Securities and Exchange Board of India (SEBI) extended relaxations to companies with regard to compliance with regulations and procedural norms pertaining to rights issues till March 31, 2022. For the issue of capital and disclosure requirements norms, the application for rights is to be made only via the application supported by blocked amount (ASBA) facility. This applies to all rights issues opening up to March 31, 2022.
In order to ensure all eligible shareholders can apply to rights issue during the COVID-19 pandemic, SEBI in a May 2020 circular had said that the issuer along with the lead manager of the issue, the registrar and other recognised intermediaries institute an optional non-cash mode mechanism to accept the applications from the shareholders, with the condition that it is insured that no-third party payments are allowed in respect of any application.
The issuer along with the lead manager, registrar and other recognised intermediaries are required to ensure compliance with this requirement.
"Issuer Company shall conduct a Vulnerability Test for optional mechanism (noncash mode only) provided to accept the applications in Rights Issue (facility provided by RTA), from an independent IT Auditor, and submit the report to Stock Exchange(s)," the circular stated.