Securities and Exchange Board of India (“SEBI”) eases norms for preferential issue by listed companies with stressed assets

By EDITORIAL TEAM - INSOL India Posted On : July 27, 2020

SEBI has announced relaxations in the pricing methodology for preferential issues by listed companies having stressed assets and exempt allottees of preferential issues from open offer obligations in such cases, with immediate effect. The relaxations provided by SEBI are as follows:
  1. Eligible listed companies having stressed assets will be able to determine pricing of their preferential allotments at not less than the average of the weekly high and low of the volume-weighted average prices of the related equity shares during the two weeks preceding the relevant date.
  2. Allottees of the preferential issue in such eligible companies will be exempted from making an open offer if the acquisition is beyond the prescribed threshold or if the open offer is warranted due to change in control, in terms of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (“Takeover Regulations”).
Furthermore, SEBI has also laid down the eligibility criteria for assets to be considered as stressed as well as conditions to be followed in order to avail such relaxations.