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Sebi cuts notice period for rights issue to 3 days

The markets regulator said it has simplified the rights issue process to make it more efficient and effective.

ETMarkets.com|
Last Updated: Jan 22, 2020, 08.29 PM IST
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Mumbai: The Securities and Exchange Board of India (Sebi) on Wednesday reduced notice period for rights issue to at least three working days from seven earlier.

The markets regulator said it has simplified the rights issue process to make it more efficient and effective. It also said the issuance of newspaper advertisement disclosing date of completion of dispatch and intimation of same to the stock exchanges for dissemination on their websites, can be completed by the issuer at least two days before the date of opening of the issue.

In the letter of offer and the abridged letter of offer, the issuer will disclose the process of credit of REs in the demat account and their enunciation, and these will be credited to the demat account of eligible shareholders in dematerialized form.

The REs with a separate ISIN shall be credited to the demat account of the shareholders before the date of opening of the issue, against the shares held by them as on the record date.

Such REs shall be traded on secondary market platform of stock exchanges, with T+2 rolling settlement, similar to the equity shares, and trading in REs on the secondary market platform of stock exchanges will commence along with the opening of the issue and will close at least four days prior to the closure of the rights issue.

Investors holding REs in dematerialised mode will be able to renounce their entitlements by trading on a stock exchange platform or off-market transfer, and such trades will be settled by transferring dematerialised REs through depository mechanism, in the same manner as done for all other types of securities.

In November, Sebi had approved a proposal to reduce the time taken to complete a rights issue to nearly T+31 days from the existing period of T+55 to 58 days.

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