SEBI relaxes procedures related to issues & Listing of Rights Issue opening upto 31.07.2020

SEBI relaxes procedures related to issues & Listing of Rights Issue opening upto 31.07.2020

SECURITIES AND EXCHANGE BOARD OF INDIA

CIRCULAR

SEBI/HO/CFD/DIL2 /CIR/P/2020/ 78

May 06 , 2020

To All Registered Merchant Bankers
All Recognized Stock Exchanges
All Registered Registrars to an Issue
All Self Certified Syndicate Banks
All listed entities All entities who propose to list specified securities

Dear Sir/Madam,

Sub: Relaxations relating to procedural matters – Issues and Listing

1. In  view  of the  impact  of  the COVID-19 pandemic and the lockdown  measures undertaken by Central and State Governments, based on representations, SEBI has decided to grant the following one time relaxations from strict enforcement of certain  regulations  of  SEBI  (Issue  of  Capital  and  Disclosure  Requirements) Regulations,  2018  (hereafter  “ ICDR  Regulations ”) , pertaining  to Rights Issue opening upto July 31, 2020 :

(i) Service of the abridged letter of offer , application form and other issue material to shareholders may be undertaken by electronic transmission as  already  provided  under  Regulation  77(2)  of  the  ICDR  Regulation. Failure to adhere to modes of dispatch through registered post or speed post or courier services due to prevailing Covid – 19 related conditions will not be treated as non – compliance during the said period.

However,  the  issuers shall publish  the  letter  of offer,  abridged  letter of offer  and  application  forms  on  the  websites  of  the  company, registrar, stock  exchanges  and  the  lead  manager ( s ) to  the  rights  issue . Further, t he  issuer  company along  with  lead  manager(s)  shall undertake  all Page 2 of 4 adequate steps to reach out its shareholders through other means such as ordinary post or SMS or audio – visual advertisement on television or digital advertisement, etc.

(ii) T he issue related advertisement as ma ndated by Regulation 84(1) , shall contain additional details   as   regards   the   manner   in   which   the shareholders who have not been served notice electronically may apply . The issuer may have the flexibility to publish the dispatch advertisement in additional newspapers, over and above those required in Regulation 84. The advertisement should also be made available on the website of the Issuer, Registrar , Lead Managers, and Stock Exchanges . The Issuer shall make use of advertisements in television channels, radio, internet etc. to disseminate information relating to the application process . Such advertisements can be in the form of crawlers / tickers as well.

(iii) In  terms  of  SEBI  circular  dated  January  22,  2020, SEBI  introduced dematerialized rights entitlements (REs). Further, physical shareholders are required to provide their demat account details to Issuer/ Registrar to the Issue for credit of REs.  In view of COVID – 19 pandemic and the lockdown measures under taken by Central and State Governments, in case the physical shareholders who have not been able to open  a demat account  or are  unable  to communicate  their demat  details,  in  terms  of clause  1.3.4  of  SEBI  circular  dated  January  22,  2020, to  the  issuer/ reg istrar   for   credit   of   REs   within   specified   time,   such physical shareholders may be  allowed  to  submit their application  subject  to following conditions:

(a) Issuer   along   with   lead   manager(s)   and   other   recognized intermediary   shall   institute   a   mechanism   to   allow   physical shareholders  to  apply  in  the  rights  issue.  Issuer  along  with  lead manager(s)  shall  ensure to  take  adequate  steps  to  communicate such a mechani sm to physical shareholders before the opening of the issue.

(b) Such  shareholder  shall not  be  eligible  to  renounce  their  rights entitlements. 

(c) Such physical shareholders shall receive shares, in respect of their application, only in demat mode. The lead managers may also be guided  by  Para  10  of  the  Form  A  Schedule  V  of  the  ICDR Regulations.

(iv) In terms of Regulation 76 of the ICDR Regulations, an application for a rights  issue  shall  be  made  only  through  ASBA  facility.  In  view  of  the difficulties   faced   due   to   COVID – 19   pandemic   and   the   lockdown measures , and i n order to ensure that all eligible shareholders are able to apply to rights issue during such time s , t he issuer shall along with lead manager(s) to   the   issue ,   the   registrar, and   other recognized intermediaries [as deemed fit by issuer and lead manager(s)] institute an optional mechanism (non – cash mode only) to accept the applications of the shareholders subject to ensuring that no third party payments shall be allowed in respect of any application .

(v) In respect of mechanisms at point ( iii ) and ( i v) above, the issuer along with Lead Manager(s) shall ensure the following:

(a) The  mechanism(s)  shall  only  be  a n additional option  and  not  a replacement  of  the existing  process . As far as  possible, attempts will be made to adhere to the existing prescribed framework.

(b) The mechanism(s) shall be transparent, robust and have adequate checks and balances. It should aim at facilitating subscription in an efficient abcaus.in manner without imposing any additional costs on investors. The issuer along with lead manager (s), and registrar shall satisfy themselves about the transparency , fairness and integrity of such mechanism .

(c) An FAQ , online dedicated investor helpdesk , and helpline shall be created by the issuer company along with lead manager(s) to guide investors  in  gaining  familiarity  with  the  application  process  and resolve difficulties faced by investors on priority basis.

(d) The  issuer  along  with  lead  manager(s) ,  registrar, and  other recognized intermediaries (as incorporated in the mechanism) shall be responsible for all investor complaints.

2. In respect of all offer documents filed until July 31, 2020, it has been decided to grant the following relaxations:

(i) Authentication/    certification/ Undertaking ( s ) in    respect    of    offer documents, may be done using digital signature certifications .

(ii) The  issuer  along  with  lead  manager(s)  shall  provide  procedure for inspection of material documents electronically.

3. This circular shall come into force with immediate effect.

4. This  circular  is  issued  in exercise  of  powers  conferred  by  Section  11(1) of  the Securities and Exchange Board of India Act, 1992.

5. A copy of this circular is available on SEBI website at www.sebi.gov.in under the categories “Legal Framework /Circulars ”.

Yours faithfully,

Jeevan Sonparote
Chief General Manager
jeevans@sebi.gov.in

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