COVID-19: Sebi extends deadline for comments on proposed relaxation in QIP, delisting norms

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Updated: April 2, 2020 3:38:58 PM

Securities and Exchange Board of India (Sebi) had sought comments on these two proposals till April 15.

COVID-19, Sebi, coronavirus pandemic, QIPs, ESP portals, delisting norms, latest news on sebiAt present, multiple players provide e-voting facility to listed entities in the country and shareholders require to register and maintain multiple user IDs and passwords with them.

In the wake of coronavirus pandemic, Sebi has extended the deadline for public comments on proposed relaxation in norms with regard to six-month-gap between two QIPs, and delisting of a firm in case of its merger with listed holding firm till April 30.

Securities and Exchange Board of India (Sebi) had sought comments on these two proposals till April 15. In addition, the deadline has been extended for submission of comments till this month-end on proposed e-voting facility provided by listed firms as well as on a proposal that will require listed entity to obtain prior approval from the shareholders before extending any loan and guarantee to promoter entities.

The comments on these two proposals were sought till March 31. “In view of the representations received by Sebi seeking extension of timelines due to impact of COVID-19 pandemic, it has been decided to extend the timelines for seeking public comments on… (the) consultation papers to April 30, 2020,” the regulator said in a report dated March 31.

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With respect to QIP, it has been proposed to relax the mandatory requirement of a six-month-gap between two successive issuances of shares to qualified institutional investors by listed companies requiring urgent funds, if they meet certain conditions.

As per the Sebi regulations, a listed company cannot make any subsequent qualified institutions placement until the expiry of six months from the date of the prior qualified institutions placement made pursuant to one or more special resolutions.

In respect of delisting, the capital markets regulator proposed to exempt a listed company from following regulations in case of its merger with a listed holding firm, if the shareholders of the subsidiary entity gets shares of the parent.
This would apply to cases where a listed holding company is merging its listed subsidiary and the subsidiary is desirous of getting delisted without following the provisions of delisting regulation.

Further, Sebi, last month, proposed two mechanisms to make the e-voting process more secure, convenient and simple for shareholders. Under the proposal, shareholders would be able to access the e-voting links of ESPs (e-voting service providers) without further authentication by it for participating in the process. Further, to enable demat account holders to cast vote on different ESP portals without having to register again with the ESPs.

At present, multiple players provide e-voting facility to listed entities in the country and shareholders require to register and maintain multiple user IDs and passwords with them.

In its draft papers on guarantee provided by listed firm, Sebi proposed that a listed entity shall obtain prior approval from the shareholders on a “majority of minority” basis, before extending any loan, guarantee or security for the benefit of promoter entities.

As per the proposal, the listed entity shall extend a guarantee or security to any person or entity, including promoter, promoter group, director, directors’ relative and key management person, considering the “economic interest” of the company.

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