SEBI revamps rights issue process, cuts timeline to 31days

The Securities and Exchange Board of India (SEBI) on November 20 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.

The markets regulator has also introduced dematerialised rights entitlements (RE) and trading of REs on stock exchanges.

Moneycontrol was the first to report on the development.

"Shareholders holding shares in physical form will be required to provide details of demat account for credit of REs," SEBI said in a release after the conclusion of its board meeting.

ASBA facility has also been made mandatory for all investors applying for rights issue, it added.

A rights issue process through the fast track route under the existing framework, typically takes about 55 to 58 days from the time the company decides to launch the rights issue until listing.

This timeline excludes the time taken for completing the letter of offer and other statutory and regulatory approvals.

Around 26 days are taken away from the notice of the board meeting to the opening of the rights issue, followed by another at least 15 days but not more than 30 days of issue period (from the opening of the issue to the closing the issue) which is a requirement under the Companies Act 2013 and thereafter, 12 working days [~15 days] for allotment and listing.