The paper invites feedback from stakeholders on proposed recommendations to make rights issues a preferred option for fundraising, according to a circular issued by SEBI on August 20.
The paper suggests introducing flexibility in allotting shares to selective investors participating in the rights issue.
In FY24, rights issues raised the least amount of funds, totaling Rs 15,110 crore, compared to Rs 68,972 crore through Qualified Institutional Placements (QIP) and Rs 45,155 crore via preferential share allotments, according to SEBI data.
Additionally, the number of rights issues was significantly lower than preferential issues.
To increase the share of rights issues in overall fundraising, SEBI conducted consultations with stakeholders in July and proposed several measures, including:
Eliminating the requirement to file a Draft Letter of Offer (DLoF) with SEBI
Streamlining the content of the Letter of Offer (LoF) by limiting disclosures to essential information, such as the purpose of the issue, pricing, record date, and entitlement ratio
Reevaluating the role of intermediaries involved in the process
Reducing the timelines associated with the rights issue process
Allowing the possibility of allotment to selective investors in rights issues