SEBI Tuesday proposed reducing the overall time taken for rights issue to around 31 days as well as make the application and allotment process more efficient.
Currently, the rights issue process takes 55-58 days from the time a company decides to launch the issue till the listing.
"... there is a need to reduce the timelines both in the pre-issue opening phase and after issue closure such that the issuer and shareholders benefit from process efficiencies," SEBI said in a discussion paper.
Besides, the regulator proposed to eliminate the requirement of giving newspaper advertisement and replacing it with intimation to the shareholders through the stock exchanges and e-mail.
The regulator said the discussion paper evaluates means to reduce time between the announcement of terms of the issue and issue closing, which would help in reducing price risks.
Further, it seeks to make the application and allotment process more efficient by using the banking and depository infrastructure as well as provide issuers with an efficient mechanism for raising funds.
SEBI said the discussion paper is also looking at means to streamline the process, reduce post issue timeline for rights issues and methodologies associated with rights issue fundraising process.
The watchdog has proposed a reduction in the period of notice for companies to set a record date from 7 to 3 working days.
"A public advertisement process adds time and cost to the rights issue process. All material information is communicated to shareholders/ investors through stock exchange announcements. In addition, companies often use electronic means to communicate with their shareholders, on an ongoing basis.
"Hence, the requirement to give a newspaper advertisement can be replaced with requirement to intimate the shareholders through the stock exchanges and through e-mail where such details are available," the regulator said.
Further, SEBI suggested moving to electronic modes of receiving entitlements, processing, payment and settlement in a rights issue including use of ASBA (Applications Supported by Blocked Amount) as a payment mode, among others.
"Electronic credit and trading of rights renunciation will make the process of renunciation more transparent and efficient. Payment through ASBA facility is investor friendly and enables faster completion of the post-issue process. As a result of these measures, post issue timeline would be reduced by 11 days," it noted.
Comments on the discussion paper have been sought until June 21.