Faster fundraising: SEBI’s new rights issue rules cut completion time to 23 days

The Securities and Exchange Board of India (SEBI) on Tuesday introduced a new framework for rights issues, reducing the timeline for completion to 23 working days from the date of board approval as against the present average of 317 days.

The regular had first announced its decision to ease norms for faster rights issue after a board meeting in September 2024.

In a circular on March 11, 2025, SEBI said, “As part of the new framework,in terms of amended Regulation 85 of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 (SEBIICDR Regulations),it is being specified that Rights Issues shall be completed within 23 working daysfrom the date of Board of Directors of the Issuer approving the Rights Issue.”

Key changes in rights issue process:

• Under the revised framework, issuers must complete rights issues within 23 working days.

• The subscription period has been set between seven and 30 days, while stock exchanges and depositories will validate bids and finalise allotments.

• A fully automated bid validation system is expected to be developed within six months.

According to the new framework, companies issuing convertible debt instruments via a rights issue, which requires shareholder approval, will follow a revised timeline.

Revised timeline:

• The revised timeline mandates that the issuer’s board must fix the record date for the rights issue within four working days of approval.

• Credit of right entitlements (REs) to investors’ demat accounts must occur within nine working days.

• The issue will open on the fourteenth working day and remain open for a minimum of seven days.

• Exchanges and depositories will validate bids within six days of the issue opening.

• Allotment and fund transfers must be finalised within one working day after closure, and trading in the newly issued shares will begin within three days of allotment.

The revised framework will come into effect from April 7, 2025, and will be applicable to rights issues approved by the issuer’s board from that date onward. Stock exchanges and depositories have been directed to implement the necessary infrastructure and ensure compliance with the new regulations.