The Hindu Business Line : Rights issues: Disclosure norms eased

Listed companies will now have the flexibility of not disclosing the price band or the offer price of the rights issue at the time of filing the draft offer letter with the market regulator SEBI.

This relaxation forms part of new steps taken by SEBI to make the domestic primary market "more transparent and efficient" through amendments in the SEBI Disclosure and Investment Protection Guideline 2000.

Under the new provisions, which will have immediate effect, the market regulator said the companies could reveal the price band (or issue price) on rights issue at any time prior to the filing of prospectus with the Registrar of Companies.

Till now, companies were required to inform the price band (or offer price) on rights issue at the time of filing the draft offer letter with SEBI.

The regulator also allowed companies to issue fresh shares after filing the draft offer document "provided full disclosures in regard to the total capital to be raised from such further issues is given in the draft offer document", the regulator said in a circular here.

At present, a company is prohibited to make further issue of shares after filing a draft offer document with SEBI till the listing of these shares.

The market regulator also rationalised the disclosure norms on rights issue and follow-on issues as these companies "are regular in filing periodic returns with stock exchanges and have a comprehensive investor grievance mechanism in place to redress investors' complaints", the SEBI circular to merchant bankers and stock exchanges said.

Under the latest amendments, listed companies that come out with rights offer are also permitted to dispatch an abridged letter of offer to its shareholders as against the current practice of sending entire letter of offer to all shareholders.

However, the issuer company shall provide the detailed letter of offer to any shareholder upon request, SEBI said.

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