SEBI Proposes To Revise Preferential Issue Guidelines

Vide it's Consultation Paper dated 26 November 2021, the Securities Exchange Board of India/SEBI has recommended changes in pricing norms, lock-in requirements, pledge, etc. in the Preferential Issue Guidelines contained in Chapter V of the SEBI (Issue of Capital and Disclosure Requirements), Regulations, 2018.

Key Recommendations:

Pricing Methodology: At present, the price of the shares to be allotted pursuant to preferential issue is required to be not less than higher of the average of weekly high and low of the Volume Weighted Average Price (VWAP) of shares on stock exchange during 26 weeks or VWAP during 2 weeks preceding the relevant date. SEBI has proposed to reduce these periods to 60 days and 10 days respectively while considering that the existing norm of 26 weeks is a very long period for determining the price in view of the market volatility.