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SEBI has proposed, in a discussion paper, that companies call for a minimum upfront part payment of 25 per cent of the total subscription from foreign investor in partly-paid shares in rights issues. This is being done to synchronise the regulations regarding public offerings (IPO)/rights/ preferential/ warrants with the recently reviewed Foreign Exchange Management Act by the RBI. The existing regulation does not specify any minimum percentage for upfront payment for partly paid-up shares in rights issues.
The Ministry of Finance has decided to permit issuance of partly-paid shares and warrants by the Indian companies to foreign investors.
Partly paid-up shares entail part payment on application by investors with the balance money to be paid when called for.
The time period within which these partly paid-up shares have to be made fully paid up has been retained at 12 months for both public and rights issues.
For warrants, SEBI has proposed a minimum upfront payment of 25 per cent for public/rights/ preferential issues. For public and rights issues of warrants, SEBI has proposed that the period of conversion be increased to 18 months from 12 months, while for preferential issues the existing norm of 18 months has been retained.
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