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June 18, 2020

SEBI allows promoters to increase stake by up to 10% in FY21

by facelesscompliance in SEBI

SEBI allows promoters to increase stake by up to 10% in FY21

The Securities and Exchange Board of India (Sebi) has allowed promoters to acquire 10 per cent instead of the currently permissible 5 per cent through creeping acquisitions without triggering an open offer, giving a one-time relaxation which will help companies raise Capital and enhance investor confidence as the promoter buying more shares

Sebi has also reduced the gap between two qualified institutional placements (QIPs) to two weeks instead of the existing minimum gap of six months.

promoter owning 25 per cent or more voting rights in a company to increase shareholding by up to 10 per cent in a year versus the earlier limit of 5 per cent is valid only till current Financial Year considering relief from Covid-19 liquidity situation

This can only be used if promoters are subscribing in a primary issue where money goes into the company through a preferential allotment

Creeping acquisition can be done through both secondary market purchases and primary issues. Sebi has given a one-time relaxation applicable for acquisitions made during FY21. However wot allow promoters to do creeping acquisition through the secondary market.

These regulations may be called the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) (Amendment) Regulations, 2020. In regulation 6, in sub-regulation (1), the following shall be inserted after the first proviso, namely,- “The relaxation from the first proviso is granted till March 31, 2021.

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