The Securities and Exchange Board of India (SEBI) has proposed easier pricing guidelines to help the stressed companies in fundraising amidst the lockdown.
With the pandemic prevailed, all the companies are losing their share values in the market. The reason being the lockdown, everything has stopped now.
With this, the SEBI has made changes to the preferential route. It also exempted the companies from making open offers for allottees. This is to benefit the fundraising for stressed companies.
According to the SEBI, the listed companies need funds right now to get over the current situation. Those industries would face certain difficulties if they are to receive the funds through traditional routes. So the SEBI has made steps to facilitate such issues.
The lack of funding in such a crucial stage may result in severe crisis and even shutting down later.
The SEBI clarified that these stressed companies require funds from financial investors right now, else it would become tough for them to sustain.
However, the existing pricing solutions make it tough for the companies to raise funds through the preferential allotment route.
The SEBI has also declared that the pricing should not be less than the average prices of the related equity shares on a recognized stock exchange during the two weeks preceding the relevant date.
SEBI has asked for public comments till May 13 and then they would implement the final norms, after taking views of all the stakeholders.
A stressed company is one which’s the credit rating of listed instruments has gone down to ‘D’.