Equity pricing norms for overseas investors relaxed

NEW DELHI: The government on Thursday relaxed the norms for issuance of convertible bonds and equity through ADRs and GDRs, giving greater freedom to corporates to price shares.

Under the revised norms, the price of the shares to be issued to overseas investors will not be less than the average of the weekly high and low prices on the stock exchanges during two weeks, instead of six months.

The government had removed the condition that Foreign Currency Convertible Bonds (FCCBs) and equity shares under Global Depository Receipts (GDRs) and American Depository Receipts (ADRs) should not be priced at less than the average weekly high and low price on stock exchange during the six months period.

It has amended the FCCB guidelines in view of the representations received by the industry that pricing norms needed to be relaxed in view of the bearish conditions on the stock markets.

As per the changed norms, the minimum price would be based on the average of high and low price on stock exchanges for two weeks, instead of six months.

In addition, the government has also redefined the term "relevant date' for the applicability of the FCCB guidelines.

Under the new norms, the 'relevant date' would be the date of the board meeting during which the company takes a decision to issue bonds/equity to overseas investors.

Earlier, the 'relevant date' was defined as thirty days prior to the date of the meeting of shareholders to consider the proposed issue.