DAILY NEWS ANALYSIS

GS-III : Economic Issues SEBI

18 June, 2020
5 Min Read

SEBI eases fund-raising norms for firms

As part of its attempts to make it easier for listed companies to raise funds in the current volatile scenario, the Securities and Exchange Board of India (SEBI) has allowed listed companies to raise funds at shorter intervals while also giving promoters the go-ahead to increase their stakes by a higher quantum without triggering an open offer.
As per a gazette notification, the capital markets regulator has allowed companies to make two qualified institutional placements (QIPs) with a gap of just two weeks between them.
This is a significant move as the earlier regulations mandated a minimum gap of six months between two such issuances.
In another important amendment, the regulator has said that promoters can increase their stakes in their companies through preferential allotments by up to 10% without triggering an open offer.
The cap was earlier set at 5%.
The regulator has, however, allowed this relaxation only for the current financial year.
Analysts said the twin moves would help in enhancing liquidity in the market as companies would be able to better time fund-raising while promoters could also acquire shares at a time when valuations were quite low compared with the historic highs.

Boosting liquidity

Relaxation from the takeover code could be a good opportunity for promoters who are looking to increase their stakes at attractive valuations, given the current market sentiments.
In April, the capital markets regulator relaxed certain regulatory requirements related to rights issues and initial public offerings (IPOs) to make it easier for companies to raise funds at a time when the COVID-19 pandemic had made the secondary markets increasingly volatile.
The watchdog said any listed entity with a market capitalisation of at least 100 crores could use the fast-track route for a rights issue.
Earlier, the norm was 250 crore for such offerings.
Further, any company that had been listed for 18 months was permitted to raise funds through a fast-track rights issue. The eligibility had earlier been set at three years.
Also, the minimum subscription requirement to make an issue successful was lowered from the earlier 90% of the offer size to 75%.

What Is a Qualified Institutional Placement (QIP)

A qualified institutional placement (QIP) is, at its core, a way for listed companies to raise capital, without having to submit legal paperwork to market regulators.
It is common in India and other southeast Asian countries.
The Securities and Exchange Board of India (SEBI) created the rule to avoid the dependence of companies on foreign capital resources.
QIPs are helpful for a couple of reasons.
Their use saves time as the issuance of QIPs and access to capital is far quicker than through an FPO.
The speed is because QIPs have far fewer legal rules and regulations to follow, making them much more cost-efficient.
Further, there are fewer legal fees, and there is no cost of listing overseas.

Source: TH

Join Our Telegram

China and Pangolin Protection

RBI to tighten rules for home finance firms

Pradhan Mantri Suryodaya Yojana

06 Feb, 24
SHARE

Recently, Prime Minister announced Pradhan Mantri Suryodaya Yojana under which 1 crore households will get rooftop solar power systems. India’s Status of Current Solar Capacity India currently stands at 4th place globally in solar power capacity. As per Ministry of New an

Foreign Contribution Regulation Act (FCRA)- NGO

06 Feb, 24
SHARE

The Foreign Contribution Regulation Act, 2010 (FCRA) registration of two prominent non-governmental organisations (NGOs) — Centre for Policy Research (CPR) and World Vision India (WVI) have been cancelled this month. What is FCRA? Key provisions of FCRA, 2010 Key aspects Description

Voice clone-AI

06 Feb, 24
SHARE

Voice clone fraud has been on the rise in India. AI voice cloning – It is the process of creating a synthetic replica of a person’s voice through machine learning and speech synthesis technology.It is called as voice deepfakesor audio deepfakes. Objective – To achieve a high level of na

Science communication- how to promote

06 Feb, 24
SHARE

Steps taken by India to promote Science Communication Publications and Information Directorate (PID) - An organisation under Council of Science and Industrial Research (CSIR) established in 1951 for publishing and disseminating scientific information in India. National science magazines- The PI

Universal Basic Income (UBI)- Analysis

05 Feb, 24
SHARE

Universal Basic Income (UBI) can strengthen welfare architecture and unlock the nation’s latent demographic potential. UBI - It is an income support mechanism typically intended to reach all or a very large portion of the population regardless of their earnings or employment status. Objective- To provide enough to co

Quick Links Testimonials FAQ

Crash Course

Regular Modules 2024

Mains

Optional

SEBI eases fund-raising norms for firms

SEBI eases fund-raising norms for firms

Pradhan Mantri Suryodaya Yojana

Foreign Contribution Regulation Act (FCRA)- NGO

Voice clone-AI

Science communication- how to promote

Universal Basic Income (UBI)- Analysis

DNA

06 Feb,2024

GS-III

PT Pickups

Toppers

Search By Date

Top Editorials

UPSC Courses

Saarthi Mentorship Programme

Important Tags

Articles:Geography And Environment

Articles: History Culture Society

Articles: Governance & National Issues

Articles: IR & IO

Articles: Economic Development & Economic Issues

Articles: S&T Internal Security

Articles: Ethics & Others

Articles: Others

Newsletter Subscription

SMS Alerts

Important Links