SEBI: Relaxation in raising of funds from the Securities Market due to COVID-19

On 23rd April, 2020 SEBI has issued a circular for relaxation in regulation 24(i)(f) of the SEBI (Buy-back of Securities) Regulations, 2018 due to the COVID-19 pandemic. SEBI has received various suggestions for relaxation of conditions with respect to raising of funds from the securities market.

Before Relaxation

  • Regulation 24(i)(f) of SEBI (Buy-back of Securities) Regulations, 2018 provides a restriction that the companies shall not raise further capital for a period of one year from the expiry of buyback period, except in discharge of their subsisting obligations.

After relaxation

  • It has been represented that the said period of one year may be reduced to six months, which would be in the line with section 68(8) of the Companies Act, 2013.

Key Note to Relaxation

  • To enable quicker access to capital, this relaxation is on temporary basis and will be applicable till December 31, 2020.
  • Accordingly the words “one year” shall be read as “six months” in the above explained regulation.
  • The circular is issued in exercise of powers conferred under section 11(1) of the SEBI Act, 1992.
  • The circular shall come into force with immediate effect.
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