Sebi makes delisting norms easier, tweaks warrants issue rules

Mumbai: Capital market watchdog Sebi on Thursday approved a raft of changes to regulations, including mandatory 25 percent upfront payment by foreign investors for warrants and partly-paid shares issued by domestic companies.

Besides, existing debt issuers would be allowed to re-issue the corporate bonds which would help in increasing overall liquidity in the concerned market.

The Sebi board, which met here today, also cleared relaxed regulations for delisting offers, made norms stricter for securitisation trustees and gave 18-month time period for companies trading on exiting bourses to move to nation-wide stock exchanges.

As per the changed norms, a domestic company would collect at least 25 percent of the total amount while issuing partly-paid shares or warrants to overseas entities.

This would be applicable for such securities issued by way of public offer or rights issue.

In the case of partly-paid shares, the balance consideration would continue to be received within 12 months if the issue size is less than Rs 500 crore, the Securities and Exchange Board of India (Sebi) said.

If the issue size exceeds Rs 500 crore and the issuer has appointed a monitoring agency, Sebi said the period for paying the remaining amount can be decided by the issuer as per the existing regulatory framework.

"In respect of warrants issued along with public or rights issue of specified securities, 25 of the consideration shall be received upfront by the issuer and tenure of such warrants shall be 18 months as against 12 months presently," it added.

Amendments have also been approved to incorporate provisions for enabling 'consolidation and re-issuance of debt securities' and 'call and put options' with regard to redemption of debt securities.

"By enabling consolidation and re-issuance of debt-securities, the illiquid and infrequently traded corporate bonds can be re-issued thereby leading to creation of a larger floating stock that can increase liquidity in the market," Sebi said.

To make the delisting process more easier, Sebi said the the requirement of mandatorily buying minimum 25 per cent shares of public shareholders would be relaxed.

The relaxation would be done only if the acquirer and the concerned merchant banker are able to "demonstrate that they have contacted all the public shareholders, about the offer".

In such cases, "the condition of mandatory participation of 25 percent of the public shareholders holding shares in demat mode would not be applicable," Sebi said.

Taking into consideration the difficulties faced by entities that trade on exiting bourses, the board has decided to give them 18-month time period to get listed on nation-wide stock exchanges.

Continuing its efforts to boost investor confidence in securitisation transactions, the Sebi board has cleared stringent regulations for trustees managing issuance of securitised debt instruments.

Among others, these trustees should maintain a standardised term sheet for securitisation transactions that cover both public issues and private placements.

Once the changes are in place, banks and public financial institutions can act as trustee without obtaining registration.

"The Board approved amendments in SDI (Securitised Debt Instruments) regulations to rationalise and clarify the role and responsibilities of trustee," Sebi said.

Generally, securitisation refers to creating a financial instrument by pooling various debt instruments and then selling them to investors.