As per the amendment, a rights share issuer company will have to announce two separate dates for book closure or record date -- one for shareholders' decision regarding the proposed rights issue and the other for entitlement of rights issue after getting the SEC clearance.

The SEC in a notification letter on Monday said for entitlement of rights issue the issuer will announce the date of book closure or record date within three working days from the date of SEC approval.

The rights share issuer company will have to hold an extra-ordinary general meeting (EGM) for the second time not earlier than 15 working days and not later than 30 working days from the announcement date of book closure or record date.

Under the previous rules, at a same EGM companies offered rights shares to their shareholders to raise paid-up capital and set the record/book closure date before getting the SEC approval.

The capital market watchdog amended the Rights Issue Rules, 1998 following rejection of some companies' rights offer due to non-compliance of rules.

SEC sources said investors, who used to buy the shares at high prices before the record/book closure date of a company, were affected badly when prices dipped following the company's failure to get SEC nod to issue rights shares.

The capital market regulator recently rejected the rights offer of Uttara Finance Ltd, Social Investment Bank Ltd, National Credit and Commerce Bank Ltd and Central Insurance Ltd due to non-compliance with rights issue rules.

But, now the provision will wipe out the scopes for any uncertainty and protect the investors from abrupt losses as a company can offer rights share only after getting the SEC approval.

ATM Tariquzzaman, director (Capital Issue Department) of SEC, said the notification will be sent to listed companies, issuer companies and issue manager companies soon.