SEBI had recently introduced a new framework for the Rights Issue process through the SEBI (Issue of Capital and Disclosure Requirements) (Amendment) Regulations, 2025, notified in the Official Gazette on 08.03.2025 which aims to make the Rights Issue process faster, more flexible, and investor-friendly.
In this regard, SEBI has on March 11, 2025 issued a circular titled ‘Faster Rights Issue with a flexibility of allotment to specific investor(s)’ providing timelines in relation to completion of the various activities involved in Rights Issue process from the date of Board of Directors of the Issuer approving the Rights Issue till the date of closure of Rights Issue.
𝐊𝐞𝐲 𝐇𝐢𝐠𝐡𝐥𝐢𝐠𝐡𝐭𝐬 𝐨𝐟 𝐭𝐡𝐞 𝐍𝐞𝐰 𝐅𝐫𝐚𝐦𝐞𝐰𝐨𝐫𝐤:
I. Faster Completion of Rights Issue:
(a) Rights Issues must now be completed within 23 working days from the date of the Board of Directors approving the issue.
II. Flexible Subscription Period
(a) The subscription period for Rights Issues has been set between a minimum of 7 days and a maximum of 30 days.
(b) This provides greater flexibility to issuers while ensuring adequate time for investors to participate.
III. Automated Validation of Application Bids
(a) Stock Exchanges and Depositories have been directed to develop a system for automated validation of application bids within six months of the circular coming into force.
(b) This will minimize errors, reduce manual intervention, and improve processing efficiency.
IV. Revised Timelines for Key Activities
(a) A detailed timeline for various activities involved in the Rights Issue process has been specified to ensure smooth execution.
(b) For example:
(i) Filing of draft letter of offer with stock exchanges – T+1 working day
(ii) Receipt of in-principle approval from stock exchanges – T+3 working days
(iii) Credit of Right Entitlements (REs) – T+9 working days
(iv) Commencement of trading in REs – T+14 working days
(v) Completion of allotment and commencement of trading – T+23 working days
V. Amendments to Master Circular on ICDR Regulations
(a) Several modifications have been made to the Master Circular on SEBI (ICDR) Regulations to align with the new framework.
(b) This includes changes in the process for credit of Right Entitlements, application forms, correction of bid data, and ASBA facility for Rights Issues.
Effective Date
The new framework will come into effect from April 7, 2025 and will apply to Rights Issues approved by the Board of Directors from that date onward.
SEBI’s initiative reflects its ongoing commitment to strengthening the capital markets and improving the ease of doing business for listed companies.
A copy of the circular is attached.