Sebi eases norms for pricing of preferential issues

The market regulator has said that its Board has decided to provide an additional option to the existing pricing methodology for preferential issuance.

Sebi eases norms for pricing of preferential issues

New Delhi: Market regulator Sebi has decided to relax norms for pricing of preferential issues.

After holding the Board met in Mumbai on Thursday, Sebi said, “Due to serious challenges faced by the corporate sector in the wake of developments related to COVID-19, SEBI has been receiving numerous representations from various stakeholders for temporarily liberalizing regulations relating to raising of capital from securities market.”

The market regulator has said that its Board has decided to provide an additional option to the existing pricing methodology for preferential issuance.

In case of frequently traded shares, the price of the equity shares to be allotted pursuant to the preferential issue shall be not less than higher of the following:

a. the average of the weekly high and low of the volume weighted average price of the related equity shares quoted on the recognised stock exchange during the twelve weeks preceding the relevant date; or

b. the average of the weekly high and low of the volume weighted average prices of the related equity shares quoted on a recognised stock exchange during the two weeks preceding the relevant date.

Sebi said that the specified securities allotted on preferential basis using the above pricing formula shall be locked-in for a period of three years.

“The existing pricing guideline for preferential issue, for frequently traded shares, as prescribed under Regulation 164(1) of the ICDR Regulations shall also continue to remain in force. The issuer may choose any one of the formula,” Sebi said.

The said option in pricing shall be available for the preferential issues made between July 1, 2020 or date of notification of amendment to the Regulations, whichever is later and December 31, 2020, Sebi added.