MANU/SPRL/0036/2020

Ministry : Securities and Exchange Board of India

Department/Board : SEBI

Press Release No. : 35/2020

Date : 23.06.2020

Relaxations for Listed Companies having stressed assets

SEBI has decided to relax the pricing methodology for preferential issues by listed companies having stressed assets and exempt allottees of preferential issues from open offer obligations in such cases, with immediate effect.

1. Relaxations

i. Eligible listed companies having stressed assets will be able to determine pricing of their preferential allotments at not less than the average of the weekly high and low of the volume weighted average prices of the related equity shares during the two weeks preceding the relevant date.

ii. Allottees of preferential issue in such eligible companies will be exempted from making an open offer if the acquisition is beyond the prescribed threshold or if the open offer is warranted due to change in control, in terms of Takeover Regulations.

2. Eligibility

A listed entity satisfying any two out of the following three conditions shall be considered as stressed and therefore be eligible for aforesaid relaxations:

(i) Any listed company that has made disclosure of defaults on payment of interest/repayment of principal amount on loans from banks/financial institutions/Systemically Important Non-Deposit taking Non-banking financial companies/Deposit taking Non-banking financial companies and/or listed or unlisted debt securities in terms of SEBI Circular dated November 21, 2019, and such default is continuing for a period of at least 90 calendar days after occurrence of such default.

(ii) Existence of Inter-creditor agreement in terms of Reserve Bank of India (Prudential Framework for Resolution of Stressed Assets) Directions 2019 dated June 07, 2019.

(iii) Downgrading of credit rating of the financial instruments (listed or unlisted), credit instruments/borrowings (listed or unlisted) of the listed company to "D".