The Securities & Exchange Board of India (Sebi) Committee on Disclosures and Accounting Standards (SCODA) has recommended that the listed entities in the country should be permitted to opt for a separate set of disclosures for the rights issues (RIs) provided the issuer entity has been filing periodical statements and information on compliance with the listing agreement for the last three years.

In the discussion paper on the rationalisation of disclosure norms for the rights issues released by Sebi, SCODA, a sub-group formed by Sebi, said that another condition is that such information should be available on the websites of any stock exchange with nationwide trading terminals or a common e-filing platform.

“The issuer entity has in place an investor grievance handling mechanism with regard to share transfer and clearly laid out systems and procedures for timely and satisfactory redressal of investor grievances,” the committee said.

The report said that the disclosure requirements for RIs are currently more or less as exhaustive as for the public issues. The RIs are further issuances of capital made by listed entities to its existing shareholders. Certain information about the entities that are listed and traded on the exchanges is available in the public domain for investors.

Hence, for further issuance of capital by such entities, it may not be necessary to mandate exhaustive disclosure requirements. “The rationalisation of disclosure norms for RIs would not only make the issuance process faster but also contribute to savings in paper, printing and distribution costs, thereby reducing overall cost of issuances”, the report said.

Sebi recently amended the guidelines relating to timelines for Ris, which has resulted in an overall reduction of more than two months in the rights issue process.

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September 2021