Search Your Queries Related To Trilegal

Update

SEBI introduces alternate pricing option for preferential issues under the ICDR Regulations

03 Jul 2020

SEBI has introduced an additional pricing option for preferential issues of frequently traded shares under the ICDR Regulations.

Introduction

In the wake of the Covid-19 pandemic and ensuing financial and operational challenges, companies are seeking capital infusion through modes such as preferential issues. However, the prevailing pricing norms for preferential issue have been a hindrance given that the price in the preferential issue is to be calculated over a 26-week period. For a company in deteriorating financial conditions and falling share prices, this leads to a wide gap between the price at the beginning of such period (which would invariably be higher at that time) and at the time funds are proposed to be raised.Accordingly, the Securities and Exchange Board of India (SEBI) has introduced an additional option to the existing pricing framework applicable to preferential issues through the SEBI (Issue of Capital and Disclosure Requirements) (Third Amendment) Regulations, 2020 (Amendment Regulations) on 1 July 2020.
Temporary Relaxations for Pricing of Preferential Issues

A new Regulation 164B (New Regulation) has been introduced to the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 (ICDR Regulations) to provide an additional option (Temporary Pricing Option) to the existing pricing framework for preferential issues of frequently traded shares. The Temporary Pricing Option may be availed for preferential issues made between 1 July 2020 and 31 December 2020.

Key aspects of the New Regulation are as follows:
- Under the Temporary Pricing Option, pricing of equity shares will be at least the higher of the average weekly high and low of the volume-weighted average price during either (i) 12 weeks, or (ii) 2 weeks preceding the relevant date.The existing pricing framework for frequently traded shares provides for the higher of the average weekly high and low of the volume-weighted average price during either (i) 26 weeks, or (ii) 2 weeks preceding the relevant date. While the existing pricing framework will continue to remain in force, issuers have now been given an option to choose between the existing pricing framework and the Temporary Pricing Option.
- Specified securities allotted in a preferential issue using the Temporary Pricing Option will be subject to a lock-in period of 3 years.
- All allotments under a preferential issue arising from the same shareholders’ resolution are required to follow the same pricing framework.

Download PDF to read more

Subscribe to our Knowledge Repository

If you would like to receive content directly in your inbox from our knowledge repository, please complete this subscription form. This service is reserved for clients and eligible contacts.

First Name: *

Last Name: *

Organisation: *

Role: *

Official Email ID: *

Your Contact at Trilegal:

Location *

Let's connect

Disclaimer

Under the rules of the Bar Council of India, Trilegal is prohibited from soliciting work or advertising in any form or manner. By accessing this website, www.trilegal.com, you acknowledge that:

You are seeking information about Trilegal of your own accord and there has been no form of solicitation, advertisement or inducement by Trilegal or its members.
This website should not be construed as providing legal advice for any purpose.
All information, content, and materials available on this website are for general informational purposes only.
Any information obtained or material downloaded from this website is completely at the user’s volition, and any transmission, receipt or use of this website is not intended to, and will not, create any lawyer-client relationship.
Information on this website may not constitute the most up-to-date legal or other information. Trilegal is not liable for the consequences of any action taken by any person based on any material or information available on this website, or for any inaccuracy in or exclusion of any information or interpretation thereof.
Readers of this website or recipients of content or information available on this website should not act based on any or all such content or information, and should always seek advice of competent legal counsel licensed to practice in the appropriate jurisdiction.
Third party links contained on this website re-directing users to such third-party websites should neither be construed as legal reference / legal advice, nor considered as referrals to, endorsements of, or affiliations with, any such third party website operators.
The communication platform provided on this website should not be used for exchange of any confidential, business or politically sensitive information.
The contents of this website are the intellectual property of Trilegal.

We prioritize your privacy. Before proceeding, we encourage you to read our privacy policy, which outlines the below, and terms of use to understand how we handle your data:

The types of information we collect and why we collect them.
How we use your information to provide a personalized experience.
The measures we take to ensure the security of your data.
Your rights and choices in managing your personal information.
How we may share information with trusted partners for specific purpose.

For more information, please read our terms of use and our privacy policy.

SEBI introduces alternate pricing option for preferential issues under the ICDR Regulations

Introduction

Search More Topics

LATEST ARTICLES

RELATED TOPICS

Trending Articles

Balancing liberty and economic justice: Supreme Court clarifies approach to bail in financial crimes

Decoding changes to India’s offshore borrowing laws

Beyond takedowns: Delhi High Court’s framework for tackling domain name infringements

The Unlock: RBI empowers banks to fund acquisitions

Insurance Law Reforms 2025: A stakeholder impact assessment

Asset Management and Funds Quarterly Milestones (October-December 2025)

Reaffirming the sanctity of party autonomy: Balaji Steel Trade v Fludor Benin SA & Ors.

Budget 2026: A strategic upgrade to India’s International Tax and Transfer Pricing Laws

Upfront disclosure of Section 32A eligibility: IBBI strengthens the clean slate framework in insolvency resolution

Technology and Data Protection Quarterly Milestones (October-December 2025)

Telecommunications Quarterly Milestones (October-December 2025)

Gaming, Cryptocurrency, and Artificial Intelligence Quarterly Milestones (October-December 2025)

Subscribe to our Knowledge Repository

Disclaimer