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Riya Dwivedi made post

SEBI has just reduced the time line for rights issue to 31 days. What is the implication of this move?

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9 months ago

In its board meeting on 20th November, one of the key decisions taken by SEBI was to reduce the time for completion of a rights issue from 55 days to 31 days effective immediately. Here are the highlights of the announcement made by SEBI.

· The timeline for completion of the rights issue process will be reduced from T+55 to T+31. This has been a demand from companies for a long time.

· This move will ensure that the company issuing rights will get the proceeds of the rights quickly and the investors will also get their rights shares quickly.

· SEBI has also stipulated that the rights entitlements, that are now traded as options in the stock exchange, will have to be mandatorily traded in the Demat form only. This will also help to expedite the entire rights process.

· SEBI has made it mandatory that all rights applications must be made through the ASBA route only. Application supported by Blocked accounts (ASBA) is a mechanism whereby the amount gets debited to the account only on an allotment. Till them, the amount is only blocked.

· Lastly, SEBI has also mandated that all rights shares will be issued in Demat form only. That means, even investors holding rights shares in physical form will have to necessarily submit their Demat account details so that rights can be directly credited in Demat form.

All the above moves are expected to combine and make life simpler for the companies issuing rights and for investors applying for rights.