Promoters of stressed companies will get more flexibility in attracting investors and the process of determining the right price for assets would get easier following a new set of amendments introduced by capital market regulator Sebi in its preferential share issuance norms.
Market experts said the new guidelines provide flexibility to the promoters and promoter group entities to attract investors for their companies rather than becoming completely dispossessed as under the IBC framework.
The amendments can also help promoters get financial investors on board without losing control of the company. Even if they get investors who wish to take control, they could end up with a continuing role in the company which may be diluted but not completely removed.Therefore, due to such flexibility, promoters may prefer restructuring through these guidelines as a better and faster alternative than going through IBC, the experts added.Sebi, on June 22, introduced guidelines relaxing pricing and open offer requirements to enable easier fund raising through preferential allotment by stressed listed companies.
In order to ensure that the relaxations can be availed by genuinely stressed companies, clear criteria for a company to qualify as a ‘stressed company’ have been laid down.
Adequate safeguards have also been put in place in terms of restricting persons who are eligible to participate, end-use disclosures, restrictions.