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ARTICLE · 11 FEBRUARY 2020

The Rights Issue Process – Supplemented And Simplified

Khaitan & Co.
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The Circular will be applicable to all rights issues (including those undertaken on a fast-track basis) for which letters of offer is filed on or after 14 February 2020.

IndiaCorporate/Commercial Law
Sudhir Bassi
Sudhir Bassi
Aayush Mohata
Aayush Mohata
Raghav Bhatia
Raghav Bhatia
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BACKGROUND

Securities and Exchange Board of India (SEBI) has recently notified amendments to the SEBI (Issue of Capital and Disclosure Requirements) Regulations 2018 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 to make the rights issue process more efficient and effective, and to reduce the overall time taken to undertake a rights issue, from approximately 55 days to approximately 31 days (the Amendment). Our ERGO on the Amendment can be accessed here. Some of the key changes introduced by the Amendment include (a) discontinuing allotment of securities in a physical manner; (b) mandatory use of Application Supported by Blocked Amount (ASBA) facility as a payment mechanism; and (c) introduction of credit and trading of Rights Entitlements (REs).

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