SEBI eases preferential issue pricing norms for companies

The relaxed pricing option will be available for all preferential allotments between July 1 and Dec. 31, 2020.   | Photo Credit: shashi ashiwal

The Securities and Exchange Board of India (SEBI) has relaxed the preferential allotment pricing norms for companies while tightening the insider trading regulations as part of its attempts to minimise instances of unpublished, price-sensitive information getting leaked.

The board of the capital markets regulator, which met here on Thursday, also amended the settlement proceeding norms to enable a faster disposal of cases while tweaking the Takeover Regulations as well.

Plea by stakeholders

“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 liberalising regulations relating to raising of capital from the securities market,” stated a release by SEBI. The watchdog has provided an additional, temporary option to price shares in a preferential allotment in the light of COVID-19’s impact on the markets.

Companies with frequently traded shares can take into account the average of the weekly high and low over the past 12 weeks or two weeks, whichever is higher, and price the preferential allotment above that mark.

While the existing pricing mechanism will continue, the relaxed pricing option will be available for all preferential allotments made between July 1 and December 31, 2020.

Earlier this week, the regulator provided a similar relaxation to companies with stressed assets.

Meanwhile, the regulator has also amended the SEBI (Prohibition of Insider Trading) Regulations making it mandatory for companies to maintain a structured, digital database containing the nature of unpublished price-sensitive information (UPSI) and the names of persons who have shared the information.

This assumes significance as the SEBI has been probing various matters wherein UPSI was shared by company officials with outsiders through applications like WhatsApp.

Monetary penalty

The regulator has also amended the SEBI (Settlement Proceedings) Regulations that allow for an entity facing regulatory proceedings to file for settling the case — popularly known as consent route — by paying a monetary penalty.

“In order to save time, instead of issuing a settlement notice under Regulation 18, a paragraph shall be included in the show cause notice, informing the noticee about the option to file a settlement application,” SEBI said in the statement.

The regulator has also tweaked the manner in which the base penalty amount is calculated.

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Printable version | Sep 18, 2021 12:31:02 PM |

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