The relaxation in the method to calculate the price of preferential shares for any issue from July to December will not only help the promoters to raise their holdings but also enable them to raise much needed funds at a time banks have become risk averse.

The Securities and Exchange Board of India (Sebi) on Thursday offered the option to fix the price of preferential shares based on the average of weekly high or low for two weeks preceding the issue or the price of the preceding twelve weeks, whichever is higher, but the shares will be locked in for a period of three years.

Recently, Sebi allowed promoters to acquire up to 10 per cent of shares of listed companies through preferential allotment without triggering an open offer.

Experts said the move would not only help promoters to fend off hostile takeovers, but also help in fund-raising when such an exercise has become difficult.

Says Lalit Sagar, partner at J Sagar Associates, “Sebi has announced a slew of measures over the past few days aimed at easing fund raising for companies to tide over the Covid crisis.”

The changes must be seen in the context of the amendment in FDI rules in late April that was designed to thwart “opportunistic takeover bids” from China.

“Sebi has indicated leniency to the company promoters and has strengthened the belief that they are outside the ambit of insider trading restrictions when it comes to subscribing shares under preferential allotment mechanism. The recent move will see a spike in such allotments to promoters under this period,” Makarand Joshi of MMJC and Associates said.