In a Circular dated 19th January, 2021, the Securities and Exchange Board of Indian (“SEBI”) has extended the earlier relaxations granted under the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 (“Regulations”).
In its previous Circular dated 6th May, 2020 (detailed in trail) SEBI had in view of the difficulties faced due to COVID-19 pandemic and the lockdown measures, and in order to ensure that all eligible shareholders are able to apply to rights issue during such times, informed that the issuer shall along with lead manager(s) to the issue, the registrar, and other recognized intermediaries [as deemed fit by issuer and lead manager(s)] institute an optional mechanism (non- cash mode only) to accept the applications of the shareholders subject to ensuring that no third party payments is allowed in respect of any application
This relaxation was granted from *Regulation 76 of the Regulations under which an application for a rights issue shall be made only through ASBA facility. The relaxation is now being further extended till 31st March, 2021 subject to the conditions that were specified earlier in Circular dated 6th May, 2020. The conditions require that the issuer along with Lead Manager(s) has to ensure the following:
i. The mechanism(s) will only be an additional option and not a replacement of the existing process. As far as possible, attempts will be made to adhere to the existing prescribed framework.
ii. The mechanism(s) must be transparent, robust and have adequate checks and balances. It should aim at facilitating subscription in an efficient manner without imposing any additional costs on investors. The issuer along with lead manager(s), and registrar has to satisfy themselves about the transparency, fairness and integrity of such mechanism.
iii. An FAQ, online dedicated investor helpdesk, and helpline must be created by the issuer company along with lead manager(s) to guide investors in gaining familiarity with the application process and resolve difficulties faced by investors on priority basis
iv. The issuer along with lead manager(s), registrar, and other recognized intermediaries (as incorporated in the mechanism) will be responsible for all investor complaints.
Background:
Earlier through Circular SEBI/HO/CFD/DIL2/CIR/P/2020/78 dated 6th May, 2020, SEBI had granted one time relaxations from strict enforcement of certain Regulations of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018, pertaining to Rights Issue opening upto 31st July, 2020 (please refer to the trailing emails for a detailed read).
Subsequently, through another Circular the validity of the relaxation for or Rights Issues opening upto December 31, 2020. (detailed in the trail mail).
Now, a further extension is being granted.
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*Regulation 76. – ASBA
The issuer shall provide the ASBA facility in the manner specified by the Board where not more than one payment option is provided. Provided that the applicants in a rights issue shall be eligible to make applications through ASBA facility only if such applicant:
(i) is holding equity shares in dematerialised mode;
(ii) has not renounced entitlement in part or in full; and
(iii) is not a renouncee. Provided further that payment made for application for any reserved portion outside the issue period can be through electronic banking modes.
Source: Securities and Exchange Board of India
