SEBI (Issue of Capital and Disclosure Requirements) (Sixth Amendment) Regulations, 2019

The Securities and Exchange Board of India (SEBI) vide a notification dated 26th December 2019 has published the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) (Sixth Amendment) Regulations, 2019. These regulations shall be applicable to the draft letter of offer, letter of offer and abridged letter of offer filed on or after the 26th December 2019. With this amendment, the following changes has been made to the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018-

  1. A new Regulation 70(7) has been inserted which provides that in the letter of offer and the abridged letter of offer, the issuer should disclose the process of credit of rights entitlements in the demat account and renunciation.
  2. Regulation 76 has been substituted which now states that an applicant to the rights issue should do so only through the ASBA facility, which facility will be provided by the issuer in the manner specified by the Board. However, the payment through any other electronic banking mode should be permitted in respect of an application made for any reserved portion outside the issue period.
  3. A new Regulation 77A has been inserted which provides that the rights entitlements should be credited to the demat account of the shareholders before the date of opening of the issue and allotment of specified securities should be made in the dematerialized form only.
  4. Regulation 84 is amended to provide that in case of issue related to advertisements, the issuer shall issue an advertisement in English, Hindi and Regional daily newspapers at the place where registered office of the issuer is situated, at least 2 days before the date of opening of the issue. Prior to this the time period was 3 days before the date of opening of the issue.
  5. In case of issue related to advertisements, the issuer shall also give an intimation to the stock exchanges for dissemination on their websites.
  6. Regulation 87 that deals with period of subscription, is amended in such a way that the rights issue shall be kept open for subscription for a minimum period of 15 days and for a maximum period of 30 days and no withdrawal of application shall be permitted after the issue closing date. Prior to the amendment, the provisions as to the restriction on withdrawal was not there.
  7. Amended Regulation 88 provides that the issuer shall give to all the shareholders for each type of instrument to pay the balance money in calls, outside the issue period, through electronic banking modes.
  8. Certain changes has been made to Schedule V which deals with formats of due diligence certificates and VI which deal with disclosures in the offer document, abridged prospectus and abridged letter of offer.

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