SEBI Clarifies on applicability of Lock in period in case of unlisted CCDs issued by way of preferential allotment on private placement basis

SEBI issues informal guidance to PC Jewellers Limited (hereinafter referred to PCJ) under the Informal Guidance Scheme read with SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 (SEBI (ICDR) Regulations 2009), clarifies on the lock-in period applicable to the pre-preferential allotment shareholding for convertible securities allotted to DVI Fund (Mauritius) Ltd.

PCJ had proposed issue and allotment of 42,69,984 Compulsorily Convertible Debentures (CCDs) to DVI Fund (Mauritius) Ltd. by way of preferential allotment on private placement basis at a face value of Rs. 1000 each in accordance with Chapter VII of SEBI (ICDR) Regulations, 2009.

Regulation 78 of SEBI (ICDR) Regulations, 2009 deal with Lock-in of specified securities and pre-preferential allotment shareholding of the allottees, if any.

Regulation 2(1)(zj):

“specified securities” means equity shares and convertible securities.

Regulation 78(6) states that:

‘The entire pre-preferential allotment shareholding of the allottees, if any, shall be locked-in from the relevant date upto a period of six months from the date of trading approval.’ PCJ queried on the lock-in period applicable to pre-preferential allotment shareholding of DVI Fund (Mauritius) Ltd.

SEBI states that Regulation 78(6) of the ICDR Regulations provides that the entire pre-preferential allotment shareholding of the allottees, if any, shall be locked-in from the relevant date upto a period of six months from the date of trading approval.

SEBI has clarified, where the requirement of trading approval is not applicable to specified securities being CCDs in this case, lock-in period shall commence from the relevant date and end on the expiry of six months from the date of allotment of CCDs and not from the date of trading approval as the CCDs were not listed.

The same shall be applicable for any convertible security to be issued.