New Delhi, March 11, 2025 – The Securities and Exchange Board of India (SEBI) announced on Tuesday that the processing time for equity rights issues has been reduced to 23 working days, making it a more attractive fundraising option. This move aims to simplify business procedures and accelerate the rights issue process.
As per agency report, SEBI has introduced flexible arrangements for allotment in rights issues, eliminating the need to file a draft offer document for regulatory comments. Instead, the document will be submitted directly to stock exchanges for in-principle approval, as the issuing company is already a listed entity. This measure is expected to streamline operations and expedite the rights issue process significantly.
According to SEBI’s circular, companies undertaking a rights issue must complete the process within 23 working days from the date of board approval. This is a substantial reduction from the current average timeline of 317 days. The revised framework will also be faster than the preferential allotment option, which currently takes around 40 working days.
Additionally, SEBI has stated that the rights issue application window will remain open for a minimum of seven days and a maximum of 30 days. The regulatory body has also mandated stock exchanges and depositories to develop an automated verification system for applications within six months.
In a separate notification, SEBI has rationalized the content requirements for offer documents, ensuring that only relevant information related to the rights issue is included. This includes details such as the purpose of the issue, pricing, record date, and eligibility ratio. Furthermore, SEBI has removed the mandatory requirement for companies to appoint a merchant banker for rights issues. Instead, this will now be an optional provision, provided the rights issue is completed within the 23-day timeline.
The changes introduced by SEBI are expected to enhance efficiency in capital raising while offering existing shareholders a faster and more seamless process to participate in their company’s growth.
