The Hindu Business Line : Fast track route for follow-on equity issue: SEBI

The Securities and Exchange of Board of India has decided to introduce a fast track mechanism for listed companies to raise funds through issue of equity.

Fast track

Under the ‘Fast Track Issuance of Securities’, lead managers can proceed with the issue or capital raising plans of companies listed on NSE or BSE after filing the offer document with SEBI, said the regulator in a news release.

Only in-principle approvals from the stock exchanges are required. Companies currently wait for SEBI clearance of their offer documents.

The prospectus/letter of offer shall, however, be filed with SEBI and the stock exchanges for record purposes.

Amendments needed

SEBI said the new mode of issuing securities would be applicable only after necessary amendments have been made in the SEBI (Disclosure and Investor Protection) Guidelines, which will be announced shortly.

Only those companies which have been listed on the BSE or the NSE for at least three years, and with a free float market capitalisation of at least Rs 10,000 crore during the last one year can avail themselves of this facility.

The trading of these companies’ shares on the stock exchanges must constitute at least 2 per cent of their total listed shares during the previous one year.

New system

This fast track mode of issuance was recommended by the Primary Market Advisory Committee of SEBI.

This new fast track system will ease the procedure for follow-on public offers and more companies will now look at this option, said Mr Ashutosh Maheshwari, CEO, Motilal Oswal Investment Advisors.

“Companies, which are increasingly looking at qualified institutional placement because it requires less documentation, will now also look at follow-on public offers," Mr Maheshwari added.

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