EXTENSION OF RELAXATION PROVIDED BY SEBI FOR RIGHTS ISSUE – Eshwars
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EXTENSION OF RELAXATION PROVIDED BY SEBI FOR RIGHTS ISSUE

Authored by Lakshmi Rengarajan

SEBI had vide circular SEBI/HO/CFD/DIL2/CIR/P/2020/78 dated 06th May 2020 had provided relaxations pertaining to opening of rights issue under SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 till 31st December 2020.

In this regard SEBI has vide circular SEBI/HO/CFD/DIL1/CIR/P/20 dated January 19, 2021 further provided extension till 31st March 2021 with regard to use of alternate non-cash mechanism to ASBA facility to accept applications form the shareholders in relation to rights issue. However while opting for alternate mechanism the issuer and the lead manager shall ensure the following;

(a) The mechanism(s) shall only be an additional option and not a replacement of the existing process As far as possible, attempts will be made to adhere to the existing prescribed framework.

(b) The mechanism(s) shall be transparent, robust and have adequate checks and balances. It should aim at facilitating subscription in an efficient manner without imposing any additional costs on investors. The issuer along with lead manager(s), and registrar shall satisfy themselves about the transparency, fairness and integrity of such mechanism.

(c) An FAQ, online dedicated investor helpdesk, and helpline shall be created by the issuer company along with lead manager(s) to guide investors in gaining familiarity with the application process and resolve difficulties faced by investors on priority basis.

(d) The issuer along with lead manager(s), registrar, and other recognized intermediaries (as incorporated in the mechanism) shall be responsible for all investor complaints.

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