India's market regulator on Tuesday temporarily eased some fund-raising regulations for listed entities to give them easier and faster access to capital markets amid the ongoing coronavirus pandemic which has greatly reduced deal activity.
To allow more companies avail fast-track rights issuances, the Securities and Exchange Board of India (SEBI) reduced the required average market capitalisation of public shareholding required to 1 billion rupees from 2.5 billion rupees and minimum period of listing to 18 months from 3 years.
Among other relaxations, SEBI also lowered the minimum subscription required for a rights issue to 75% of the offer size from 90%, subject to certain conditions.
The reduction will also make it easier for promoters of a company to increase their stake as stock prices have corrected significantly due to coronavirus, said Shriram Subramanian, founder of proxy advisory firm InGovern. "Promoters who have cash will use this opportunity," he said.
SEBI said the measures would make the rights issue framework more "effective and efficient", adding that the relaxations were applicable to right issues opening on or before March 31, 2021.
In an effort to increase flexibility, the regulator also said issuers whose offer documents are pending SEBI's observations up to Dec. 31, 2020 would be allowed to increase or decrease the issue size by up to 50%, without having to submit a fresh draft offer document.
SEBI also extended the validity of its approval for a public or rights issue by six months for offers which expire between March 1, 2020 and Sept. 30, 2020. Typically, entities have 12 months to open an issue from the date of SEBI's approval.