Mr. Deepak Jasani, Head Retail Research, HDFC Securities on relaxations announced by SEBI today.
The SEBI relaxation of rules for listed companies with stressed assets are welcome and could not have come at a better time. This will help raising funds by a company especially a financially distressed company by way of preferential issue of equity shares or convertible instruments to investors other than promoters, in time. This will help them to fund their operations to upturn its economic conditions thereby avoiding Insolvency/Bankruptcy.
The key irritants of pricing, requirement of open offer have been taken care of. The stressed companies will wish for more - like cutting lock-in period from 3 years to 1 year, relaxation in definition of stressed companies so that those on the verge of becoming stressed also can benefit out of these relaxations, dispensation of requirement of approval by the majority of minority shareholders (excluding the promoters and proposed allottees).
However this is a good beginning and the rules can be finetuned later after taking into consideration the emerging experience.