Rights Issues: SEBI Reduces Timeline to 23 Working Days from Average of 317 Days

Moneylife Digital Team 12 March 2025

Investor Interest

Securities and Exchange Board of India (SEBI) has introduced a new framework that reduces the timeline for completing a rights issue to 23 working days from the board approval date. This marks a significant reduction from the current average of 317 days which has often been a barrier for companies looking to raise capital through rights issues.

The decision to streamline and expedite the rights issue process was first discussed during a SEBI board meeting in September 2024. The finalised circular, issued by the market regulator on 11 March 2025, aims to improve efficiency and benefits both issuers and investors.

The new regulations introduce key changes, including reducing the overall timeline for a rights issue to just 23 working days, allowing for much quicker completion. It will significantly speed up the process, making it more efficient for companies to raise capital and for investors to participate.

Under the new framework, the subscription period for rights issues will now range from seven to 30 days, providing investors with a clear and defined window to subscribe. This change ensures that investors have sufficient time to make informed decisions about their participation.

Another key feature is implementing a fully automated bid validation system within six months. This system is designed to improve the speed and efficiency of bid validation, ensuring a smoother process for companies and investors, SEBI says.

Additionally, companies issuing convertible debt instruments through rights issues, which usually require shareholder approval, will also be subject to the expedited timeline. According to the market regulator, this change aims to simplify the process for such companies and ensure a quicker capital-raising procedure.

The revised framework also sets new timelines for different stages of the rights issue process. After the issuer’s board approval, the record date for the rights issue must be fixed within four working days. Investors will see their right entitlements (REs) credited to their demat accounts within nine working days.

Once the issue closes, share allotment and fund transfer must be completed within one working day. Trading in the newly-issued shares will begin within three days after the allotment is finalised, ensuring a fast capital-raising process that benefits issuers and investors.

The revised framework will take effect on 7 April 2025. From this date, the new rules will apply to rights issues approved by the issuer’s board.

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