In a move to encourage the companies to raise their capitals through rights issues and accelerate its compilation process, the Security and Exchange Board of India (SEBI) on Thursday issued a discussion paper seeking the comments of public by March 28.
Usually, the process of issuing rights issues (RIs) takes as much as two months of period in which the issuing company has to mandatory mention all the exhaustive disclosure pertaining to entities and rights; while certain information are already available on the public domain for investors that are listed and traded on the bourses.
‘In such cases, it may suffice to have a more restricted set of disclosures about the issue and the entity. Further, rationalisation of disclosure norms for rights issues would not only make the issuance process faster, but also contribute to savings in paper, printing and distribution costs, thereby reducing overall cost of issuances’, said the released discussion paper.
SEBI had constituted a committee ‘Sebi committee on disclosures and accounting standards (SCODA)’ to discuss all the prospect of this proposal.
According to Scoda, ‘The offering company needs not obligatory to mention details like management, board of directors, corporate structures, industry overview, and future prospects as it is already mentioned in the company’s domain. Instead the company would have to disclose only those risk factors that are related to the rights issue or the issuer’s ongoing business activities and litigations that impacted the business directly.’
Moreover, SEBI has also proposed that the companies need to mention only financial statements of previous year, not the statements of last five years. ‘There is not necessary for the companies to declare the basis of the issue price and price band, which is a function of parameters like earnings per share, price to earnings ratio and others. It is mandatory for the market regulator,’ SEBI stated.
The requirement to disclose changes in accounting policies are also proposed to be done away with.
Sebi had recently amended the guidelines relating to timelines for rights issue, which has resulted in an overall reduction by more than 2 months in the rights issue process. It also extended the use of Applications Supported by Blocked Amount (ASBA) for rights issues.
|
|
Comments:
