such listing and a period of 3 full years has not elapsed since such listing.

12) Company to –

  • Report status of Utillization/deviation of funds raised through rights issue to Stock Exchanges on quarterly basis (in case of Mani Board Companies/half yearly (in case of Companies listed on SME platform) until the amount is fully utilised by the Company
  • Disclose utilization of funds during the year raised in the Annual Report until the amount is fully utilised by the Company

     [Reg 32 of SEBI LODR Regulations, 2015, as amended]

13) Reporting under Reg 29(1)/29(2) of SEBI SAST Regulations, 2011 within the specified timelines by the acquirers wherever applicable. 

14) Any material information shared by the Company with any intermediaries connected to the issue during the course of the rights issue shall be recorded by them in the Structured Digital Database maintained by it as per the requirements of Reg 3(5) of SEBI (Prohibition of Insider Trading) Regulations, 2015.

15) The Company and all intermediaries connected to the issue shall be alert at all points of time during the course of the issue for any complaints raised by the investors and shall regularly check their SCORES portal.

SEQUENCE OF EVENTS – RIGHTS ISSUE BY LISTED COMPANIES

Steps

Events

Timelines*

1.

> Notice of Board Meeting to the Directors At least 7 days prior to Board Meeting

[As per Companies Act,2013]

[Note: Gap between the date of intimation and date of board meeting may be kept less than 7 days – the Company must ensure the attendance of at least 1 Independent Director in the meeting to avoid non-compliance]

> Intimation of Board Meeting to Stock Exchanges for –

  • considering proposal for rights issue and At least 2 working days prior to Board Meeting (excluding date of intimation and date of Board Meeting)

[Reg 29 of SEBI LODR Regulations, 2015, as amended]

[Note: It is advisable that intimation is made simultaneously with the notice of board meeting given to directors]

&

> Intimation to Stock Exchanges for closure of Trading Window

[SEBI (Prohibition of Insider Trading) Regulations, 2015, as amended]

[Note: Trading Window to remain closed for all designated persons (including Directors and designated employees as per Company’s code) and their immediate relatives as per Company’s code for prevention of Insider Trading from the date of intimation till 48 hours of Board meeting]

> Uploading the above Intimation on Company’s website Simultaneously with the above intimations

[Reg 46 of SEBI LODR Regulations, 2015, as amended]

 X

2.

> Conduct Board Meeting for approval of the following –

  • Quantum of Rights issue (Authorised Share Capital limits to be checked before approval)
  • Employee Reservation (optional) [Reg 74 of SEBI ICDR Regulations, 2018]
  • Appointment of ->  Lead Manager, ->Legal Advisor* ->Registrar to the Issue* ->Banker to the Issue/Escrow Bank* and other intermediaries as required for the issue*
  • Constitution of Rights Issue Committee

*[Note: Alternatively, Appointment and Terms of Appointment of Legal Advisor, Registrar to the Issue, Banker to the Issue/Escrow Banker and other intermediaries can be taken up by the Rights Issue Committee at a later stage before approval of Draft Letter of Offer]

> Outcome of board meeting to Stock Exchanges within 30 minutes of Board Meeting

[Reg 30 read with Schedule III of SEBI LODR Regulations, 2015, as amended]

> Uploading the above Intimation on Company’s website Simultaneously with the above intimations

[Reg 46 of SEBI LODR Regulations, 2015, as amended]

> File form MGT-14 (for approval of rights issue)

Maximum time – Within 30 days of Board Meeting

> Issuance of appointment letters to Lead Manager, Legal Advisor and Registrar to the Issue, Banker to the Issue.

> Company to Enter into agreements with –

  • Lead Manager in format as per Schedule II of SEBI ICDR Regulations, 2018 and other intermediaries [Reg 69 of SEBI ICDR Regulations, 2018]
  • Registrar to the Issue
  • Banker to the Issue (May be executed at a later stage but before Filing of Letter of Offer)

X+7

3.

> Commencement of due diligence process and preparation of Draft Letter of Offer by the Lead Manager in coordination with Legal Advisor.

X+8

to

X+40 (Appx)

4.

> Notice of Board Meeting to be sent to Directors for Approval of Draft Letter of Offer & Public Announcement

 At least 7 days prior to Board Meeting

[Note: Gap between the date of intimation and date of board meeting may be kept less than 7 days – the Company must ensure the attendance of at least 1 Independent Director in the meeting to avoid non-compliance]

> Intimation to Stock Exchanges for calling of Board Meeting for –

  • Approval of Draft Letter of Offer
  • Public Announcement which is to be made as per Reg 72(2) of SEBI ICDR Regulations, 2018 At least 2 working days prior to Board Meeting (excluding date of intimation and date of Board Meeting)

[Reg 29 of SEBI LODR Regulations, 2015, as amended]

[Note: It is advisable that intimation is made simultaneously with the notice of board meeting given to directors]

&

> Intimation to Stock Exchanges for closure of Trading Window

[SEBI (Prohibition of Insider Trading) Regulations, 2015, as amended]

[Note: Trading Window to remain closed for all designated persons (including Directors and designated employees as per Company’s code) and their immediate relatives as per Company’s code for prevention of Insider Trading from the date of intimation till 48 hours of Board meeting]

> Uploading the above Intimation on Company’s website Simultaneously with the above intimations

[Reg 46 of SEBI LODR Regulations, 2015, as amended]

X+41

5.

> Finalization of Draft Letter of Offer and Public Announcement

> Conduct Board for approval of the following –

  • Draft Letter of Offer
  • Public Announcement which is to be made as per [Reg 72(2) of SEBI ICDR Regulations, 2018]

[Note: Draft Letter of Offer shall contain disclosures as specified in Schedule VI Part B of SEBI ICDR Regulations, 2018]

> Outcome of Board meeting to Stock Exchanges Within 30 minutes of Meeting 

[Reg 30 read with Schedule III of SEBI LODR Regulations, 2015, as amended]

> Uploading the above outcome and Draft Letter of Offer on Company’s website Simultaneously with the above intimations

[Reg 46 of SEBI LODR Regulations, 2015, as amended]

[Note: Draft Letter of Offer shall also be available on Lead Manager’s website]

> APPLICATION FOR IN-PRINCIPLE APPROVAL FOR THE RIGHTS ISSUE TO THE STOCK EXCHANGES/FILING OF DRAFT LETTER OF OFFER

 [Reg 28 of SEBI LODR Regulations, 2015, as amended]

[Note: In case the issue size is less than Rs. 50 Crores, the Draft Letter of Offer is filed with SEBI for information purposes only.

Where the issue size is Rs. 50 Crores or more the Draft Letter of Offer should be filed with SEBI along with documents as specified in Reg 71(2) of SEBI ICDR Regulations, 2018 and the DLOF is hosted on the website of SEBI and Stock Exchanges for public comments for at least 21 days]

Main Board Processing Fees (as on date)

Both BSE an NSE Processing Fees 0.025 % of the Issue size, subject to Minimum Rs. 2,50,000/- and Maximum Rs. 20,00,000/- plus GST to be paid as per applicable rate

SME Board Processing Fees (as on date)

Both BSE and NSE Processing Fees 0.025 % of the Issue size, subject to Minimum Rs. 50,000/- and Maximum Rs. 10,00,000/- plus GST to be paid as per applicable rate
X+48

6.

> Making of 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 Company is situated Within 2 days of filing Draft Letter of Offer

 [Reg 72(2) of SEBI ICDR Regulations, 2018]

> Uploading the Public Announcement on Company’s website

[Reg 46 of SEBI LODR Regulations, 2015, as amended]

> Intimation of Newspaper Publication to Stock Exchanges

[Reg 30 read with Schedule III of SEBI LODR Regulations, 2015, as amended]

X+50

7.

> Receipt of In-Principle approval from Stock Exchanges for the rights Issue.

[Note 1: The time period within which Companies receive the In-Principle approval varies on a case to case basis]

[Note 2: Where the Draft Letter of Offer has to be filed with SEBI, approval to be received at least after a period of 21 days since in such case, the DLOF is made available on the websites of SEBI and Exchanges for public comments Reg 72 of SEBI ICDR Regulations, 2018]

 

X+65

Where DLOF filed only with Exchanges 

8.

> Notice of Board Meeting to be sent to Directors for approval of the following –

  • Rights Issue price,
  • Rights Entitlement ratio
  • Fixation of Record Date
  • Issue Opening and Closing date
  • Selection of Designated Stock Exchange

At least 7 days prior to Board Meeting

[Reg 29 of SEBI LODR Regulations, 2015, as amended]

[Note: Gap between the date of intimation and date of board meeting may be kept less than 7 days – the Company must ensure the attendance of at least 1 Independent Director in the meeting to avoid non-compliance]

> Intimation of Board Meeting to Stock Exchanges for –

  • Approval of Issue price
  • Rights Entitlement ratio
  • Fixation of Record Date
  • Approval of Issue Opening and Closing date
  • Selection of Designated Stock Exchange

[Reg 29 of SEBI LODR Regulations, 2015, as amended]

At least 2 working days prior to Board Meeting (excluding date of intimation and date of Board Meeting)

[Reg 29 of SEBI LODR Regulations, 2015, as amended]

[Note: It is advisable that intimation is made simultaneously with the notice of board meeting given to directors]

&

> Intimation to Stock Exchanges for closure of Trading Window [SEBI (Prohibition of Insider Trading) Regulations, 2015, as amended]

[Note: Trading Window to remain closed for all designated persons (including Directors and designated employees as per Company’s code) and their immediate relatives as per Company’s code for prevention of Insider Trading from the date of intimation till 48 hours of Board meeting]

> Uploading the above Intimation on Company’s website Simultaneously with the above intimations

[Reg 46 of SEBI LODR Regulations, 2015, as amended]

X+66

9.

> Conduct Board Meeting for approval of the following –

  • Approval of Issue price (based on Ex-rights price of shares of the Company)
  • Right entitlement ratios
  • Finalizing Record Date
  • Approval of Issue Opening and Closing date
  • Selection of Designated Stock Exchange

> Outcome of Board meeting to Stock Exchanges Within 30 minutes of Meeting

[Reg 30 read with Schedule III of SEBI LODR Regulations, 2015, as amended]

> Intimation of Record Date to Stock Exchanges Record Date to be intimated to the exchange at least 3 Working Days prior to the Record Date excluding date of intimation & Record Date)

[Reg 42 of SEBI LODR Regulations, 2015 as amended]

> Intimation of Record Date to Depositories

[Exchanges to put up Record date notices on their websites]

> Uploading the above Intimations on Company’s website Simultaneously with the above intimations

[Reg 46 of SEBI LODR Regulations, 2015, as amended]

X+73

10.

> Newspaper Advertisement for Record Date

> Uploading the Newspaper Publication on Company’s website

[Reg 46 of SEBI LODR Regulations, 2015, as amended]

> Intimation of Newspaper Publication to Stock Exchanges [Reg 30 read with Schedule III of SEBI LODR Regulations, 2015, as amended]

X+74

11.

> Application to Depositories for R-ISIN for the purpose of credit of the right entitlements [Reg 77A of SEBI ICDR Regulations, 2018]

> Application to Depositories for PP-ISIN (in case of Partly Paid-up Issue)

> Initiation for Opening of

  • Escrow Account with Bank,
  • Unclaimed Rights Entitlement Account for crediting the REs of

> demat accounts without active status

> physical shareholders, etc.

  • Unclaimed Share Escrow Account for crediting the REs of

> Shareholders who have exercised their REs however the demat account is frozen, etc at the time of execution of Corporate Action for allotment of shares

X+75

12.

> Obtaining R-ISIN from Depositories for the purpose of credit of the right entitlements [Reg 77A of SEBI ICDR Regulations, 2018]

> Obtaining PP-ISIN from Depositories (in case of Partly Paid-up Issue)

> Receipt of Escrow Account and Shares Escrow Accounts opening confirmations from Escrow Bank and Depository Participant

X+80

13.

> Notice of Board Meeting to be sent to Directors for Approval of Draft Letter of Offer & Public Announcement

At least 7 days prior to Board Meeting

[Note: Gap between the date of intimation and date of board meeting may be kept less than 7 days – the Company must ensure the attendance of at least 1 Independent Director in the meeting to avoid non-compliance]

> Intimation to Stock Exchanges for calling of Board Meeting for –

  • Approval of Letter of Offer
  • Approval of Abridged Letter of Offer along with Application Forms and Rights Entitlement Letter

[Note: It is advisable that intimation is made simultaneously with the notice of board meeting given to directors

&

> Intimation to Stock Exchanges for closure of Trading Window

[SEBI (Prohibition of Insider Trading) Regulations, 2015, as amended]

[Note: Trading Window to remain closed for all designated persons (including Directors and designated employees as per Company’s code) and their immediate relatives as per Company’s code for prevention of Insider Trading from the date of intimation till 48 hours of Board meeting]

> Uploading the above Intimation on Company’s website Simultaneously with the above intimations

[Reg 46 of SEBI LODR Regulations, 2015, as amended]

X+81

14.

> Conduct Board Meeting for approval of the following –

  • Approval of Letter of Offer
  • Approval of Abridged Letter of Offer along with Application Forms and Rights Entitlement Letter

[Note 1: Letter of Offer shall contain disclosures as specified in Schedule VI Part B of SEBI ICDR Regulations, 2018

Note 2: Abridged Letter of Offer shall contain disclosures as specified in Schedule VI Part F of SEBI ICDR Regulations, 2018]

> Outcome of the Board meeting to Stock Exchanges [Reg 30 read with Schedule III of SEBI LODR Regulations, 2015, as amended]

> Uploading the above outcome, Letter of Offer, Abridged Letter of Offer and Rights Entitlement Letter on Company’s website Simultaneously with the above intimations

[Reg 46 of SEBI LODR Regulations, 2015, as amended]

> FILING OF LETTER OF OFFER WITH STOCK EXCHANGES BY THE LEAD MANAGER [Reg 71 of SEBI ICDR Regulations, 2018]

SEBI Fees (as on date)

Issue Less than or equal to ten crore rupees A flat charge of Rs. 50,000/-
Issue More than ten crore rupees 0.05 per cent. of the issue size.

[Note: Letter of Offer, Abridged Letter of Offer and Rights Entitlement Letter shall also be available on the website of Lead Manger, Banker, Registrar to the Issue and Stock Exchanges. SEBI to host Letter of Offer on its website]

> Filing of Letter of Offer along with all material agreements and documents as mentioned in Letter of Offer with ROC in Form GNL 2

> Ex-date for Record Date

X+88

15.

> Record Date for determining the list of eligible shareholders in the issue

> Instruction to depositories to provide the BENPOS, i.e., list of shareholders of the Company along with entitlement working sheet (as on the record date)

 X+89

16.

> Obtaining BENPOS and list of shareholders as on record date for dispatch of Letter of offer.

> Obtaining Entitlement working for the purpose of determining the eligibility of shareholders in the Rights Issue

> Printing of Letter of Offer, Abridged Letter of Offer, Application Forms.

> Deposit of 1% refundable security deposit with the designated Stock Exchange [Reg 80 of SEBI ICDR Regulations, 2018] Security Deposit Amount to be kept with Designated Stock Exchange – 1% of Issue Size)

> Submission of documents for ASBA with Stock Exchanges 

ASBA fees Main Board (as on date)

Issue Size Rights Issue – Software Usage Fees
Upto Rs.100 Crores Rs.5,00,000/-
Above Rs.100 Crores Rs.5,00,000/- and an additional fee of Rs.15 for every increase of Rs.1 lac above 100 crores. Subject to a cap of Rs. 40,00,000 plus Taxes

ASBA fees SME Board (as on date)

Issue Size  ASBA Fees for utilization for IBBS Platform
Up to Rs. 10 crores  Rs. 1,00,000/-
Above Rs. 10 crores  Rs. 1,50,000/-

X+90

to

X+95

(Appx)

17.

> Application to Depositories to –

  • Keep the REs suspended from transfer at the time of crediting the same to eligible equity shareholder till issue opening date activation/freezing & suspension of R – ISIN,
  • Activation of REs for transfer during the Issue Period,
  • Suspension of REs after closure of Issue period

> Execution of Corporate Action with depositories for Credit of REs in the demat a/c of shareholders holding shares on record date as per ratio

X+96

18.

> Complete dispatch of Rights Issue Offer Documents (Abridged LOF along with Application Forms and Rights Entitlement Letter) to all the shareholders as on Record Date by E-mail whose e-mail addresses are registered with the RTA and by registered post or speed post or by courier service to shareholders whose e-mail addresses are not registered with the RTA

At least 3 days before the date of opening of the issue

[Reg 77 of SEBI ICDR Regulations, 2018]

> Right Entitlements shall be credited in R-ISIN and the same shall show up in the demat account of eligible shareholders (Receipt of Credit of entitlement letters from depositories)

At least 3 days before the date of opening of the issue

X+97

19.

> Pre Issue Advertisement in at least one English national daily newspaper with wide circulation, one Hindi national daily newspaper with wide circulation and one regional language daily newspaper with wide circulation, at the place where registered office of the Company is situated At least 2 days before the date of opening of the issue

[Reg 84 of SEBI ICDR Regulations, 2018]    

> Uploading the Newspaper Publication on Company’s website

[Reg 46 of SEBI LODR Regulations, 2015, as amended]

> Intimation of Newspaper Publication to Stock Exchanges [Reg 30 read with Schedule III of SEBI LODR Regulations, 2015, as amended]

> APPLICATION TO STOCK EXCHANGES FOR OBTAINING TRADING APPROVAL FOR RIGHTS ENTITLEMENTS & RENUNCIATION / ACTIVATION OF RIGHTS ENTITLEMENTS & RENUNCIATION TRADING FACILITY

> Registrar to the Issue sends official intimation to ASBA Banks giving instructions for accepting Applications made by investors in the issue

> Request letter to Depositories for BENDEM Activation along with fees to be paid for the same

X+98

20.

> Receipt of trading approval from Stock exchanges for Rights Entitlements & Renunciation (Hosting of Notice by Stock Exchange on its website)

At least 1 day before the date of opening of the issue

X+99

21.

> Opening of the Rights Issue.

[Note 1: Issue Period shall remain open for a minimum period of 7 days and and a maximum period of 30 days – Section 62(1)(a)(i) of the Companies Act, 2013]

> Commencement of Trading in Right Entitlement

> Registrar to the Issue to send collection reports to the Company on a daily basis

X+100

22.

> Closure of Trading in Right Entitlement (i.e., for shareholders holding shares in demat form)

At least 3 working days prior to the closure of the rights issue

> Last date for Market Renunciation (i.e., for shareholders holding shares in demat form)

[Note: Market Renunciation will close on the same date when trading in REs close]

X+110

23.

> Physical shareholders shall be required to provide their demat account details to Issuer / Registrar to the Issue for credit of REs not later than 2 working days prior to the issue closing date

> Execution of Corporate Action with depositories for Credit of REs for Physical shareholders who have furnished their demat a/c details to the RTA

X+111

24.

> REs shall get credited to the demat account of the PHYSICAL SHAREHOLDERS (who have provided their demat account details to Issuer / Registrar) at least 1 day before the issue closing date.

[Note: Physical shareholders should ensure that they should open a demat account and provide their demat account details to the RTA at least 2 days before the issue closing date so that RTA is able to process the credit of Rights Entitlement to such demat account]

> Last date for Off-Market Renunciation (i.e., for shareholders who were holding shares in physical form as on Record Date but have now provided their demat account details)

> Company shall intimate issue closing date to the depositories at least 1 day before the issue closing date and the depositories shall suspend the ISIN of REs for transfers, from issue closing date.

X+113

25.

Closure of the Rights Issue (Offer period shall remain open for a minimum of 7 days and maximum 30 days) [Reg 87 of SEBI ICDR Regulations, 2018 & Section 62(1)(a) of Companies Act, 2013].

[Note: Subject to the compliance with the provisions of the Companies Act, 2013, a rights issue may be opened within 12 months from the date of issuance of the observations by the Board on DLOF – Reg 85 of SEBI ICDR Regulations, 2018].

 

X+114

(Here kept for 15 days)

26.

> Collection of Final Certificates from all ASBA Banks / Receipt of Bank Statement from Banker to the Issue

> Verification of all ASBA Applications received in Rights Issue by Lead Manager and Registrar to the Issue

X+115

27.

> Receipt of Third Party Application data from the Registrar to the Issue

 X+116

28.

> Draft Rejection Data to be finalized by the RTA

> Submission of Post Issue Report. [Reg 96 of SEBI ICDR Regulations, 2018]

Initial post-issue report as specified in Part B of Schedule XVII of SEBI ICDR Regulations, 2018. Within 3 working days of closure of the issue.

X+117

29.

> APPLICATION TO DESIGNATED EXCHANGE FOR FINALIZING THE BASIS OF ALLOTMENT

(submission of documents to Exchanges as per checklist)

 X+118

30.

> Receipt of Approval of Basis of Allotment by the Designated Stock Exchange

Basis has to be finalised Within 10 days of Issue Closure / completion of all activities pertaining to the issue..

[Reg 92 of SEBI ICDR Regulations, 2018]

> Conduct Board/Committee Meeting for Allotment of shares

> Outcome of the board/committee meeting to Stock Exchanges [Reg 30 read with Schedule III of SEBI LODR Regulations, 2015, as amended]

> RTA to instruct ASBA Banks

  • to transfer funds pertaining to valid allotments from ASBA to Escrow Account and
  • to unblock funds pertaining to unsuccessful applicants

> RTA sends allotment advices and unblocking intimations to shareholders

> File form PAS 3 (return of allotment)

Maximum time – Within 30 days of Board/Committee Meeting

X+119

31.

> Newspaper Advertisement post Basis of Allotment

      Within 10 days of completion of all activities pertaining to the issue.

     [Reg 92 of SEBI ICDR Regulations, 2018]

> APPLICATION TO STOCK EXCHANGES FOR LISTING OF SHARES

> Filing of corporate action with the depositories for –

  • credit of shares in Demat A/c of the investors who have got the allotment
  • extinguishment of REs that have not been exercised

[Note 1: Company shall ensure that Right Entitlements which are lapsed are extinguished from the depository system once securities are allotted pursuant to Rights Issue. Once allotment is done, the ISIN for REs shall be permanently deactivated in the depository system by the depositories] 

[Note 2: Company to also pay requisite stamp duty fees for corporate action for allotment]

> RTA to provide BENDEM confirmation to the depositories with respect to verification of Beneficiary details

X+120

32.

> Receipt of Listing Approval from Stock Exchanges.

> Obtaining Credit Confirmation and Capital Updation Confirmation from Depositories.

> Filing of corporate action form with the depositories for –

  • shares for which corporate action is rejected due to non-functional demat account

X+122

33.

> Obtaining Credit Confirmation from Depositories for successful allottees in TEMPORARY ISIN

> Obtaining Credit Confirmation from Depositories for transfer of rejected cases to Unclaimed Share Escrow Account

> APPLICATION TO STOCK EXCHANGES FOR TRADING APPROVAL

X+123

34.

> Receipt of Trading Approval from Stock Exchanges.

> RTA to instruct depositories for transfer of shares from TEMPORARY ISIN to PERMANENT ISIN/PP ISIN (in case of Partly paid-up issue)

> Obtaining Credit Confirmation from Depositories for credit of shares in PERMANENT ISIN/PP ISIN (in case of Partly paid-up issue)

X+124

35.

> Effective date of Trading of Rights shares

> Submission of Final Post Issue Report. [Reg 96 of SEBI ICDR Regulations, 2018]

Final post-issue report as specified in Part C of Schedule XVII of SEBI ICDR Regulations, 2018., within fifteen days of the date of finalization of basis of allotment or within fifteen days of refund of money in case of failure of the issue.

> Lead Manager to issue instructions to bankers to the issue/Escrow Banker for release of money/ transfer of money from Escrow Account to the Company’s Account

> Release of money by bankers to the issue to the Company’s Bank Account

X+125

36.

> Confirmation from Registrar to the Issue and Merchant Banker the all ASBA Accounts have been unblocked, i.e., no amounts remain blocked as on date

> Receipt of No Dues Certificate/Confirmation from all intermediaries/ASBA Banks connected to the issue.

> Closure of Escrow Accounts opened for the issue.

> Initiation of procedure for release of 1% Security Deposit amount from Designated Stock Exchange as per the procedure laid down by SEBI as per its Master Circular No. SEBI/HO/OIAE/IGRD/P/CIR/2022/015 dated November 7, 2022 and subsequent circulars (if any) issued in this regard.

[Note: Company can initiate the procedure for release only after the expiry of 2 months from the date of listing and trading permission]

X+145

*The above timelines may vary on a case to case basis depending on the time taken for carrying out due diligence, preparation of DLOF & LOF, printing/dispatch, time taken at RTA’s end for their activities, receipt of approvals from Stock Exchanges, SEBI, technical glitches, holidays, extra-ordinary circumstances, etc.

Note: Companies may at their discretion choose to have more/less number of board meetings for taking up the above matters for consideration and approval by the Company’s Board/Committee members.

******

Disclaimer: The above points are not exhaustive and there is lot more to it. The Company and all intermediaries shall endeavour to have structured approach towards execution of the assignment. Further I do not take any responsibility for the correctness or adequacy of the above stated matters. The above matters should be read in in conjunction with, and should be qualified in their entirety by, more detailed information that are provided in SEBI (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2018 (“SEBI ICDR Regulations”), SEBI (SUBSTANTIAL ACQUISITION OF SHARES AND TAKEOVERS) REGULATIONS, 2011 (“SEBI SAST Regulations”), SEBI (LISTING OBLIGATIONS AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2015 (“SEBI LODR Regulations”), SEBI (PROHIBITION OF INSIDER TRADING) REGULATIONS, 2015 (“SEBI PIT Regulations”), SECURITIES CONTRACTS (REGULATION) RULES, 1957 (“SEBI SCRR”) 

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Author Bio

I am a qualified Company Secretary by profession having more than 4 years of experience in various matters pertaining to Corporate Compliance, Due Diligence, Drafting, Public Issues, Delisting, Buy-Back, Open Offer and other Merchant Banking activities. View Full Profile

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6 Comments

  1. Kumar Sunny says:

    Extremely information and in detail coverage of the key aspects of the right issue. Thank You for sharing the provisions along with the procedure.

  2. Aditi says:

    The entire article retain a compendium of almost all relevant regulations and it envisage need of more such detailed article for listed company compliances.

    1. PRITY GUPTA says:

      The Article will indeed prove to be very helpful for the working professionals. The entire procedure has been illustrated in a very simple and lucid manner. Hope to come across more of such insightful articles in the near future. Keep it up!!

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