SEBI has amended the SEBI ICDR Regulations 2018 to insert a new Regulation 164A which provides for the pricing of preferential issue of shares of companies having stressed assets and other conditions of such an issue.
In case of frequently traded shares, the price of the equity shares to be allotted pursuant to the preferential issue shall not be less than the average of the weekly high and low of the volume weighted average price of the related equity shares quoted on a recognised stock exchange during the two weeks preceding the relevant date. However, such allotment shall be made only if the issuer meets any two of the following criteria:
The new Regulation 164A also provides for the various conditions for such preferential issue and exemption from open offer , including :
In line with the abovementioned amendment to the ICDR Regulations, SEBI has amended the SEBI (SAST) Regulations 2011 to insert a new sub-regulation 2A in Regulation 10 thereof to exempt any acquisition of shares or voting rights or control of the target company by way of preferential issue that is in compliance with the abovementioned regulation 164A of the SEBI (ICDR) Regulations, 2018, from the obligation to make an open offer under Regulation 3(1) and 4 of the SAST Regulations.
This exemption will also apply to the target company with infrequently traded shares which is compliant with the applicable provisions of regulation 164A of the ICDR Regulations, 2018. The pricing of such infrequently traded shares shall be in terms of regulation 165 of the ICDR Regulations, 2018.
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