Last month, we had discussed a decision of the Kerala High Court in Securities and Exchange Board of India v. Kunnamkulam Paper Mills Ltd, where it was held that in certain circumstances a rights offering by an unlisted company may amount to a public offering thereby conferring jurisdiction on SEBI. The company preferred an appeal to the Supreme Court, which has issued notice, and ordered that in...
When a Rights Offering Becomes a Public Offering
In August last year, the Supreme Court unequivocally ruled in the Sahara case on the issue of when an offer of shares by an unlisted company would become a public offering thereby invoking SEBI’s jurisdiction. One of our readers, Sumit Agrawal, has brought to our attention a decision of the Kerala High Court in Securities and Exchange Board of India v. Kunnamkulam Paper Mills Ltd, where it was...
Amendments to DIP Guidelines: Rights Issues and IDRs
SEBI today issued amendments to the SEBI (Disclosure and Investor Protection) Guidelines, 2000 with a view to simplifying the process for a rights issue. Since listed companies embarking on a rights issue are already subject to the disclosure norms under the listing agreement, substantial information regarding such companies are already available in the public domain, and hence SEBI has decided...
SEBI’s Proposal to Revitalise Rights Issues
Rights issues offer an important avenue for companies to raise capital, especially when bank financing may be difficult owing to a credit crunch as we are currently witnessing. However, in the Indian context, the procedure for carrying out a rights issue has been as onerous as it is for a full-blown public issue. This is because the disclosure requirements and the timing involved in a rights...
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