In yet another move to boost the capital markets, the Government has relaxed the minimum pricing norms for the issue of securities (being GDRs/ADRs/FCCBs) to foreign investors. This comes on the heels of similar relaxations provided to qualified institutional placements (QIPs) some weeks ago.
There are two changes proposed:
(i) the minimum price will be the average weekly high and low prices for the 2 weeks prior to the relevant date, instead of the previous price determined as the higher of the average for 6 months and 2 weeks;
(ii) the relevant date for price determination will the date on which the board decides to issue to securities, and not 30 days prior to the shareholders’ resolution as it earlier stood.
The measures will ensure that the price is commensurate with the current market rather than an average over a longer period. This will help companies raise finances at lower prices during falling market conditions.
Further, as the Economic Times reports, some procedural issues regarding issue of warrants (which can be converted into shares over a period of time) are also being resolved so as to make it convenient for foreign investors to take warrants in Indian companies.