In another relief over regulatory compliance for listed companies, the Ministry of Corporate Affairs (MCA) has said that if a company is not able to deliver a notice with the details of a proposed rights issue, opening up to July 31, to the shareholders, it will not be considered as a violation of norms.
In a circular, the Ministry said that it has received several representations for providing clarification on the mode of issue of notice referred to in section 62(1)a(i) of Companies Act read with Section 62(2) of the Act for rights issue of listed companies, in view of the difficulties faced by companies in sending notices through post or courier services on account of the threat posed by Covid-19.
“In view of the above and on account of the overall situation, it is hereby clarified that for rights issues opening upto 31st July 2020, in case of listed companies, which comply with the SEBI circular date 6th May 2020, inability to dispatch the notice to the shareholders through registered post or speed post or courier would not be viewed as a violation of section 62(2) of the Act,” it said.
As per the regulation, the offer shall be made by notice specifying the number of shares offered and limiting a time not being less than 15 days and not exceeding 30 days from the date of the offer within which the offer, if not accepted, shall be deemed to have been declined.
It should be dispatched through registered post or speed post or through electronic mode or courier or any other mode having proof of delivery to all the existing shareholders at least three days before the opening of the issue.
This is another regulatory relief provided to companies in view of the coronavirus pandemic.
MCA’s latest move is in line with security market regulator SEBI’s relaxation announced to companies from compliance with procedural norms pertaining to rights issues opening up to July 31 amid the coronavirus lockdown. It said that the abridged letter of offer, application form and other issues material to shareholders can be undertaken by electronic transmission as already provided under the ICDR (Issue of Capital and Disclosure Requirements) norms.