Market regulator Securities and Exchange Board of India (SEBI), in its board meeting to be held on Thursday, is likely to discuss ways in which fundraising through preferential allotment of shares can be made easier for listed companies. SEBI may consider making certain amendments to the Substantial Acquisition of Shares and Takeover Regulations, sources told CNBC-TV18.
The regulator may be looking at easing pricing regulations for preferential allotment, said the sources, adding that it may allow companies to consider two-week average price for pricing preferential share issue.
Currently, any preferential share issuer has to consider the average of weekly high and low for 26 weeks. As per sources, SEBI may remove the 26-week condition by amending the Issue of Capital and Disclosure Requirement (ICDR) rules.
The market regulator may also discuss the issue of Chinese investment through the Foreign Portfolio Investor or FPI route into Indian companies. CNBC-TV18 on June 22 had reported on the government deliberating on ways to supervise Chinese investment into Indian companies via FPI route.
SEBI may also take some important decisions with respect to open offers facing delays. According to the sources, it may ask the acquirer in an open offer to pay 10% interest to shareholders in case of a delay.
In its February 3 discussion paper, SEBI said that there have been instances of open offers getting delayed because of disagreement on valuations, investor complaints, delay in making payment by an acquirer upon tendering the shares and delay in tendering process.
SEBI may also consider deposition of 100% of amount payable for open offer into an escrow account for indirect acquisition. Currently, this is applicable on direct acquisitions only.
"The current framework of takeover regulations does not stipulate a mandatory requirement of depositing in an escrow account a sum equivalent to 100% of the consideration payable under an open offer, in case of an indirect acquisition of shares/voting rights in, or control over the target company where public announcement of the offer has been made under Regulation 13(2)(e). It is felt that the Takeover Regulations should not differentiate between direct acquisitions and indirect acquisitions when providing safeguards for shareholders who wish to avail the exit opportunity provided by an open offer," SEBI had said in its discussion paper.