In an attempt to prop up the capital market sentiment, SEBI has announced a series of steps like relaxing the time restrictions to launch an IPO after a company receives the approval from SEBI. The capital markets regulator at its board meeting on Thursday decided to extend the validity of its approval for IPOs and rights issues from three months currently, to one year, subject to updating of documents by the issuer.
This will help more than two dozen companies who have extended their IPO plans after the stock market crash. Earlier, the companies had to go through the entire process if they miss the three month deadline. Companies like Reliance Telecom Infrastructure have deferred their IPOs following the markets crash.
As for rights issue, the board has approved the introduction of an alternative mode of application i.e., ASBA mode (application supported by blocked amount). Here the application money is blocked in the applicant’s bank account till the time of allotment of the shares. The ASBA mode has already started functioning in the case of application for IPOs through select SEBI-approved banks.
The board also approved electronic trading of “rights entitlement” in stock exchanges. The right entitlement will now be made available in demat form for all shareholders holding the underlying shares in demat form.Until now, a shareholder intending to renounce his/her rights entitlement had to do it by applying physically through a designated application form.
No Early Exit In Close Ended Mutual Funds
To ease redemption pressure on mutual funds, the board has put a stop to early exit from close-ended schemes. The schemes which have been approved earlier but not yet launched will also have to be amended accordingly.