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Fundraising for stressed firms gets easier; SEBI tweaks pricing norms for share issues, with riders

Fundraising for stressed firms gets easier; SEBI tweaks pricing norms for share issues, with riders

Capital markets regulator SEBI today relaxed the pricing methodology for preferential issue of equity shares to make it easier for listed companies with stressed assets to raise funds in the market. Securities and Exchange Board of India, while extending this option for stressed listed firms, also exempted allottees of preferential issues from open offer obligations in such cases. However, the relaxation from the market regulator comes with certain riders, which will force the companies to not make preferential issues to any member of the promoter group or the promoter of the company.

“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,” SEBI said. It added that the allottees of such preferential issue 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 Takeover Regulations. Currently, the rules mandated that the pricing of a preferential allotment can not be less than the average weekly high and low of 26 weeks

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