Amendments in the Process of Right Issue in case of Listed Companies

SEBI Circular: Dated 22.01.2020

Purpose: To Streamlining the process of Right Issue

Amendments in Following Regulations: –

(a) SEBI (ICDR) Regulations, 2018 &

(b) SEBI (LODR) Regulations 2015

Followings changes are made in the Right Issue Process in case of Listed Companies: –

1. Regulation 42(2) of LODR

Period of Advance Notice to Stock Exchange has been reduced to 7 workings days to 3 Workings days.

Note*- Working days excluding the intimation date & record date.

2. Regulation 84(1) of ICDR

Issuance of newspaper advertisement-

(a) disclosing the date of completion of dispatch and

(b) intimation of the same to the stock exchange for dissemination on their website, Shall be completed by the Issuer at least 2 days before the opening of the Issue.

3. Dematerialized Right Entitlements (REs)

(a) In the letter of offer or abridge letter of offer, the Issuer shall disclosed the process of the credit of REs in the Demat account and renunciation.

(b) REs shall be credited to the demat account of the eligible shareholders in damat form.

(c) the REs with a separate ISIN shall be credited to the demat account of the shareholders before the opening of the issue, against the shares held by them on the record date.

(d) In case shares held in physical form-

Physical shareholders shall be required to provide their demat account details to the Issuer/ Registrar to the issue for credit for REs-

Not later than 2 working days prior to the issue closing date so that credit of REs in their demat account takes place at least 1 Day prior to the issue closing date.

4. How the Dematerialised REs trade on stock exchange platform

(a) it shall be traded on secondary market platform of SEs-

i. with T+2 rolling settlement as equity shares,

ii. Trading shall commence along with the opening of the issue and

iii. shall be closed at least 4 days prior to the closure of the Right issue.

(b) Investors holding REs in dematerialized mode shall be able to renounce their entitlements by trading on stock exchange platform or off market transfer.

(c) application for right issue shall be made only through ASBA Facility.

(d) Withdrawal of application shall not allow after the closure of the Issue.

5. Applicability

This circular shall be applicable for-

(a) all the Right issue and

(b) Fast track issue,

Where letter of offer is filed with stock exchange w.e.f February 14, 2020

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January 2021