The Securities and Exchange Board of India (Sebi) on Tuesday has proposed a number of measures to make rights issue the preferred funding route among companies.

These include doing away with filing a draft letter of offer (DLoF), sharply reducing the timeline of the entire exercise and rationalising disclosure requirements in the offer document.

The markets regulator in its consultation paper has also suggested abolishing the requirement of appointing a merchant banker.

A rights issue can be made through the fast track mode by filing letter of offer (LoF) with the stock exchange and through the non-fast track mode by DLoF with Sebi.

The regulator said the preparation of DLoF or LoF may be time consuming that may result in the duplication of information available in the public domain.

The consultation paper, therefore, proposed to discontinue the current requirement of filing DLoF with Sebi.

It also proposed the issuer needs to disclose only the relevant information in LoF such as the object of the issue, price, record date and entitlement ratio.

The paper also suggested dropping the requirement of a merchant banker.

The role can be assigned to the issuer, registrar to issue and stock exchanges or the designated stock exchange (DSE).

The consultation paper suggested the timeline can be brought down to T+20 working days from the date of the board meeting on the issue and the date of closure of the offer.

Current regulations restrict the promoters from renouncing their share in case the issue has not achieved minimum subscription criteria and in fast track rights issues.

It has now proposed to relax the restrictions with regard to renunciation and allow the promoter or the promoter group to renounce their allotment in favour of selective investors.

Upfront disclosure of the details must be made through an advertisement in a newspaper.

It also proposed to allow the allotment of the unsubscribed portion of the issue to selective investors at the discretion of the issuer.

Stock, gold rally

Stock market benchmark indices Sensex and Nifty found firmer ground on Tuesday, propelled by robust buying in banking, financial and auto stocks amid a largely firm trend in global equities.

Besides, easing geopolitical tensions in West Asia and falling global crude oil prices further bolstered sentiment, traders said.

The 30-share BSE Sensex rebounded 378.18 points or 0.47 per cent to settle at 80802.86.

Rising for the fourth consecutive day, the NSE Nifty surged 126.20 points or 0.51 per cent to 24698.85.

Gold prices saw the sharpest gain in the past one month and rallied ₹1,400 to touch ₹74,150 per 10 grams in the New Delhi market on Tuesday, amid strong global cues.

Silver price also climbed ₹3,150 to ₹87,150 per kilogram from ₹84,000 per kg in the previous close.