On 11 August, the Securities and Exchange Board of India notified a third amendment to the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009. Some of the key changes to regulation 10 (Fast Track Issue) are highlighted below:
- In order to be eligible for a fast-track issue under regulation 10, issuers formerly were required to have a minimum average market capitalization of public shareholding of ₹30 billion (US$455 million). This has been revised to a minimum of ₹10 billion in the case of public issues and ₹25 billion in the case of rights issues.
- A further proviso was added to the requirement that the issuer has been in compliance with the equity listing agreement for at least three years immediately preceding the reference date. This proviso states that the imposition of only monetary fines by stock exchanges on the issuer shall not make the issuer ineligible to undertake the issue.
- The amendment introduced the following requirements:
- For a rights issue, the promoters and promoter group shall mandatorily subscribe to their rights entitlement and shall not renounce their rights, except to the extent of renunciation within the promoter group, or for the purpose of complying with minimum public shareholding norms prescribed under rule 19A of the Securities Contracts (Regulation) Rules, 1957.
- The issuer’s equity shares cannot have been suspended from trading as a disciplinary measure during the three years immediately preceding the reference date.
- The annualized delivery-based trading turnover of the equity shares during the six calendar months immediately preceding the month of the reference date must have been at least 10% of the weighted average number of equity shares listed during that six-month period.
- There shall be no conflict of interest between the lead merchant bankers and the issuer or its group or associate company in accordance with applicable regulations.
The business law digest is compiled by Nishith Desai Associates (NDA). NDA is a research-based international law firm with offices in Mumbai, New Delhi, Bangalore, Singapore, Silicon Valley and Munich. It specializes in strategic legal, regulatory and tax advice coupled with industry expertise in an integrated manner.
