SEBI notifies norms for listing of preference shares

The Securities and Exchange Board of India - SEBI notified a new comprehensive regulatory framework to govern issuance and listing of non-convertible preference shares.

This framework would bring more transparency while raising funds and also make it easier for banks and infrastructure companies to garner funds through the securities’ route.

In case of public issuance of non-convertible redeemable preference shares, SEBI has said that an issuer will be required to apply and obtain necessary approval from a recognized stock exchange for listing of such securities.

The company will also have to disclose details of any outstanding loans, any defaults committed and other financial indebtedness apart from audited annual reports of last three years.

In case of delay in listing of such shares beyond 20 days from the deemed date of allotment, the company would have to pay penal amount of at least one per cent per annum.

To safeguard the interest of small investors from high-risk securities, SEBI has said the listing of privately placed non-convertible redeemable preference shares would require a minimum application size of Rs. 10 lakh for each investor.

In the last three years, Indian companies have raised over Rs. 25,000 crore through preference share issuance.
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