Did RIL benefit from SEBI easing rights-issue norm?

They could be unconnected. But the ₹53,000 crore rights offer of Reliance Industries Ltd (RIL) in May was preceded by an innocuous tweak by SEBI to one of its rules governing rights issues in the market.

On April 21, SEBI said that it would allow companies even with pending prosecution proceedings to raise money through fast-track rights issues. The rules were eased thus so that companies under stress due to the Covid-19 lockdown could raise funds. RIL announced its rights issue a few days later, on April 30.

As per the earlier regulatory norm, any company that had any case or prosecution proceedings pending with SEBI was not allowed to raise money through the fast-track right issue route. RIL is currently in an adjudication proceeding relating to allegations of insider trading, levelled by SEBI. Therefore the company could not have raised money in fast-track mode under the earlier rule.

A fast-track issue is where the company does not require SEBI approval. 

Just 20 days after announcing the rights issue, RIL opened its books to mobilise funds, on May 20, and closed them in June. RIL’s rights issue was oversubscribed 1.59 times.




This blog is authored by Company Secretary Ronak Gupta. He is author of many blogs and runs many websites and youtube channels. His work is dedicated to corporate laws, legal, secretarial, professional services and also in strategy formulations for corporates. Mail him at: csronakgupta23@gmail.com or call at :9910226715

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