SEBI eases fund-raising norms for firms
In order to help companies to raise funds in the present COVID crisis situation, SEBI has allowed listed companies to raise funds at shorter intervals and also permitted promoters to increase their stakes without resorting to open offer.
As per the notification, SEBI has allowed companies to make two Qualified Institutional Placements (QIPs) with a gap of just two weeks between them. Earlier, the minimum gap allowed was six months between two such issuances. Qualified Institutional Placement means issuing equity shares, convertible debentures and warrants to Qualified Institutional Buyers (QIBs). Examples of QIBs include Public Financial Institutions, Scheduled Commercial Banks and Mutual Funds etc.
In another significant step, the regulator has allowed promoters to increase their stakes in their companies through preferential allotments by up to 10% without triggering an open offer. Earlier, this limit was 5%. The regulator has, however, allowed this relaxation only for the current financial year. The preferential allotment of shares means issuance of shares to existing shareholders by preferring a bulk issue to selected individuals, companies or venture capitalists. The open offer is an offer of securities in the secondary market where securities are issued at below the market price.
