SEBI wants rights issue refunds to be fast-tracked

Our Bureau Mumbai | Updated on April 23, 2021

Extends relaxation in procedures till September-end

The Securities and Exchange Board of India (SEBI) has issued guidelines to fast-track refund for un-allotted and partially allotted applications for rights issue. SEBI has said that bankers, registrar, and other recognised intermediaries should ensure the refund for un-allotted/ partial allotted application are completed on or before T+1 day.

SEBI has further said that it must be ensured that data with respect to refund instructions is error-free to avoid any technical rejections. Further, in case of any technical rejection of refund instruction, the same should be addressed promptly. Due to Covid-19, the markets regulator had granted relaxations in the procedures that apply to rights offerings opening on or prior to July 31, 2020. These relaxations were extended several times and will be applicable for rights issues opening up to September 30, 2021.

Applications in rights issue are allowed only through the Application Supported by Blocked Amount (ASBA) facility (whereby bidders provide instructions to specified banks to block amounts equivalent to the bid amount in their ASBA accounts).

SEBI had relaxed this condition for eligible rights issues by allowing the issuer, along with the lead manager, registrar and other intermediaries, to formulate an additional non-cash mechanism to accept applications from shareholders. However, no third-party payments were allowed in respect of any application under such additional mechanism. It had clarified that the mechanism was an additional option and not a replacement of the existing process.

Published on April 23, 2021

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