SEBI proposes relaxing disclosure norms for rights issues

NEW DELHI: With companies preferring other modes of raising capital post IPO, the market regulator SEBI on Thursday proposed relaxing the disclosure norms for rights issues to help shareholders retain their stake and reduce overall cost of issuance.

"Rights issues are further issuance of capital made by listed entities to its existing shareholders. Certain information about the entities that are listed and traded on the exchanges is available in the public domain," SEBI said in a discussion paper while making a case for less disclosures for rights issues.

SEBI said it may not be necessary to mandate exhaustive disclosure requirements. "In such cases it may suffice to have a more restricted set of disclosures about the issue and the entity," SEBI said while inviting comments from the public by March 28.

The market regulator pointed out that quite often issuers choose preferential offers or qualified institutional placements or even ADR and GDR issuances over rights issues as these modes require less time, cost and efforts.