The Securities and Exchange Board of India has brought down the timeline for rights issue of shares. Rights issues could now be completed in just 43 days after filing, instead of the existing 109 days.
In rights issue, a company offers its existing shareholders the right to purchase additional shares of the company at a given price, which is usually at a discount to the prevailing market price of the stock.
"This will reduce the risk faced by investors as under the existing system, the issue price is decided far before the issue is made. We will see if the process can be quickened further," said SEBI chairman C.B. Bhave.
The regulator said the issue price will now be the last two weeks' average price from the relevant date. This is seen as a better price discovery mechanism in the case of qualified institutional placements (QIPs). At present, the issue price in such cases are arrived by taking the higher of last six months' and the last two weeks' average prices.
"Price uncertainity is higher in such a system due to high volatility. Thus, it has been decided that issuers can do QIPs at last two weeks' average price," the chairman said.
Further, the regulator has formulated a standardised scheme for the annual reports filed by mutual funds. Funds will now be required to dispatch these reports to its unit holders within four months, instead of the existing time limit of six months.
Sebi said it has given the in-principle approval for the National Stock Exchange Ltd to start currency futures. The market regulator had received applications from the Bombay Stock Exchange and also a subsidiary of the Multi Commodities Exchange to start currency futures.
"The MCX subsidiary needed an approval of name from the registrar of companies and that has been given. But BSE is in no stage to start currency futures trading," Bhave said.