Sebi cuts restriction to raise capital after buyback to 6 months

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The Securities and Exchange Board of India (Sebi) on Thursday cut restriction on fresh fund raising by companies after the buyback to six months from one year earlier in light of the coronavirus pandemic. Such relaxation will be applicable up to December 31, and will come into effect immediately. The relaxation is based on representations made by various industry bodies and is expected to help businesses that have been severely impacted by the pandemic.

Earlier this week, the markets regulator granted a one-time relaxation in its primary market fund-raising norms to make it easier for companies to raise capital amid the current gloomy scenario. Sebi extended its period of approval for initial public offerings (IPOs) and rights issues by six months. This will be applicable to companies where Sebi’s approvals have expired or are due to expire between March 1 and September 30.

Separately earlier this week, Sebi also notified further changes to rights issues guidelines in order to make such share sales easier for listed companies. According to the new norms, a company that has been listed on the stock exchanges for 18 months can raise funds via a rights issue, as compared to the earlier norms that allowed firms that were listed for at least three years to undertake a rights offer.

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