If you invest in the stock market, then this information is very important for you because SEBI-Securities and Exchange Board of India has changed a big rule.
new Delhi. The stock market regulator SEBI (SEBI-Securities and Exchange Board of India) has taken a big decision and changed many rules. On Thursday, during the Corona virus epidemic, the work of raising funds for companies was made easy. Under this, it has been decided to temporarily relax the pricing rules for allocation of shares on preferential basis. Also, the rule related to open offer has also changed. Experts say that this decision will boost stocks of companies with small and good business model. So investors have a good chance.
Know about the decisions of SEBI-
(1) While granting temporary relief, SEBI said that in case of preferential allotment there will be an additional option for pricing methods. In the event of adopting new options, it will be mandatory to keep such shares for three years. This means there will be a ‘lock in period’ of three years. This option of preferential price will be available from 1 July 2020 or the date of notification related to amendment of regulation, whichever is later, till 31 December 2020.
(2) PwC India Partner and Head (Financial Services Tax) Bhavin Shah said that the change in guidelines is a much awaited change. This will please the promoters as well as the investors. He said that many deals were stuck due to non-matching between the regulatory minimum level and the current market situation. This amendment has cleared the way for many deals. Also, this will improve the cash position of many companies.
(3) With this, SEBI has also approved the purchase of shares during the open offer. In the case where the open offer has been announced publicly, the entire amount for indirect acquisition should be submitted two working days before the date of the detailed public statement. If the open offer is delayed due to the acquirer, all shareholders who have offered shares in the open offer will have to pay 10 percent simple interest.
(5) Apart from this, the regulator will also amend the insider trading prohibition rule. It will have to have a digital database which will contain the nature of unpublished sensitive price information and the names of those who have information about it. Also, among other things, it includes automation of the process of informing the stock markets and restricting the trading window.
(6) Apart from this, SEBI has also decided to streamline the disposal rules to make the processes faster and effective. SEBI said that instead of issuing settlement notice under the settlement rules to save time, the disposal application to the concerned party A paragraph will be included in the show cause notice to inform the filing. The Board of Directors also approved the SEBI Annual Report 2019-20. It will be handed over to the central government.
What is Preferential Allotment – ‘preference share’. Any company issues these shares to its selected investors and promoters. Investors holding preference or preference shares are more secure than equity share holders.
This is because if such a company is on the verge of bankruptcy, then such shareholders are given preference in payment of capital over common equity shareholders.