SEBI eases fundraising, open offer norms for distressed companies

The Securities and Exchange Board of India (SEBI) has relaxed fundraising norms for distressed companies to help them tide over a cash crunch and find investors in a bid to get back on their feet. SEBI has tweaked its pricing rules for preferential allotment of shares by distressed companies to investors and exempted investors from making an open offer to public shareholders. The decisions are aimed at helping stressed companies raise capital through timely financial intervention and, at the same time, protecting the interest of shareholders. SEBI has decided to reduce the period for determining the pricing of a preferential share issue for distressed companies to two weeks from the earlier 26 weeks. It has also exempted investors who buy shares via preferential allotment from making an open offer to public shareholders of a distressed company if the acquisition is beyond the prescribed limit.