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SECURITIES AND EXCHANGE BOARD OF CORPORATION FINANCE DEPARTMENT DIVISION OF ISSUES & LISTING Mittal Court, ‘A’ Wing, Ground Floor Nariman Point, MUMBAI - 400 021. TEL NO.
: 22850451- 56/ 22880962-70 FAX
NO. :2204 5633 |
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SEBI/CFD/DIL/ DIP/ Circular No 11 |
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To All Registered Merchant
Bankers
Dear Sirs,
Sub:
Amendments to the SEBI (Disclosure and Investor Protection){ DIP}
Guidelines,2000
SEBI, in its constant endeavor
to enhance the level of investors’ protection, to increase the transparency and
efficiency of the primary market, to strengthen the disclosure and eligibility
norms for issuer companies and to rationalize and simplify various operational
procedures in the primary market so as to facilitate raising of resources by
the issuer companies, has taken several initiatives, in this regard, based on
the recommendations of the committees set up by SEBI. The recommendations of these committees were also
made available at SEBI Website for soliciting public comments.
The SEBI Board, after
considering the recommendations of the Committees and public comments thereon,
has approved certain modifications to be incorporated in the captioned
Guidelines.
Accordingly, SEBI, under
the provision of Section 11(1) of SEBI Act, is hereby issuing the amendments to
SEBI (DIP) Guidelines, 2000; incorporating the modifications approved by the SEBI
Board, as stated above. The amendments
are detailed in the Annexure and are categorized under various sections as specified
below:
Section A
Review of Eligibility Norms
The existing eligibility norms of
the issuers have been reviewed interalia with an objective to strengthen the existing norms,
to facilitate entry of mid-cap, small-cap new entrepreneurs to the primary market
without exposing the public to undue risk, to maintain quality of issuer
companies and also to keep fly by night issuers at bay. Accordingly amendments to SEBI(DIP)
guidelines have been carried out . The amendments inter-alia include
introduction of Net Tangible Assets and minimum number of allottees as
additional criterion, appraisal route as an alternative to the mandatory book
building route etc. Details of the amendments are given under this section in
the Annexure.
Section B
Review of
Book building is a facility given
to issuer companies and merchant bankers
to ascertain the demand and indicative price before the actual opening of the
issue. SEBI has been reviewing the existing book building guideline on an
ongoing basis, to make price discovery process more realistic, immune from
artificial demand and more responsive to the
market demand. The companies have now been given a flexibility of
indicating a movable price band or a
fixed floor price in Red Herring prospectus, definition of QIBs has been
enlarged to include Insurance companies, Provident and Pension funds with
minimum corpus of Rs. 25 crores. Further operational guidelines are amended thus
shortening the interregnum between the closure of issue and listing/ trading of
securities to T+6 ( T stands for date of closure of issue)
Details of the amendments carried
out at relevant places in SEBI (DIP) Guidelines, 2000, are given under this
section in the Annexure.
Section C
Introduction of Green Shoe Option
Green Shoe option means an option
of allocating shares in excess of the shares included in the public issue. It
is extensively used in international IPOs
as stabilization tool for post listing
price of the newly issued shares. It is being introduced in the Indian Capital
Market in the initial public offerings using book building method. It is
expected to boost investors’ confidence by arresting the speculative forces
which work immediately after the listing and thus results in short-term
volatility in post listing price. The amendments carried out in SEBI (DIP)
guidelines in this regard, have been detailed under this section in the
Annexure.
Section D
Review of disclosure requirements in the
offer documents
The existing disclosure
requirements in the offer documents are reviewed on an ongoing basis by SEBI
and based on the review, the amendments are carried out in SEBI (DIP)
guidelines. The amendments under this section interalia include full disclosure
about the promoters including their photograph, PAN number etc, classification
of risk factors, use of standard financial units etc. Details of the amendments are given under this
section in the Annexure.
Section E
Review of requirements pertaining to issue of
Debt Instruments
SEBI has reviewed the role of
debenture trustees and also the provisions pertaining to issue of debt
instruments in SEBI (DIP) guidelines 2000. The amendments under this section
inter-alia include prohibition on a willful defaulter to make a debt issue, requirement
of investment grade credit rating for making a debt issue, relaxation in the existing
provisions of promoters contribution in IPO of debt issue etc. The amendments have been carried out at
relevant places in SEBI (DIP) Guidelines, 2000, details of which are given
under this section in the Annexure.
Section F
Modifications pursuant to amendments carried
out on
Amendments carried out in SEBI
(Employee Stock Option Scheme & Employee Stock Purchase Scheme) Guidelines,
1999 on
Section
G
Amendments pursuant to withdrawal of the concept of Regional Stock
Exchange by Ministry of Finance (MOF), Govt. of
On
Section H
Review of Operational/Procedural Requirements
SEBI has reviewed the
operational/procedural requirements specified in SEBI (DIP) 2000, Guidelines
with an objective to streamline the same further. The amendments under this
section interalia include reducing the validity period of SEBI’s observation
letter to 6 months from 365 days, demarking the responsibilities of lead
managers, defining associate etc. Details of the amendments are given under
this section in the Annexure.
Section I
Miscellaneous Amendments
This
section contains amendments to various other provisions of SEBI (DIP)
Guidelines, 2000. Details of the amendments are given under this section in the
Annexure.
These amendments of the
Guidelines shall come into force with immediate effect and shall be applicable
to all Public Issue/Rights Issue/Offer for
You are directed to ensure
compliance with the provisions of SEBI (DIP) guidelines 2000. This circular
alongwith the annexure is available in SEBI website at www.sebi.gov.in. Full text of SEBI (DIP)
guidelines 2000 including the amendments issued vide this circular is also
available in SEBI’s web site under Primary Market Section.
Yours sincerely,
Neelam Bhardwaj
(Deputy General Manager)
ANNEXURE
Section A –Review of Eligibility Norms
1
The existing Clause 2.0 shall be substituted by the
following:
“2.0 Conditions for issue of securities
The companies issuing securities offered through an
offer document, shall, satisfy the following at the time of filing draft offer document
with SEBI and also at the time of filing the final offer document with the
Registrar of Companies./ Designated Stock Exchange ”.
2 The
existing Clause 2.2 shall be substituted by the following:
“2.2 Initial Public Offerings by unlisted
companies”
3 The
existing Clause 2.2.1 shall be substituted by the following, namely:
“2.2.1 An
unlisted company may make an initial public offering (IPO) of equity shares or
any other security which may be converted into or exchanged with equity shares
at a later date, only if it meets all the following conditions:
(a)The
company has net tangible assets of at least Rs. 3 crore in each of the
preceding 3 full years (of 12 months each), of which not more than 50% is held
in monetary assets:
Provided that if more than 50% of the net tangible assets are held in monetary
assets, the company has made firm commitments to deploy such excess monetary
assets in its business/project;
(b)The
company has a track record of distributable profits in terms of section 205 of
the Companies Act, 1956, for at least three (3) out of immediately preceding
five (5) years;
Provided
further that extra ordinary items shall not be considered for calculating
distributable profits in terms of Section 205 of Companies Act, 1956.”
(c)The company has a net worth of at least Rs.
1 crore in each of the preceding 3 full years (of 12 months each);
(d)In case the company has changed its name
within the last one year, atleast 50% of the revenue for the preceding 1 full
year is earned by the company from the activity suggested by the new name; and
(e)The
aggregate of the proposed issue and all
previous issues made in the same financial year in terms of size (i.e. offer
through offer document + firm allotment + promoters’ contribution through the
offer document), does not exceed five (5) times its pre-issue networth as per
the audited balance sheet of the last
financial year.”
4 The
existing Clause 2.2.2 shall be substituted by the following:
“2.2.2 An unlisted company not complying with any of the conditions
specified in Clause 2.2.1: may make an initial public offering (IPO) of equity
shares or any other security which may be converted into or exchanged with
equity shares at a later date, only if it meets both the conditions (a) and (b)
given below:
(a)(i)The
issue is made through the book-building process, with at least 50% of the issue
size being allotted to the Qualified Institutional Buyers (QIBs), failing which
the full subscription monies shall be refunded.
OR
(a)(ii)The
“project” has at least 15% participation by Financial Institutions/ Scheduled
Commercial Banks, of which at least 10% comes from the appraiser(s). In
addition to this, at least 10% of the issue size shall be
allotted to QIBs, failing which the full subscription monies
shall be refunded
AND
(b)(i)
The minimum post-issue face value capital of the company shall be Rs. 10 crore
OR
(b)(ii)
There shall be a compulsory market-making for at least 2 years from the date of
listing of the shares subject to the followings.
·
Market makers undertake to
offer buy and sell quotes for a minimum depth of 300 shares;
·
Market makers undertake to
ensure that the bid-ask spread (difference between quotations for sale and
purchase) for their quotes shall not at any time exceed 10%:
·
The inventory of the market
makers on each of such stock exchanges, as on the date of allotment of
securities, shall be at least 5% of the
proposed issue of the company
. 5 After
clause 2.2.2, the following clauses 2.2.2A and 2.2.2B shall be inserted:
“2.2.2A
An unlisted public company shall not make an allotment pursuant to a public
issue or offer for sale of equity shares or any security convertible into
equity shares unless in addition to satisfying the conditions mentioned in
Clause 2.2.1 or 2.2.2 as the case may be, the prospective allottees are not less
than one thousand (1000) in number.”
“2.2.2B For
the purposes of clauses 2.2.1 and 2.2.2 above:
(i) ‘Net tangible assets’ shall mean the sum of
all net assets of the company, excluding ‘intangible assets’, as defined in
Accounting Standard 26 (AS 26) issued by the Institute of Chartered Accountants
of India.
(ii) “Project”
means the object for which the monies proposed to be raised to cover the
objects of the issue.
(iii) In case
of partnership firms which have since been converted into companies, the track
record of distributable profits of the firm shall be considered only if the
financial statements of the partnership business for the said years conform to
and are revised in the format prescribed for companies under the Companies Act,
1956 and also comply with the following:
a. adequate disclosures are made in the financial
statements as required to be made by the companies as per Schedule VI of the
Companies Act, 1956;
b. the financial statements shall be duly
certified by a Chartered Accountant stating that:
II. the accounting
standards of the Institute of Chartered Accountants of India(ICAI) have been
followed and that the financial statements present a true and fair picture of
the firm’s accounts.
(iv) In case
of an unlisted company formed out of a division of an existing company, the
track record of distributable profits of the division spun off shall be considered
only if the requirements regarding financial statements as specified for
partnership firms in sub-clause (iv) above are complied with.
(v) ‘Qualified
Institutional Buyer’ shall mean:
a. public
financial institution as defined in section 4A of the Companies Act, 1956;
b. scheduled
commercial banks;
c. mutual
funds;
d. foreign
institutional investor registered with SEBI;
e. multilateral
and bilateral development financial institutions;
f.
venture capital funds registered with SEBI.
g. foreign
Venture capital investors registered with SEBI.
h. state
Industrial Development Corporations.
i.
insurance Companies registered with the Insurance
Regulatory and Development Authority (IRDA).
j.
provident Funds with minimum corpus of Rs. 25
crores
k. pension
Funds with minimum corpus of Rs. 25 crores
6. Clause 2.2.3.1 shall be substituted by the following:
“2.2.3.1
An offer for sale shall not be made of equity shares of a company or any other
security which may be converted into or exchanged with equity shares of the
company at a later date, unless the conditions laid down in clause 2.2.1 or
2.2.2, as the case may be and in clause 2.2.2A , are satisfied.”
7. Clause 2.3.1 shall be substituted by the following:
“2.3.1 A
listed company shall be eligible to make a public issue of equity shares or any
other security which may be converted into or exchanged with equity shares at a
later date.
Provided
that the aggregate of the proposed issue and
all previous issues made in the
same financial year in terms of size (i.e. offer through offer document + firm
allotment + promoters’ contribution through the offer document), issue size
does not exceed 5 times its pre-issue networth as per the audited balance sheet of the last financial year.
Provided
that in case there is a change in the name of the issuer company within the
last 1 year (reckoned from the date of filing of the offer document), the
revenue accounted for by the activity suggested by the new name is not less than 50% of its total revenue in the
preceding 1 full-year period
8 The
existing Clause 2.3.2 shall be substituted by the following:
“2.3.2 A
listed company which does not fulfill the conditions given in the provisos to
Clause 2.3.1 above, shall be eligible to make a public issue subject to complying with the conditions specified in Clause
2.2.2”
9 The existing Clauses 2.3.3 shall be
deleted
10 In existing clause 2.4.1, in sub-clause
(iii), sub-clause (a) shall be substituted by the following:
“(a) whose project has been appraised by a Public Financial Institution
(PFI) or Infrastructure Development Finance Corporation (IDFC) or
Infrastructure Leasing and Financing Services Ltd. (IL&FS) or a bank which
was earlier a PFI; and,”
11 The existing Clause 2.5.1 shall be substituted by the
following:
“2.5.1 A No
issuer company shall make a public issue or rights issue of debt instruments
(whether convertible or not), unless the following conditions are also
satisfied, as on date of filing of draft offer document with SEBI and also on the date of filing a final offer
document with ROC/ Designated Stock Exchange:
(i)
credit rating of not less than investment grade is obtained from not less than
two credit rating agencies registered with SEBI and disclosed in the offer
document.
(ii)The
company is not in the list of willful defaulters of RBI
(iii)The
company is not in default of payment of interest or repayment of principal in
respect of debentures issued to the public,if any, for a period of more than 6 months.
2.5.1B An
issuer company shall not make an allotment of non-convertible debt instrument pursuant
to a public issue if the proposed allottees are less than fifty (50) in number.
In such a case the company shall forthwith refund the entire subscription
amount received. If there is a delay beyond 8 days after the company becomes
liable to pay the amount, the company shall pay interest @15% p.a to the
investors”
12 The existing Clause 2.5.2 shall be
substituted by the following:
“2.5.2Where
credit ratings are obtained from more than two credit rating agencies, all the
credit rating/s, including the unaccepted credit ratings, shall be disclosed”
13 The
existing Clause 2.5.3 shall be deleted
14 After Clause 2.7, a new Clause 2.8 shall be added as
following:
“2.8 Means of Finance –
No
company shall make a public or rights issue of securities unless firm
arrangements of finance through verifiable means towards 75% of the stated means of finance , excluding
the amount to be raised through proposed Public/Rights issue, have been made.”
Section B – Review of
1.
In clause 11.3.1, new sub-clauses (iv)(a)
&(iv)(b) shall be inserted after the existing sub-clause (iv) as follows:
“(iv)(a) The issuer company shall enter into an agreement
with one or more of the Stock Exchange(s) which have the requisite system of
on-line offer of securities. The agreement shall
specify inter-alia, the rights, duties, responsibilities and obligations of the
company and stock exchange (s) inter se. The agreement may also provide for a
dispute resolution mechanism between the company and the stock exchange.
(iv)(b) The company may apply for listing of its
securities on an exchange other than the exchange through which it offers its
securities to public through the on-line system”
2 In clause 11.3.1, new
sub-clause (vii)(a), (vii)(b), vii(c) & vii(d) shall be inserted after
existing sub-clause (vii) as follows:
“(vii)(a)The
Book Runner(s)/syndicate members shall appoint brokers of the
exchange, who are registered with SEBI, for the purpose of accepting bids,
applications and placing orders with the company and ensure that the brokers so appointed are
financially capable of honouring their commitments arising out of defaults of
their clients/investors, if any.
(vii)(b)For the purposes of this Chapter, the brokers, so appointed
accepting applications and application monies, shall be considered as ‘bidding/collection
centres’.
(vii)(c)The broker/s so appointed, shall collect the money from
his/their client for every order placed by him/them and in case the client/investors
fails to pay for shares allocated as per the Guidelines, the broker shall pay
such amount.
(vii)(d) The company shall pay to the broker/s a commission/fee for the
services rendered by him/them. The exchange shall ensure that the broker does
not levy a service fee on his clients/investors in lieu of his services.”
3 In clause 11.3.1, the existing
sub-clause (viii)(a) shall be substituted by the following:
“(viii-a)
The red herring prospectus shall disclose, either the floor price of the
securities offered through it or a price band along with the range within which
the price can move, if any”.
4 In clause 11.3.1, after sub-clause
(viii)(a), a new sub-clause (viii)(b) shall be inserted as follows:
“(viii-b)
In case the red herring prospectus discloses the price band, the lead book
runner shall ensure compliance with the following conditions:
(a)
The cap of the price band should not be more than
20% of the floor of the band; i.e cap of the price band shall be less than or
equal to 120% of the floor of the price band
(b)
The price band can be revised during the bidding
period in which case the maximum revision on either side shall not exceed 20% i.e
floor of price band can move up or down to the extent of 20% of floor of the
price band disclosed in the red herring prospectus and the cap of the revised
price band will be fixed in accordance with Clause (a) above;
(c)
Any revision in the price band shall be widely
disseminated by informing the stock exchanges, by issuing press release and
also indicating the change on the relevant website and the terminals of the
syndicate members.
(d)
In case the price band is revised, the bidding
period shall be extended for a further period of three days, subject to the
total bidding period not exceeding thirteen days.
(e)
The manner in which the shortfall, if any, in the
project financing, arising on account of lowering of price band to the extent
of 20% will be met shall be disclosed in the red herring prospectus. It shall
also be disclosed that the allotment shall not be made unless the financing is
tied up.”
5 In clause 11.3.1, the existing
sub-clause (xi)(a) shall be substituted by the following:
“(xi)(a)The issuer company shall after receiving the final observations,
if any, on the offer document from the Board, make an advertisement in an
English National daily with wide circulation, one Hindi National newspaper and
a Regional language newspaper with wide circulation at the place where the
registered office of the Issuer company is situated, containing the salient
features of the final offer document as specified in Form 2A of the Companies
Act circulated along with the application form. The advertisement in addition
to other required information, shall also contain the following:
i.
the date of opening and
closing of the issue
ii. the method and process of application and allotment
iii. the
names, addresses and the telephone numbers of the stock brokers and centres for
bidding.”
6 In clause 11.3.1, the existing
sub-clause (xi)(a) shall be substituted by the following:
“(xi)(b)The issuer company shall circulate the application forms
to the Brokers”
7 In clause
11.3.1, the existing sub-clause (xvii)(a) & (xvii)(b) shall be substituted
by the following:
“(xvii)(a)
The broker may collect an amount to the extent of 100% of the application money
as margin money from the clients/investors before he places an order on their
behalf. The margin collected from categories other than Qualified Institutional
Buyers shall be uniform across the book runner(s)/syndicate members, for each
such category
(xvii)(b) Bids for securities beyond
the investment limit prescribed under relevant laws shall not be accepted by
the syndicate members/brokers from any category of clients/investors”
8. In clause 11.3.2, the existing
sub-clause (i) shall be substituted by the following:
“(i)The
particulars of syndicate members, brokers, registrars, bankers to the issue,
etc.”
9
In clause 11.3.2, the existing sub-clause (iii)
shall be substituted by the following:
“(iii)The following accounting ratios shall be given under the basis for
issue price for each of the accounting periods for which the financial
information is given:
1.
EPS, pre-issue, for the
last three years (as adjusted for changes in capital).
2.
P/E pre-issue
3.
Average return on
net-worth in the last three years.
4. Net-Asset
value per share based on last balance sheet.
5 Comparison
of all the accounting ratios of the issuer company as mentioned above with the industry average and with the accounting ratios of the peer
group ( i.e companies of comparable size in the same industry.( Indicate
the source from which industry average
and accounting ratios of the peer
group has been taken)
6. The
accounting ratios disclosed in the offer document shall be calculated after
giving effect to the consequent increase of capital on account of compulsory
conversions outstanding, as well as on the assumption that the options
outstanding, if any, to subscribe for additional capital shall be exercised.”
10 The existing proviso to sub-clause (i)
of Clause 11.3.3 shall be substituted by the following:
“Provided that nothing
contained in sub-clause (i) shall apply to 50% of the net offer to the public,
mandatorily to be allotted to the Qualified Institutional Buyers under proviso
to clause 2.2.2 or clause 2.3.2 of these guidelines, in case the company is
making an issue of securities under clause 2.2.2 or clause 2.3.2, as the case
may be ”
11 In Clause 11.3.4.1,
(i)The
existing sub-clause (i) shall be substituted by the following:
“(i) Bid
shall be open for atleast 5 days and not more than 10 days, which may be
extended to a maximum of 13 days in case the price band is revised in
accordance with clause 11.3.1.”
(ii) The
existing sub-clause (vi) shall be substituted by the following:
“(vi) Individual as well as qualified institutional buyers shall place
their bids only through the ‘brokers’ who shall have the right to vet the bids.
The applicant shall enclose the proof of DP ID and Client ID along with
the application, while making bid”
(iii) New
sub-clauses (vi)(a), (vi)(b), (vi)(c)_& (vi)(d) shall be inserted after the
existing sub-clause (vi) as follows:
“(vi)(a)During
the period the issue is open to the public for bidding, the applicants may
approach the brokers of the stock exchange/s through which the securities are
offered under on-line system, to place an order for bidding to the securities.
Every broker shall accept orders from all clients/investors who place orders
through him
(vi)(b)The broker shall collect the client registration form duly filled
up and signed from the applicants before placing the order in the system as per
"Know your client rule" as specified by SEBI and as may be modified
from time to time.
(vi)(c)The
broker shall, thereafter, enter the buy order in the system, on behalf of the
clients and enter important details including the name, address, telephone
number, and category of the applicant, the number of shares applied for, amount
paid, beneficiary ID, DP code and Bid-cum Application Form number, Bid price,
etc., and give an order number/order confirmation slip to the investor.
(vi)(d)The broker shall open a separate bank account [Escrow Account]
with the clearing house bank for primary market issues and the amount collected
by the broker from his clients/investors as margin money shall be deposited in
this account”
(iv) The
existing sub-clause(vii) shall be substituted by the following:
“(vii) The investors shall have the right to
revise their bids provided that Qualified
Institutional Buyers shall not be allowed to withdraw their bids after the
closure of the bidding”.
(v)after
sub-clause (ix),a new sub-clauses (x) & (xi) shall be inserted
as following
“(x) The
identities of the Qualified Institutional Buyers making the bidding, shall not
be made public
(xi) The Stock exchange shall, by the end of each
day while the issue is open for subscription, send the order data to the
Registrar to the Issue and Lead Managers / Book Runners. This data shall
consist of only valid orders (excluding those that are cancelled). On the date
of closure of the issue, the final status of orders received shall be sent to
the Registrar to the issue and Lead Managers / Book Runners”
”.
12 In clause 11.3.5 the existing sub-clause
(i) shall be substituted by the following:
“(i) In case an issuer
company makes an issue of 100% of the net offer to public through 100% book
building process -
a) not less
than 25% of the net offer to the public shall be available for allocation to
retail individual investors ;
b) not less
than 25% of the net offer to the public shall be available for allocation to
non institutional investors i.e. investors other than retail individual
investors and Qualified Institutional Buyers;
c) not
more than 50% of the net offer to the public shall be available for allocation
to Qualified Institutional Buyers.
Provided that, 50% of
the issue size shall be mandatorily allotted to the Qualified Institutional
Buyers, in case the issuer company is making a public issue under Clause 2.2.2
and 2.3.2of these guidelines”
13 In clause 11.3.5 the existing sub-clause
(ii) shall be substituted by the following:
“(ii)In
case an issuer company makes an issue of 75% of the net offer to public through
book building process and 25% at the price determined through book building -
a.
in the book built portion, not less than 25% of the
net offer to the public, shall be available for allocation to non Qualified
Institutional Buyers and not more than 50% of the net offer to the public shall
be available for allocation to Qualified Institutional Buyers.
b.
the balance 25% of the net offer to the public,
offered at a price determined through book building, shall be available only to
retail individual investors who have either not participated or have not
received any allocation, in the book built portion."
Provided that, 50% of
the issue size shall be mandatorily allotted to the Qualified Institutional
Buyers, in case the issuer company is making a public issue under Clause 2.2.2
and 2.3.2of these guidelines”
14 In
clause 11.3.5, the existing sub-clause (vi) shall be substituted by the
following:
“(vi) After finalisation of basis of allocation,
the Registrar to the Issue/company shall send the computer file containing the
allocation details i.e. the allocation numbers, allocated quantity of
successful applicants, etc. along with broker-wise funds pay-in obligation, to
the Broker to the Issue and the stock
exchange (s).”
15 In
clause 11.3.5, the existing sub-clause (vii) shall be substituted by the
following:
”(vii)The
Company, Lead Manager / Book Runner shall announce the pay-in day and intimate
the same to Brokers and stock exchange. It shall be responsibility of the
broker to deposit the amount in the Escrow Account to the extent of allocation
to his clients on the pay-in date”.
16 In
clause 11.3.5, the existing sub-clause (viii) shall be substituted by the
following:
“(viii) On receipt of the basis of allocation data, the
brokers shall immediately intimate the fact of allocation to their client
/applicant. The broker shall ensure that each successful client/applicant pays
submits the duly filled-in and signed application form to him along with the
amount payable towards the application money by the pay-in date. Amount already
paid by the applicant as margin money shall be adjusted towards the total
allocation money payable. The broker shall, thereafter, hand over the
application forms of the successful applicants who have paid the application
money, to the exchange, which shall submit the same to the Registrar to Issue/company for their
records.”
17 In
clause 11.3.5, the existing sub-clause (ix) shall be substituted by the
following
“(ix) The broker shall refund
the margin money collected earlier, within 3 days of receipt of basis of
allocation, to the applicants who did not receive allocation. “
16 In
clause 11.3.5, after the existing sub-clause (ix), new sub-clauses(x) – (xxiii)
shall be inserted as follows:
“(x) The brokers shall give
details of the amount received from each client/investors and the names of
clients/investors who have not paid the application money to Registrar
/ Book Runner the exchange. The brokers shall
also give soft copy of this data to the exchange.
(xi) In the
event of the successful applicants failing to pay the application money, the
broker through whom such client placed orders, shall bring in the funds to the
extent of the client’s default. If the broker does not bring in the funds, he
shall be declared as a defaulter by the stock exchange and action as prescribed
under the Bye-Laws of the stock exchange shall be initiated against him. In
such an event, the Book Runners in case of issues through book building
process, who have underwritten the issue, shall bring-in the shortfall.
(xii) On
pay-in date, the clearing house shall, without any instruction from the broker,
debit the escrow account of each broker to the extent of allocation made to his
clients/investors and credit the amount so collected from each broker to the
‘Issue Account’.”
(xiii) The concerned Exchange
shall not use the Settlement/Trade Guarantee Fund of the Exchange for honoring
brokers commitments in case of failure of broker to bring in the funds.
(xiv) The broker shall open an ‘Escrow Securities
Account’ with any depository for the purpose of receiving credit of securities
on behalf of the clients.
(xv) On
payment and receipt of the sum payable on application for the amount towards
minimum subscription, the company shall allot the shares to the applicants as
per these Guidelines.
(xvi)After
the allotment, the Registrar to the issue shall post the share certificates to
the investors or, instruct the depository to credit the Escrow Securities
Account of each Broker, as the case may
be.
.
(xvii) On receipt of the credit of securities to
the Escrow Securities Account, the Broker shall transfer the shares to the
clients’/applicants’ depository account, after receipt of confirmation of full
payment from the clients/applicants. For this purpose broker shall be
considered as Agent of the client/applicant. Broker shall confirm to the
Book-runner/Registrar to the issue that shares have been credited to the
account of clients /applicants not later than the day of commencement of
trading, in case full payment had been received.
(xviii) Any cases of dispute, amongst the broker and
the clients, would be referred to arbitration as per the by-laws / regulations
of the stock exchange
(xix) The Allotment details shall be put on the
website (if available) of the Registrar to the issue and the issuer. Further,
online messaging facility of NSDL/CDSL or of stock exchanges may be used to
communicate the Allotment details to Brokers, as an alternative of physical
Confirmation of Allocation Note”
“(xx) Trading shall commence within 6
days from the closure of the issue failing which interest at the rate of
15% p.a. shall be paid to the investors.
(xxi) Schedule XX may be referred to for Clarificatory Examples for issue
size and allocation has been specified in Schedule
XX.
(xxii) Model Time Frame for
(xxiii) In case the issuer
company has made an issue of 75% of the net offer to public through book
building process and 25% at the price determined through book building -
a)
the offer of 25% of the
net offer to the public, made at a price determined through book building,
shall open within 15 days from the date of closure of bidding ;
b)
the offer for subscription
to the public, shall remain open for a period of atleast 3 working days after
completing all the requirements of advertisement and despatch of issue material
to all the stock exchanges ;
c)
during the time when the
offer is open, the investors who have received an intimation of entitlement of
securities under sub clause (xviii) of clause 11.3.1, shall submit the
application forms along with the application moneys ;
d)
the other retail
individual investors who had not participated in the bidding process or have
not received intimation of entitlement of securities under sub clause (xviii)
of clause 11.3.1 may also make an application.”
17 The
existing Schedule XXI shall be substituted by the following:
SCHEDULE XXI
|
T |
T+1 |
T+2 |
T+3 |
T+4 |
T+5 |
T+6 |
|
Book
Closed |
· Price
Determination · Determination
of offer size |
· Registrar
draws the allocation list · All
entered bids assumed as valid |
· Stock
Exchanges approve the basis of allocation · Final
prospectus printed and dispatched · CANs
sent to QIBs · Allocation
details electronically communicated by Registrar/Company to brokers |
· Pay –in
(Only high-value) · Bankers
to confirm clearance of fund · Board
Meeting · Stock
Exchanges to issue the listing and trading permission · Company
to instruct NSDL/CDSL to credit shares to the demat account of brokers |
· Brokers
account to be credited with shares · Brokerto
credit shares to the demat account of investors |
· Trading
commences |
Section C - Introduction of Green Shoe Option
1. In clause 1.2.1, after sub-clause
(xiii) a new sub-clause (xiii-a) shall be added as following;
“(xiii-a) “Green Shoe option” means an
option of allocating shares in excess of the shares included in the public
issue and operating a post-listing price stabilizing mechanism in accordance
with the provisions of Chapter VIII-A of these Guidelines, which is granted to
a company to be exercised through a Stabilising
Agent.”
2. The existing Clause
4.14.1 shall be substituted by the following:
“4.14.1
The entire pre-issue share capital, other than that locked-in as promoters’
contribution, shall be locked-in for a period of one year from the date of
commencement of commercial production or the date of allotment in the public
issue, whichever is later.
Provided
that where shares held by promoter(s) are lent to the SA under clause 8A.7,
they shall be exempted from the lock in requirements specified above, for the
period starting from the date of such lending to the date when they are
returned to the same promoter(s) under clause 8A.13 or under clause 8A.15, as
the case may be.”
3. A new chapter VIIIA on ‘Green Shoe Option’ shall be inserted
as following:
“CHAPTER VIII-A - GREEN SHOE OPTION
8A.1 (a) In case an issuer company is making an
initial public offer of equity shares through the book building mechanism, the
company can avail of the Green Shoe option (GSO) for stabilizing the post
listing price of its shares, subject to the provisions of this Chapter.
(b) A company desirous of availing
the option granted by this Chapter, shall in the resolution of the general
meeting authorizing the public issue, seek authorization also for the
possibility of allotment of further shares to the ‘stabilizing agent’ (SA) at
the end of the stabilization period in terms of clause 8A.15.
8A.2 The company shall appoint one of the Lead
book runners, amongst the issue management team, as the “stabilizing agent”
(SA), who will be responsible for the price stabilization process, if required. The SA shall enter into an agreement with the
issuer company, prior to filing of offer document with SEBI, clearly stating
all the terms and conditions relating to this option including fees charged /
expenses to be incurred by SA for this purpose.
8A.3 The SA
shall also enter into an agreement with the promoter(s) who will lend their
shares for the purpose of clause 8A.5, specifying the maximum number of shares
that may be borrowed from the promoters, which shall not be in excess of 15% of
the total issue size.
8A.4 The details
of the agreements mentioned in clause 8A.2 and 8A.3 shall be disclosed in the
draft Red Herring prospectus, Red Herring prospectus and the final prospectus.
The agreements shall also be included as material documents for public
inspection in terms of clause 6.19.15.
8A.5 The Lead
Book Runner, in consultation with the SA, shall determine the amount of shares
to be overallotted with the public issue, subject to the maximum number
specified in clause 8A.3..
8A.6 The draft
Red Herring prospectus, the Red Herring prospectus and the final prospectus
shall contain the following additional disclosures:
a. Name of the SA
b. The maximum number of shares (as also the percentage vis
a vis the proposed issue size) proposed
to be over-allotted by the company
c. The period, for which the company proposes to avail of
the stabilization mechanism,
d. The maximum increase in the capital of the company and
the shareholding pattern post issue, in case the company is required to allot
further shares to the extent of over-allotment in the issue.
e. The maximum amount of funds to be received by the
company in case of further allotment and the use of these additional funds, in
final document to be filed with RoC
f.
Details of the agreement/
arrangement entered in to by SA with the promoters to borrow shares from the
latter which inter-alia shall include name of the promoters, their existing
shareholding, number & percentage of shares to be lent by them and other
important terms and conditions including the rights and obligations of each
party.
g. The final prospectus shall additionally disclose the
exact number of shares to be allotted pursuant to the public issue, stating
separately therein the number of shares to be borrowed from the promoters and
overallotted by the SA, and the percentage of such shares in relation to the
total issue size.
8A.7 The SA
shall borrow shares from the promoters of the company to the extent of the
proposed over-allotment. These shares shall be in dematerialized form only. For
the purposes of this clause, promoter means a promoter as defined in
Explanation I to clause 6.4.2.1.
8A.8 The allocation of these shares shall be
pro-rata to all the applicants.
8A.9 The stabilization mechanism shall be
available for the period disclosed by the company in the prospectus, which
shall not exceed 30 days from the date when trading permission was given by the
exchange(s).
8A.10 The SA shall open a special account with a
bank to be called the “Special Account for GSO proceeds of _____ company”
(hereinafter referred to as the GSO Bank account) and a special account for
securities with a depository participant to be called the “Special Account for
GSO shares of _______ company” (hereinafter referred to as the GSO Demat
Account).
8A.11 The money received from the applicants against
the overallotment in the green shoe option shall be kept in the GSO Bank
Account, distinct from the issue account and shall be used for the purpose of
buying shares from the market, during the stabilization period.
8A.12 The shares bought from the market by the SA,
if any during the stabilization period, shall be credited to the GSO Demat
Account.
8A.13 The shares bought from the market and lying in
the GSO Demat Account shall be returned to the promoters immediately, in any
case not later than 2 working days after the close of the stabilization period.
8A.14 The prime responsibility of the SA shall be to
stabilize post listing price of the shares. To this end, the SA shall determine
the timing of buying the shares, the quantity to be bought, the price at which
the shares are to be bought etc.
8A.15 On expiry of the stabilization period, in case
the SA does not buy shares to the extent of shares over-allotted by the company
from the market, the issuer company shall allot shares to the extent of the
shortfall in dematerialized form to the GSO Demat Account, within five days of
the closure of the stabilization period. These shares shall be returned to the
promoters by the SA in lieu of the shares borrowed from them and the GSO Demat
Account shall be closed thereafter. The company shall make a final listing
application in respect of these shares to all the Exchanges where the shares
allotted in the public issue are listed. The provisions of Chapter XIII shall
not be applicable to such allotment.
8A.16 The shares returned to the promoters under
clause 8A.13 or 8A.15, as the case may be, shall be subject to the remaining
lock in period as provided in the proviso the clause 4.14.1.
8A.17 The SA shall remit an amount equal to (further
shares allotted by the issuer company to the GSO Demat Account) * (issue price)
to the issuer company from the GSO Bank Account. The amount left in this
account, if any, after this remittance and deduction of expenses incurred by
the SA for the stabilization mechanism, shall be transferred to the investor
protection fund(s) of the stock exchange(s) where the shares of issuer company
are listed, in equal parts if the shares are listed in more than one exchanges.
The GSO Bank Account shall be closed soon thereafter.
8A.18 The SA
shall submit a report to the stock exchange(s) on a daily basis during the
stabilization period. The SA shall also submit a final report to SEBI in the
format specified in Schedule XXIX. (Flag B)This report shall be signed by the
SA and the company. This report shall be accompanied with a depository
statement for the “GSO Demat Account”
for the stabilization period, indicating the flow of the shares into and from
the account. The report shall also be accompanied by an undertaking given by
the SA and countersigned by the depository(ies) regarding confirmation of
lock-in on the shares returned to the promoters in lieu of the shares borrowed
from them for the purpose of the stabilization, as per the requirement
specified in 8A.16.
8A.19 The SA shall
maintain a register in respect of each issue having the green shoe option in
which he acts as a SA. The register shall contain the following details of:
·
in respect of each
transaction effected in the course of the stabilizing action, the price, date
and time
·
the details of the promoters
from whom the shares are borrowed and the number of shares borrowed from each; and,
·
details of allotments made
under clause 8A.15.
8A.20 The register
must be retained for a period of at least three years from the date of the end
of the stabilizing period.”
8A.21For
the purpose of the Chapter VIII-A, Over allotment shall be defined as an
allocation of shares in excess of the size of a public issue, made by the SA
out of shares borrowed from the promoters, in pursuance of a green shoe option exercised
by the company in accordance with the
provisions of the said Chapter”
4
A new
Schedule XXIX shall be inserted as following:
“SCHEDULE XXIX
[Clause 8A]
Final report for Green Shoe Option
|
a.
Name of the
company |
|
|
b.
Name of the
SA ( Registration No) |
|
|
c.
Issue size (
No of shares ) |
|
|
d.
Issue opened
on |
|
|
e.
Issue closed
on |
|
|
f.
Over-allotment
in issue (%) |
|
|
g.
Date of
commencement of trading |
|
|
h.
Amount in
the GSO Bank Account ( Rs..) |
|
|
i.
Details of
promoter(s) from whom shares borrowed (Name & Number of shares borrowed.) |
|
|
j.
Date on
which the stabilisation period ended |
|
|
k.
Number of
shares bought during the stabilization period |
|
|
l.
Date on
which company allotted further shares to the extent of shortfall |
|
|
m. Date when the shares in the GSO Demat Account were
returned to the promoter(s) |
|
|
n.
Date when
the money in the GSO Bank Account was remitted to the company |
|
|
o.
Details of
the Depository account (Special account for GSO securities) where shares
purchased from the market were kept inter-alia the following:. p.
Depository
Participant q.
Account No. r.
Number of
shares purchased, date wise. s.
Number of
shares taken out, date wise. |
|
Section D - Review of disclosure requirements
in the offer documents
1. In clause 6.2.1.2, in sub-clause vii),
after para b), the following para shall be inserted, namely –
“c) If
more than one merchant banker are associated with the issue, the inter-se
allocation of responsibility of each Merchant Banker as demarcated and
submitted to the Board in terms of clause 5.3.2, shall be disclosed in the
offer document.”
2 In Clause 6.2.3, the existing clause
6.2.3.2 shall be substituted by the following:
“6.2.3.2
i. The
Risk factors shall be classified as those which are specific to the project and
internal to the issuer company and those which are external and beyond the
control of the issuer company.
ii. The
Risk factor shall be determined on the basis of their materiality.
iii Materiality
shall be decided taking the following factors into account
a.
Some
events may not be material individually but may be found material collectively.
b.
Some
events may have material impact qualitatively instead of quantitatively.
c.
Some events may not be material at present but
may be having material impacts in future.
iv. The
Risk factors shall appear in the Offer Document in the following manner:
a.
Risks envisaged by
Management
b.
Proposals, if any, to
address the risks.
3. The existing Clause 6.6.1, shall be
substituted as following :
6.6.1.1 Objects
6.6.1.2
Whether the company proposes to raise funds for a purpose like fixed asset creation
and/or for rotation such as working capital etc shall be disclosed clearly in
the offer document
6.6.1.3.
Where the company proposes to raise funds for a purpose like fixed asset
creation, the requirement of funds shall also be disclosed clearly.
4. The existing Clause 6.6.3 shall be substituted by the
following:
“6.6.3 Means of Financing
a. An
undertaking shall be given in the offer document by the issuer company confirming firm arrangements of finance
through verifiable means towards 75% of the
stated means of finance , excluding the amount to be raised through proposed
Public/Rights issue, have been made.”
b.. The
balance portion of the ‘Means of
Finance’ for which no firm arrangement has been made
shall be mentioned without specification”
5. In Clause 6.7.3, sub-clause a) shall be substituted by the
following:
“a)
(i)A complete profile of the promoters including their age, educational
qualifications, experience in the business or employment and in the line of
business proposed in the offer document , their business and financial
activities, photograph, Voter ID Number, Driving License Number shall be
disclosed.
(ii) A disclosure, confirming that the
Permanent Account Number, Bank Account
Number and Passport Number of the
promoters have been submitted to the
Stock Exchanges on which securities are proposed to be listed, at the time of filing the draft offer
document to them.”
6. After Clause 6.8.3, a new Clause 6.8.4
shall be added as following :
“6.8.4 One standard financial unit shall be used in
the offer document.”
7. After clause 6.18.7, the
following clause shall be inserted, namely -
“
6.18.8
a.
The Issuer Company, if it so
desires , may include in the offer document, the financial statements prepared
on the basis of more than one accounting standards subject to disclosure of the
material differences arising because of differences in the accounting policies
of two different accounting standards.
b.
‘Management Discussion and Analysis (MDA)’ and
‘Accounting and other Ratios’ computed as per Clause No. 6.8 and 6.13 of the
Guidelines shall be based on the
Financial Statements prepared on the basis of Indian Accounting Standards. In
addition, the issuer company may present MDA based on other Accounting
Standards.”
Section E - Review of requirements pertaining
to issue of Debt Instruments
1 A new clause 5.3.3.1A shall be
inserted after the existing clause 5.3.3.1 as follows:
“5.3.3.1A
In case of a debenture issue, the lead merchant banker shall also furnish to the
Board a due diligence certificate given by the debenture trustee in the format
specified in Schedule IIIA along with the draft offer document.”
2 A new clause 6.5.6.2 shall be inserted
after the existing clause 6.5.6.1, as follows:
“6.5.6.2
In case of a debenture issue, the company shall also give undertakings to the
following effect in the offer document:
i.
That the company shall forward the details of
utilization of the funds raised through the debentures duly certified by the
statutory auditors of the company, to the debenture trustees at the end of each
half-year.
ii. That the
company shall disclose the complete name and address of the debenture trustee
in the annual report.
iii. That the
company shall provide a compliance certificate to the debenture holders (on
yearly basis) in respect of compliance with the terms and conditions of issue
of debentures as contained in the offer document, duly certified by the
debenture trustee.
iv. That the
company shall furnish a confirmation certificate that the security created by
the company in favour of the debenture holders is properly maintained and is
adequate enough to meet the payment obligations towards the debenture holders
in the event of default.”
3. In clause 8.2.1, the existing
sub-clause (b) shall be substituted by the following:
“(b) a
contribution of atleast 20% of the project cost i.e., objects proposed to be
inter alia, financed through the issue, shall be brought in the form of
equity. Such equity participation may be brought by the promoter from his own
funds or from other sources, subject to the condition that at least 20% of the
issue size is brought by way of equity by the promoter from his own funds. In
case, the project is to be implemented in stages, the promoters contribution as
per these requirements shall be with respect to total equity participation till
the respective stage vis a vis the debt
raised or proposed to be raised through the issue.”
4 The
existing Clause 10.1.1 shall be substituted by the following:
“10.1.1
No company shall make a public issue or rights issue of debt instruments
(whether convertible or not), unless credit rating of not less than investment
grade is obtained from not less than two registered credit rating agencies and
disclosed in the offer document.”
5 The
existing Clause 10.1.2 shall be deleted
6 The existing Clause 10.1.3 shall be
substituted by the following:
“10.1.3Where
credit ratings are obtained from more than two credit rating agencies, all the
credit rating/s, including the unaccepted credit ratings, shall be disclosed”
7 In
clause 10.2,
(i) The
existing sub-clause 10.2.1 shall be substituted by the following:
“10.2.1
No company shall issue a prospectus or a letter of offer to the public for
subscription of its debentures, unless the company has appointed one or more
debenture trustees for such debentures in accordance with the provisions of the
Companies Act, 1956.”
(ii) The
existing sub-clause 10.2.2 shall be substituted by the following:
“10.2.2
The names of the debenture trustees shall be stated in the Offer Documents and
also in all the subsequent periodical communications sent to the debenture
holders”
(iii) The
existing sub-clause 10.2.3 shall be substituted by the following:
“10.2.3 A trust
deed shall be executed by the issuer company in favour of the debenture
trustees within three months of the closure of the issue.”
8 The
existing clause 10.2.5 shall be substituted by the following:
“10.2.5
The merchant banker shall, along with the draft offer document, file with the Board
certificates from the bankers of the Company that the assets on which the
security is to be created are free from any encumbrances and the necessary
permissions to mortgage the assets have been obtained or No -objection
Certificate from the Financial Institutions or Banks for a second or pari passu
charged in cases where assets are encumbered.
The
merchant banker shall also ensure that the security created is adequate to
ensure 100% asset cover for the debentures.”
9 In clause 10.2.6, the existing clauses
(a) and (b) shall be substituted by the following:
“(a) It
shall obtain reports from the lead bank, regarding monitoring progress of the
project.
(b) It
shall monitor utilization of funds raised in the debenture issue.”
10 The existing clause 10.3 shall be substituted by the following:
“10.3 Creation of Debenture Redemption Reserve (DRR)
10.3.1
For the redemption of the debentures issued, the company shall create debenture
redemption reserve in accordance with the provisions of the Companies Act,
1956.”
11 In clause 10.4, the existing sub-clause
(a) shall be substituted by the following:
“(a) in
case of the companies which have defaulted in payment of interest on debentures
or redemption of debentures or in creation of security as per the terms of
issue of the debentures, any distribution of dividend shall require approval of
the Debenture Trustees and the Lead Institution, if any.”
12 The existing clause 10.6.3 shall be deleted.
13 The existing clause 10.7.1 shall be substituted by the
following:
“10.7.1
Where the company desires to rollover the debentures issued by it, it shall
file with SEBI a copy of the notice of the resolution to be sent to the
debenture-holders for the purpose, through a merchant banker prior to
dispatching the same to the debenture-holders. The notice shall contain
disclosures with regard to credit rating, necessity for debenture-holders
resolution and such other terms which SEBI may specify. Where the company
desires to convert the debentures into equity shares in accordance with clause
10.7.2, it shall file with SEBI a copy of the letter of option to be sent to
debenture-holders with the Board, through a merchant banker, prior to
dispatching the same to the debenture-holders. The letter of option shall
contain disclosures with regard to option for conversion, justification for
conversion price and such other terms which SEBI may specify.”
14 The existing clause 10.7.1.1 shall be
substituted by the following:
“10.7.1.1 Roll over of Non Convertible
Portions of Partly Convertible Debentures(PCDs)/ Non Convertible Debentures
(NCDs), by company not being in default.
The
non-convertible portions of PCDs or the NCDs issued by a listed company, the
value of which exceeds Rs.50 lacs, can be rolled over without change in the
interest rate subject to section 121 of the Companies Act, 1956 and subject
to the following conditions, if the
company is not in default:
(a) A
resolution to this effect is passed by postal ballot, having the assent from
not less than 75% of the debenture-holders.
(b) The
company shall redeem the debentures of all the dissenting debenture holders,
who have not assented to the resolution.
(c) Before
roll over of any NCDs or non-convertible portion of the PCDs, at least two
credit ratings of not less than investment grade, shall be obtained within a
period of six months prior to the due date of redemption and communicated to
debenture holders before roll over.
(d) Fresh
trust deed shall be executed at the time of such roll over.
(e) Fresh
security shall be created in respect of such debentures to be rolled over.
Provided that if the existing
trust deed or the security documents provide for continuance of the security
till redemption of debentures, fresh trust deed or fresh security need not be
created.”
15 A new
Clause 10.7.1.1A shall be inserted after the existing Clause 10.7.1.1 as
follows:
“10.7.1.1A Roll over of Non Convertible
portions of Partly Convertible Debentures (PCDs)/ Non Convertible Debentures
(NCDs), by the company being in default.
The
non-convertible portions of PCDs and the NCDs issued by a listed company, the
value of which exceeds Rs.50 lacs, can be rolled over without change in the
interest rate subject to section 121 of the Companies Act, 1956 and subject to
the following conditions, where the company is in default:
(a) A
resolution to this effect is passed by postal ballot, having the assent from
not less than 75% of the debenture-holders.
(b) The
company shall send an Auditors’ certificate on the cash flow of the company
with comments on the liquidity position of the company to all debenture
holders, along with the notice for passing the said resolution.
(c) The
company shall redeem the debentures of all the dissenting debenture holders,
who have not assented to the resolution.
(d) The
debenture trustee shall decide on whether the company is required to create
fresh security and execute fresh trust deed in respect of such debentures to be
rolled over
Provided that if the existing
trust deed or the security documents provide for continuance of the security
till redemption of debentures, fresh security and fresh trust deed need not be
created.”
16 The existing clause 10.7.1.3 shall be substituted by the
following:
“10.7.1.3
The debenture trustee shall submit a certificate of compliance with clauses
10.7.1.1, 10.7.1.1A or 10.7.1.2, as the case may be, to the merchant banker
which shall be filed with the Board within 15 days of the closure of the
rollover or conversion.”
17 A new Schedule III-A shall be inserted
after the existing Schedule III, as follows:
“SCHEDULE III-A
(See clause 5.3.3.1A)
FORMAT OF DUE DILIGENCE CERTIFICATE TO BE GIVEN BY THE
DEBENTURE TRUSTEE BEFORE OPENING OF THE ISSUE
To,
SECURITIES AND EXCHANGE BOARD OF
Dear Sirs,
SUB.: ISSUE OF ____________________ BY
_______________LTD.
We, the under noted Debenture Trustee (s) to the
above mentioned forthcoming issue state as follows :
(1) We have examined various documents pertaining to the security
to be created for the said issue and other such relevant documents.
(1)
On the basis of such
examination and of the discussions with the company, its directors and other
officers, other agencies and of independent verification of the various
relevant documents, WE CONFIRM that :
(a)
The company has made adequate
provisions for and/or has taken steps to provide for adequate security for the
debentures to be issued.
(b)
The company has obtained all
the permissions necessary for creating security on the said property (ies).
(c)
The company has made all the
relevant disclosures about the security and also its continued obligations
towards the debenture holders.
(d)
All disclosures made in the
draft prospectus / letter of offer with respect to the security are true, fair
and adequate to enable the investors to make a well informed decision as to the
investment in the proposed issue.
(3) We have satisfied ourselves about the ability of the company
to service the debentures.
|
PLACE |
DEBENTURE TRUSTEE TO THE ISSUE WITH HIS SEAL |
|
DATE:” |
|
Section F
Modifications pursuant to amendments carried
out on
1. The existing Clause
4.14.2 shall be substituted by the following,-
“4.14.2.Clause 4.14.1 shall not be
applicable to
i.
pre-issue share capital held by Venture Capital
Funds and Foreign Venture Capital Investors registered with the Board. However,
the same shall be locked-in as per the provisions of the SEBI (Venture Capital
Funds) Regulations, 1996 and SEBI (Foreign Venture Capital Investors) Regulations, 2000 and any amendments
thereto
ii.
pre-issue share capital held for a period of at
least one year at the time of filing draft offer document with the Board and
being offered to the public through offer for sale.
iii pre-IPO shares held by
employees other than promoters, which were issued under employee stock Option
or employee stock purchase scheme of the issuer company before the IPO. However
the same is subject to the issuer company complying with the requirements laid
down in Clause 22.4 of SEBI(Employee Stock Option Scheme and Employee Stock
Purchase Scheme) Guidelines, 1999”
Section
G
Amendments pursuant to withdrawal of the concept of Regional
Stock Exchange by MOF vide its circular dated
1. In clause 1.2.1,
after sub-clause (xvii) a new sub-clause (xvii-a) shall be added as following;
“(xvii-a) “Designated stock exchange” means a
stock exchange in which securities of the company are listed or proposed to be
listed and which is chosen by the company for purposes of a particular issue under these guidelines.
Provided
that where any of such stock exchanges have nationwide trading terminals, the
company shall choose one of them as the designated stock exchange.
Provided
further that the company may choose a different exchange as a designated stock
exchange for any subsequent issue, subject to the above clause”
2. The existing Clause 2.1.2 shall be
substituted by the following:
“2.1.2No listed company shall make
any issue of security through a rights issue where the aggregate value of
securities, including premium, if any, exceeds Rs.50 lacs, unless the letter of
offer is filed with the Board, through an eligible Merchant Banker, at least 21
days prior to the filing of the Letter of Offer with Designated Stock Exchange.
Provided that if, within 21 days from
the date of filing of draft letter of offer, the Board specifies changes, if
any, in the draft letter of offer, (without being under any obligation to do
so), the issuer or the Lead Merchant
banker shall carry out such changes before filing the draft letter of offer
with Designated Stock Exchange.”
3. The existing Clause
3.5.3 shall be substituted by the following
“3.5.3 The Lead Merchant
Bankers shall ensure that in case of the listed companies, a 48 hours notice of
the meeting of the Board of Directors for passing resolution for determination
of price is given to the Designated Stock Exchange.”
4. The existing Clause 6.3.6 shall be
substituted by the following:
“6.3.6
Names of the Designated stock exchange and other exchanges where application
has been made for listing of the present issue shall be mentioned”
5 The
existing Clause 6.39 shall be substituted by the following:
“6.39 The
letter of offer shall fulfill the requirements and shall contain disclosures as
specified under Section I of this Chapter for the prospectus under the
following heads:
Explanation:
For the
purpose of rights issue, wherever the word 'RoC' appears, the same shall be
deemed to refer Designated Stock Exchange.”
6. The existing Clause
7.6.1 shall be substituted by the following:
“7.6.1 In
a public issue of securities, the Executive Director/Managing Director of the Designated
Stock Exchange along with the post issue Lead Merchant Banker and the
Registrars to the Issue shall be responsible to ensure that the basis of
allotment is finalised in a fair and proper manner in accordance with the
following guidelines:
Provided, in the book building
portion of a book built public issue notwithstanding the above clause, Clause
11.3.5 of Chapter XI of these Guidelines shall be applicable”
8. The existing Clause
7.6.2 shall be substituted by the following:
“7.6.2
The drawl of lots (where required) to finalise the basis of allotment, shall be
done in the presence of a public representative on the Governing Board of the
Designated Stock Exchange”.
9. The existing Clause 7.6.3 shall be
substituted by the following
“7.6.3
The basis of allotment shall be signed as correct by the Executive
Director/Managing Director of the designated stock exchange and the public
representative (where applicable) in addition to the lead merchant banker
responsible for post issue activities and the Registrar to the Issue. The
designated stock exchange shall invite the public representative on a rotation
basis from out of the various public representatives on its governing board”
10. The existing clause 8.3.5.2 shall be
substituted by the following:
“8.3.5.2
An application to the Board under Clause 8.3.5.1 shall be made through the
designated stock exchange of the listed company and the designated stock
exchange may recommend the application giving the reason therefore.”
11 The existing clause 8.19.1 shall
be substituted by the following:
“8.19.1The issuer company may utilise funds collected
against rights issues after satisfying designated stock exchange that minimum
90% subscription has been received.”
12. The proviso to clause
11A.2.1 shall be deleted.
13. The existing Clause
11A.5.1 shall be substituted by the following
“11A.5.1
The company may apply for listing of its securities on an exchange other than
the exchange through which it offers its securities to public through the
on-line system.”
14. The existing Clause 11A.7.11 shall be substituted by the
following
“11A.7.11 On the closure of the
issue, the Designated Stock Exchange, alongwith the Lead merchant banker and
Registrars to the Issue shall ensure that the basis of allocation is finalised
in fair and proper manner on the lines of the norms with respect to basis of
allotment as specified in Chapter VII of the Guidelines, as may be modified
from time to time.”
15 The existing Clause 16.2.4 shall be
substituted by the following:
“16.2.4. Issue of No objection
certificate(NOC)
16.2.4.1
(a) As per the Listing
Agreement of the Stock Exchanges, the issuer companies shall deposit 1% of the
amount of securities offered to the public and/or to the holders of the
existing securities of the company, as the case may be, with the designated
Stock Exchange, which can be released by the concerned stock exchange only
after obtaining an NOC from the Board.
(b) An application for NOC
shall be submitted by issuer company to the Board in the format specified in Schedule XXIV.
16.2.4.2 The following conditions shall be
complied before submitting the application for issue of NOC:
a) Completion of 4
months from the date of obtaining the listing permission from the concerned
Designated Stock Exchange or the last date when the listing permission was
obtained from any of the other stock exchanges, where the securities are
proposed to be listed, whichever is later.
b) Satisfactory redressal
of all complaints received at the Board against the Company.
c) Certificate from the
Designated Stock Exchange to the issuer company to the effect that
underwriting/brokerage commission as well as Registrars/Lead merchant bankers
fees have been duly paid by the company.
16.2.4.3. Applications for issue of NOC shall be filed by merchant bankers with the concerned designated
office of Board under the jurisdiction to which the registered office of the
issuer company falls, as specified in Schedule
XXII.
16.2.4.4. In cases where issues (i.e. public/rights/offer of sale or any
other) fail and the investors monies are fully refunded, an NOC from the Board
may not be required and the concerned designated Stock Exchange can refund the
1% security deposit after duly verifying that the refund orders have actually
been despatched.
16.2.4.5
(a) The complaints with
respect to non-receipt of underwriting /brokerage commission and non-receipt of
Registrars/Lead merchant bankers fees may be filed with the concerned
Designated Stock Exchanges.
(b) Responses against
complaints forwarded by the Board to the concerned companies shall be submitted
to the Board as per the proforma specified in Schedule XXV for updation of records.”
16. The existing Schedule III shall be substituted by the
following:
SCHEDULE III
(Clause 5.3.3.1)
FORMAT OF
DUE DILIGENCE CERTIFICATE TO BE GIVEN BY LEAD
MERCHANT
BANKER(S) ALONGWITH DRAFT OFFER DOCUMENT
To,
SECURITIES AND EXCHANGE BOARD OF
Dear Sirs,
SUB.: ISSUE OF ____________________ BY
_______________LTD.
We, the under noted Lead Merchant Banker (s) to
the above mentioned forthcoming issue state as follows :
(2)
We have examined various
documents including those relating to litigation like commercial disputes,
patent disputes, disputes with collaborators etc. and other materials more
particularly referred to in the Annexure hereto in connection with the
finalisation of the draft prospectus/letter of offer pertaining to the said
issue;
(2) On
the basis of such examination and the discussions with the company, its
directors and other officers, other agencies, independent verification of the
statements concerning the objects of the issue, projected profitability, price
justification and the contents of the documents mentioned in the Annexure and
other papers furnished by the company, WE CONFIRM that:
(a) the
draft prospectus/letter of offer forwarded to the Board is in conformity with
the documents, materials and papers relevant to the issue;
(b) all
the legal requirements connected with the said issue as also the guidelines,
instructions, etc. issued by the Board, the Government and any other competent
authority in this behalf have been duly complied with; and
(c) the
disclosures made in the draft prospectus / letter of offer are true, fair and
adequate to enable the investors to make a well informed decision as to the
investment in the proposed issue.
(3) We
confirm that besides ourselves, all the intermediaries named in the
prospectus/letter of offer are registered with the Board and that till date
such registration is valid.
(4)
We have satisfied ourselves
about the worth of the underwriters to fulfil their underwriting commitments.
(5)
We certify that written
consent from shareholders has been obtained for inclusion of their securities
as part of promoters’ contribution subject to lock-in and the securities proposed to form part of promoters’
contribution subject to lock-in, will not be disposed / sold / transferred by
the promoters during the period starting from the date of filing the draft
prospectus with the Board till the date of commencement of lock-in period as
stated in the draft prospectus.
PLACE:
LEAD MERCHANT BANKER(S) TO THE
ISSUE DATE: WITH
HIS/ THEIR SEAL (S)
ANNEXURE TO
THE DUE DILIGENCE CERTIFICATE FOR THE ISSUE OF
_______________________ BY
______________________________LIMITED
1. Memorandum
and Articles of Association of the Company.
2. Letter of Intent/SIA Registration/Foreign Collaboration
Approval/Approval for import of plant and machinery, if applicable.
3. Necessary clearance from governmental, statutory, municipal
authorities etc. for implementation of the project, wherever applicable.
4. Documents in support of the track record and experience of
the promoters and their professional competence.
5. Listing agreement of the Company for existing securities on
the Stock Exchanges.
6. Consent letters from Company's auditors, Bankers to issue,
Bankers to the Company, Lead Merchant Bankers, Brokers and where applicable,
Proposed Trustees.
7. Applications made by the company to the financial
institutions/banks for financial assistance as per object of the Issue and
copies of relative sanction letters.
8. Underwriting letters from the proposed underwriters to the
issue.
9. Audited Balance Sheets of the Company/Promoter companies for
relevant periods.
10.
Auditors certificate
regarding tax-benefits available to the Company,
Shareholders and Debenture holders.
11. Certificate from Architects or any other competent authority
on project implementation schedule furnished by the company, if applicable.
12. Reports from Government agencies / expert agencies /
consultants / company regarding market demand and supply for the product,
industry scenario, standing of the foreign collaborators, etc.
13. Documents in support of the infrastructural facilities, raw
material availability, etc.
14. Auditors' Report indicating summary of audited accounts for
the period including that of subsidiaries of the company.
15. Stock Exchange quotations of the last 3 years duly certified
by designated stock exchange in case of an existing company.
16. Applications to RBI and approval thereof for allotment of
shares to non-residents, if any, as also for collaboration terms and
conditions.
17. Minutes of Board and General Body meetings of the company for
matters which are in the prospectus.
18. Declaration in Form 32 from Directors (for particulars of
Directorship) or the Company Secretary's certificate in this regard.
19. Revaluation certificate of company's assets given by
Government Valuer or any other approved Valuer.
20. Environmental clearance as given by Pollution Control Board of
the State Government or the Central Government as applicable.
21. Certificate from company's solicitors in regard to compliance
of legal provisions of the Prospectus as also applicability of FERA/MRTP
provisions to the company.
22. Other documents, reports etc. as are relevant / necessary for
true, fair and adequate disclosures in the draft prospectus / letter of offer
(to give details).
23. True copy of the Board resolution passed by the issuer
authorising a representative of the Registrar to act on its behalf in relation
to handling of stockinvests.
PLACE: LEAD MERCHANT
BANKER (S) TO THE ISSUE WITH HIS / THEIR
SEAL (S)
DATE:
17 The
existing Schedule XVI shall be substituted by the following:
“SCHEDULE
XVI
(Clause 7.2.1)
POST ISSUE MONITORING REPORTS
PUBLIC
ISSUE
SUBSCRIPTION
STATUS : (SUBSCRIBED / UNDERSUBSCRIBED)
3-DAY MONITORING REPORT
(RESPONSIBILITY:
POST ISSUE LEAD MERCHANT BANKER)
1. Name of the Issuer Company :
2. Issue opening date :
3. Earliest closing date :
4. Actual closing date :
5. Date of filing prospectus
with RoC :
6. Issue Details (as per the prospectus)
6.1
Nature of instrument : (Equity/FCD/PCD/NCD/Others,
Etc.)
6.2
Offer price per instrument
for different categories :
6.3 Amt. per instrument on application
for different categories :
6.4 Issue Size : (Rs lakhs)
(a)
Promoters' contribution :
(a)(i) Date of submission of auditors'
certificate to SEBI for receipt of
promoters'
contribution :
(b)
Amount through
offer document :
(including reserved categories
and net public offer)
(b)
(i) Reserved Category
Amount reserved (Rs lakhs)
Firm basis Competitive basis
-------------------------------------------------------------------------------
Mutual funds
FIS / Banks
FIIs
NRIs / OCBs
Employees
Others (Please specify)
-------------------------------------------------------------------------------
(b)(ii) Net public offer :
7(a). Provisional Subscription Details of Net
Public offer (including unsubscribed portion of reserved categories
i) Total amount to be collected on application : Rs lakhs
ii) Amount collected on
application : Rs lakhs
iii) % subscribed i.e. % of
(ii) to (i) : (%)
7(b). Amount subscribed by the reserved categories on competitive
basis
: Rs.
lakhs
8) Please tick mark whether 90% minimum
subscription of the amount through offer document is collected.
(i) YES (ii) NO
Signed by ...
Signed by .....
Registrars to the Issue
Company
Signed by.....
Lead Merchant Banker(s)
Place:
Date :
Note: This is the
responsibility of Lead Merchant banker(s) to give correct information after
verifying it from the company and the Registrar to the issue.
PUBLIC
ISSUE
SUBSCRIPTION
STATUS : (SUBSCRIBED / UNDERSUBSCRIBED)
FINAL POST ISSUE MONITORING REPORT
(RESPONSIBILITY:
POST ISSUE LEAD MERCHANT BANKER)
1. Name of the Company :
2. Issue opening date :
3. Actual closing date :
4. 3-Day Report
Due on :
Submitted on :
5. No. of Collecting Banks :
(Allso specify no. of Bank Branches)
6. Bank-wise names of branches which did
not submit final consolidated certificates
within 21 days from closure of issue and
mention the dates when they actually
submitted :
7.
Subscription Details
a) Public Offer (Net) (Including unsubscribed portion of
reserved category
added back to net public offer)
1) No. of applications recd. :
2) No. of instruments applied for :
3)
Amount of subscription received : Rs.
4) No. of times issue subscribed :
5) No. of applications
accompanied by stock invests :
6)
No. of instruments applied
through stock invest :
7) Amount of subscription received
through stock invest : Rs.
8) Percentage of subscription
through stock invest in total
subscription :
(b)
Information relating to reserved categories
Reservations No.of applications No. of instruments Amount
applied for subscribed
------------------------------------------------------------------------------------------------
NRIs
FIs
FIIs
MFs
Employees
Others
(Specify)
-------------------------------------------------------------------------------------------------
The firm allottees who did
not meet their commitments though mentioned in the prospectus (Please give
their names and amount and whether the promoters have subscribed to that amount
before opening of the issue).
9. Actual Date of finalisation of Basis of Allotment
(enclose copy) :
10. Allotment Details
10.1 No. of successful
allottees per 1 lac shares :
10.2
No. of successful allottees
from
stock-invest applicants :
10.3
No. of instruments allotted
to
stockinvest applicants :
10.4
Percentage of stockinvest
allottees in total allottees :
10.5 No. of unsuccessful
allottees :
11. Actual Date(s) of completion of
despatch of -
(a) Refund Orders :
(b) Cancelled
stock invests :
(c)
Certificates/Allotment Letters :
(d)
Certificate/allotment letter against
application
by stock Invest :
(e)
Reasons for delay in
despatch, if
any :
(f)
Whether interest paid for delayed
period, if so, for which period
:
12.
If there is a reservation for
NRIs, date(s)
of completion of despatch of -
(a) Refund
Orders :
(b) Cancelled
Stockinvests :
(c) Certificate/Allotment Letters
:
(d) Reasons for delay in despatch, if
any :
(e) Whether
interest paid for delayed period :
(f)
Date of
submission of application to the
RBI for approval for despatch of share
certificates :
(g) Date of approval received from RBI :
13. Amount of refund due : Rs.
14. Refund Banker(s) (Name and Address):
15. Date of transfer of refund