The SEBI had held its Board Meeting on 25th June, 2020 and concluded the following matters:
1) Pricing of preferential issues – Temporary relaxation due to COVID 19:
SEBI has decided to provide an additional option to the existing pricing method in case of preferential issue for frequently traded shares under ICDR Regulations. The issuer will have an option to opt either for the existing pricing under regulation 164(1) of the ICDR Regulations method or the additional method.
However, all specified securities allotted on the basis of the additional pricing method will be locked-in for a period of 3 years.
2) Amendments to SEBI SAST Regulations:
• Acquisition through bulk and block deals will be permitted during the open offer subject to regulation 22(2A) of SAST Regulations
• Where public announcement has been made for the open offer in case of indirect acquisitions, 100% of the consideration must be deposited 2 working days before the detailed public statement in an escrow account in the form of cash and/or bank guarantee
• The acquirer will be required to pay 10% interest to all the shareholders who have tendered their shares in case of delay in making the open offer due to omission or commission by the acquirer
3) Amendments to SEBI PIT Regulations:
Various amendments to the PIT Regulations were approved pertaining to structured digital databases, automation of the process of filing disclosures to stock exchanges, entities to file the non-compliances of Code of Conduct with the stock exchanges etc.
4) SEBI (Settlement Proceedings) (Amendment) Regulations, 2020:
In order to streamline settlement procedures based on the settlement matters handled for the past one year, SEBI approved various amendments to the Regulations.
SEBI ICDR (Second Amendment) Regulations, 2020:
SEBI has introduced guidelines on pricing in preferential issue of shares of companies having stressed assets vide SEBI ICDR (Second Amendment) Regulations, 2020. The regulations have been issued vide notification dated 22nd June, 2020 with immediate effect.
A new regulation 164A has been issued for the pricing guidelines providing for the below:
• Allotment of equity shares by companies having stressed assets
• Restrictions on making preferential issue to certain entities
• Resolution for the preferential issue and exemption from open offer
• Use of proceeds of such preferential issue
• Arrangements to be made by issuer for monitoring the use of proceeds by a PFI/Bank (not to be a related party)
• Lock-in period for 3 years of such allotment
SEBI SAST (Second Amendment) Regulations, 2020:
Owing to the above, subsequent amendment has also been made in the SAST regulations to exempt any acquisition of shares or voting rights or control of the target company by way of preferential issue in compliance with regulation 164A of ICDR regulations from the obligation to make an open offer under sub-regulation (1) of regulation 3 and regulation 4 of SAST regulations. The exemption has been brought by SEBI SAST (Second Amendment) Regulations, 2020 vide notification dated 22nd June, 2020 with immediate effect.