SEBI Circular on Faster Rights Issue with Flexibility of Allotment to Specific Investor(s)

Introduction

The Securities and Exchange Board of India (“SEBI”), through its circular dated March 11, 2025, has introduced key procedural reforms aimed at facilitating a faster rights issue process and enabling greater flexibility in allotment to specific investors. These changes align with SEBI’s ongoing efforts to simplify capital-raising mechanisms for listed companies and promote ease of doing business in the securities market.

Explanation

This circular seeks to explain the amendments relating to the Rights Issue of Capital and Disclosure Requirements by SEBI issued on 2025. Those amendments along with the 2018 ICDR Regulations either were modified or added new concepts which are summarized as follows:

• Timely Completion of Rights Issue Process: The owner or the issuer company is now required to complete the entire rights issue process within 23 working days from the date of approval by the board. This is aimed towards easier access of funds through capital infusion.

• Change of Time Limits of Opening of Issues: There are now set limits of 30 days as an upper limit and 7 days as a lower limit during which issues must remain open (regulation number 87). This aims towards easing the burden but retaining a level of safeguarded policies for investors.

• Proposed Timeframes: There are two main structured tables which represent precise timeframes for all the activities that are done from the board’s deliberation to the allotment and listing. This also encompasses in principle approval, filing of offer letter, credit and trading of REs, bid validation, and refund offers.
• Enhancement of Application Processing Efficiency: Within half a year the issues and stock Registry and Depository of the stock exchange ought to have come up with a mechanism to validate the application without manual intervention. This development is aimed at the so called “set the record straight” principle.

Modifications to Master Circular (2024):

This circular partially modifies the earlier SEBI Master Circular dated November 11, 2024.

 Key updates include:

• Clear disclosures in the offer letter regarding RE credit and renunciation process.
• Ease of application through both online and printed forms.
• ASBA process for rights issues to follow public issue norms, applicable mutatis mutandis.
• Bid data corrections to be completed on the day of issue closure itself.
• Issuers must submit offer documents via email and pay fees online, digitizing the filing process.

Conclusion

This circular has marked another accomplishment for SEBI with respect to ease of doing business and increasing flexibility for both issuers and investors related to a rights issue. Reduction in delays and greater transparency mentioned above will also be possible with more structured timelines, advanced automated systems, detailed instructions, and enhanced disclosure and application processes. It is anticipated that these changes will improve the perception of rights issues as a viable and efficient method of capital procurement in terms of time and cost in the Indian securities market.