SEBI heard this prayer and now proposes to relax not only the
pricing norms applicable for a preferential issue by financially
stressed listed companies, but also grant exemption from making an
open offer if the acquisition results in the acquirer acquiring
more than 25% voting rights in the investee company. It is about
time. This relaxation is long overdue and not related to the
pandemic. No doubt, because of the pandemic, valuations have taken
a hit and the share prices of stressed companies have further
contracted.
Companies which face financial stress need fund infusion to
subjugate the stress situation and avoid insolvency and/or
bankruptcy. Investors keen to invest in distressed companies are
scarce and are also subject to hurdles and practical difficulties
under various laws.
