SEBI releases norms for listing of preference shares

India Infoline News Service | Mumbai |

The listing of privately placed non-convertible redeemable preference shares would require a minimum application size of Rs. 10 lakh for each investor

Market regulator Securities and Exchange Board of India (SEBI) has notified new norms to govern issuance and listing of non-convertible preference shares.

The objective is to bring more transparency in raising funds through such securities and to safeguard the interest of small investors from such high-risk securities.
An organised structure for issuance and listing of non-convertible preference shares would also make it easier for banks and infrastructure companies to raise funds through this route.

The said regulations provide for a comprehensive regulatory framework for public issuance of non-convertible redeemable preference shares and also for listing of privately placed redeemable preference shares, SEBI said in a press release on Friday.

Further, banks can issue non-equity instruments such as perpetual non-cumulative preference shares and innovative perpetual debt instruments. The Regulations shall also be applicable to such instruments issued by banks, it added.

According to SEBI, the listing of privately placed non-convertible redeemable preference shares would require a minimum application size of Rs. 10 lakh for each investor.

The public issuance of such shares would require a minimum tenure of three years for the instruments and at least a rating of 'AA-' or equivalent investment grade.

In case of public issuance of non-convertible redeemable preference shares, an issuer is required to make an application to a recognised stock exchange for listing of such securities and needs to obtain approval from the stock exchange regarding the same, SEBI said.

The issuer is required to disclose about last three years audited annual reports, among others, along with the listing application to the stock exchange.

In addition, the issuer should also disclose details of any outstanding loans, any defaults committed and other financial indebtedness including corporate guarantee given by the company in the past five years.

In case of delay in listing of such shares beyond 20 days from the deemed date of allotment, the company would have to pay penal amount of at least 1% per annum over the dividend rate from the expiry of 30-day from the deemed date of allotment till the listing, SEBI added.




 

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