Capital market regulator Securities and Exchange Board of India on Monday proposed to relax the mandatory requirement of a six-month-gap between two successive issuances of shares to qualified institutional investors by listed companies requiring urgent funds if they meet certain conditions.
As per the Securities and Exchange Board of India regulations, a listed company cannot make any subsequent qualified institutions placement until the expiry of six months from the date of the prior qualified institutions' placement made pursuant to one or more special resolutions.
Floating a consultation paper for relaxation with respect to QIP issues, SEBI said it has been receiving requests from listed companies with regard to the stipulated cooling off period between two QIP issues. SEBI said the companies have been seeking exemptions or waiving off for this requirement of the six-month cooling-off period between two successive QIP issues.
The reasons cited for such an exemption include an urgent need of funds and the fact that other fundraising mechanisms such as public issue or rights issue are time taking in comparison to a QIP issue. SEBI said its primary market advisory committee has suggested seeking public comments in this matter.
Accordingly, SEBI has proposed that to address concerns of the issuer companies and to support the raising of capital, it is initiating a public consultation on whether relaxation can be provided for successive QIPs within six months of previous QIP issue, in cases where terms of placement for the subsequent tranches/issue are disclosed upfront in the special resolution. SEBI has sought public comments on this proposal till April 15, 2020.
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