DAILY NEWS ANALYSIS

GS-III : Economic Issues SEBI

18 June, 2020
5 Min Read

SEBI eases fund-raising norms for firms

As part of its attempts to make it easier for listed companies to raise funds in the current volatile scenario, the Securities and Exchange Board of India (SEBI) has allowed listed companies to raise funds at shorter intervals while also giving promoters the go-ahead to increase their stakes by a higher quantum without triggering an open offer.
As per a gazette notification, the capital markets regulator has allowed companies to make two qualified institutional placements (QIPs) with a gap of just two weeks between them.
This is a significant move as the earlier regulations mandated a minimum gap of six months between two such issuances.
In another important amendment, the regulator has said that promoters can increase their stakes in their companies through preferential allotments by up to 10% without triggering an open offer.
The cap was earlier set at 5%.
The regulator has, however, allowed this relaxation only for the current financial year.
Analysts said the twin moves would help in enhancing liquidity in the market as companies would be able to better time fund-raising while promoters could also acquire shares at a time when valuations were quite low compared with the historic highs.

Boosting liquidity

Relaxation from the takeover code could be a good opportunity for promoters who are looking to increase their stakes at attractive valuations, given the current market sentiments.
In April, the capital markets regulator relaxed certain regulatory requirements related to rights issues and initial public offerings (IPOs) to make it easier for companies to raise funds at a time when the COVID-19 pandemic had made the secondary markets increasingly volatile.
The watchdog said any listed entity with a market capitalisation of at least 100 crores could use the fast-track route for a rights issue.
Earlier, the norm was 250 crore for such offerings.
Further, any company that had been listed for 18 months was permitted to raise funds through a fast-track rights issue. The eligibility had earlier been set at three years.
Also, the minimum subscription requirement to make an issue successful was lowered from the earlier 90% of the offer size to 75%.

What Is a Qualified Institutional Placement (QIP)

A qualified institutional placement (QIP) is, at its core, a way for listed companies to raise capital, without having to submit legal paperwork to market regulators.
It is common in India and other southeast Asian countries.
The Securities and Exchange Board of India (SEBI) created the rule to avoid the dependence of companies on foreign capital resources.
QIPs are helpful for a couple of reasons.
Their use saves time as the issuance of QIPs and access to capital is far quicker than through an FPO.
The speed is because QIPs have far fewer legal rules and regulations to follow, making them much more cost-efficient.
Further, there are fewer legal fees, and there is no cost of listing overseas.

Source: TH

Join Our Telegram

China and Pangolin Protection

RBI to tighten rules for home finance firms

Anti-Defection Law in India

18 Mar, 26
SHARE

The Supreme Court of India recently gave a final three-week deadline to the Telangana Assembly Speaker to decide pending disqualification petitions against defecting MLAs under the Anti-Defection Law. What is the Anti-Defection Law? The Anti-Defection Law was introduced through the 52nd Amendment (1985), which added the Tenth Schedule to the

Rat-Hole Mining

18 Mar, 26
SHARE

A major disaster unfolded in East Jaintia Hills, Meghalaya, when at least 18 workers died following an explosion in an illegally operating rat-hole coal mine. This incident highlights the continued prevalence of rat-hole mining despite bans imposed by the National Green Tribunal (NGT) and the Supreme Court of India. Rat-hole mining is driven

India’s Aviation Sector

17 Mar, 26
SHARE

India’s aviation sector has grown rapidly, becoming a major economic success story. However, regulatory oversight has not evolved at the same pace. Data-driven monitoring of fares and market behavior is essential to ensure fair competition, prevent market abuse, and shift from reactive crisis management to proactive regulation. Challen

Federalism in India

14 Mar, 26
SHARE

Recently, a high-level committee on Union–State relations submitted its first report to the Government of Tamil Nadu. The report examines the distribution of powers and responsibilities between the Union and the States, highlighting ongoing debates regarding the balance between central authority and state autonomy. This discussion is clos

India–UAE Economic Partnership

14 Mar, 26
SHARE

The relationship between India and the United Arab Emirates has evolved from a traditional energy-based partnership into a comprehensive economic and strategic relationship. Over the years, strong political trust, growing trade, and expanding investments have transformed bilateral ties into a diversified economic corridor. The economic partnership

Quick Links Testimonials FAQ

Crash Course

Regular Modules 2024

Mains

Optional

SEBI eases fund-raising norms for firms

SEBI eases fund-raising norms for firms

Anti-Defection Law in India

Rat-Hole Mining

India’s Aviation Sector

Federalism in India

India–UAE Economic Partnership

DNA

22 Mar,2026

PT Pickups

Toppers

Search By Date

Top Editorials

UPSC Courses

Saarthi Mentorship Programme

Important Tags

Articles:Geography And Environment

Articles: History Culture Society

Articles: Governance & National Issues

Articles: IR & IO

Articles: Economic Development & Economic Issues

Articles: S&T Internal Security

Articles: Ethics & Others

Articles: Others

Newsletter Subscription

SMS Alerts

Important Links