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Neelam Bhardwaj Deputy General Manager Corporation Finance
Department Division of Issues
and Listing Phone: +91 22 2284 2826 (D), +91 22 2285 0451-56, 2288
0962-70 (Extn: 367) Fax: +91
22 2204 5633. Email: neelamb@sebi.gov.in SEBI/CFD/DIL/DIP/22/2006/8/5 To All Registered Merchant Bankers / Stock Exchanges Dear Sirs, Sub.: Guidelines
for “Qualified Institutions Placement” – Amendments to SEBI (Disclosure and
Investor Protection) {DIP} Guidelines, 2000.
1.
In order to
make Indian markets more competitive and efficient, it has been decided to
introduce an additional mode for listed companies to raise funds from domestic
market in the form of “Qualified Institutions Placement” (QIP). Key features of the same are as under: Issuer:
A company
whose equity shares are listed on a stock
exchange having
nation wide trading terminals and which is complying with the prescribed requirements
of minimum public shareholding of the listing agreement will be eligible to
raise funds in domestic market by placing securities with Qualified Institutional
Buyers (QIBs). Securities: Securities
which can be issued through QIP are equity shares or any securities
other than warrants, which are convertible into or exchangeable with equity
shares (hereinafter referred to as “specified securities”). A security which is convertible
into or exchangeable with equity shares at a later date, may be converted or
exchanged into equity shares at any time after allotment of security but not
later than sixty months from the date
of allotment. The specified securities shall be made fully paid up at the time
of allotment. Investors / Allottees: The specified securities can be issued only to Qualified
Institutional Buyers (QIBs), as defined under sub-clause (v) of clause 2.2.2B
of the SEBI (DIP) Guidelines. Such QIBs shall not be promoters or related to
promoters of the issuer, either directly or indirectly. Each placement of the
specified securities issued through QIP shall be on private placement basis, in
compliance with the requirements of first proviso to clause (a) of sub-section
(3) of Section 67 of the Companies Act, 1956. A minimum of 10% of the securities
in each placement shall be allotted to Mutual Funds. For each placement, there
shall be at least two allottees for an issue of size up to Rs.250 crores and at
least five allottees for an issue size in excess of Rs.250 crores. Further, no
single allottee shall be allotted in excess of 50 per cent of the issue size. Investors
shall not be allowed to withdraw their bids / applications after closure of the
issue. Issue Size: The
aggregate funds that can be raised through QIPs in one financial year
shall not exceed five times of the net worth of the issuer at the end of its previous
financial year. Placement Document: Issuer
shall prepare a placement document
containing all the relevant and material disclosures. There will be no pre-issue
filing of the placement document with SEBI. The placement document will be
placed on the websites of the Stock Exchanges and the issuer, with appropriate
disclaimer to the effect that the placement is meant only for QIBs on private
placement basis and is not an offer to the public. Pricing: The floor price of the specified securities shall be determined on a basis
similar to that for GDR / FCCB issues and shall be subject to adjustment in
case of corporate actions such as stock splits, rights issue, bonus issue etc. Other
procedural requirements: The resolution approving QIP, passed under
sub-section (1A) of Section 81 of the Companies Act, 1956 or any other
applicable provision, will remain valid for a period of twelve months from the
date of passing of the resolution. There shall be a gap of at least six months
between each placement in case of multiple
placements of specified securities pursuant to authority of the same
shareholders’ resolution. Issuer and
Merchant Banker shall submit documents / undertakings, if any, specified in
this regard in the listing agreement, for the purpose of seeking
in-principle approval and final permission from Stock Exchanges for listing of
the specified securities. Involvement of Merchant
Banker:
QIP shall be managed by a SEBI registered merchant banker who shall exercise due diligence and furnish a due
diligence certificate
to Stock Exchanges stating that the issue complies with all the relevant
requirements. The merchant banker shall file a copy of the placement document and post
issue details with SEBI within thirty days of the allotment, for record
purpose. 2.
The above policy
decisions have been given effect to by introducing Chapter XIIIA in the SEBI
(DIP) Guidelines, 2000. A copy of Chapter XIIIA is enclosed herewith at Annexure I. 3.
The amendments
made vide this circular shall come into force with immediate effect. 4.
This circular is
being issued in exercise of the powers conferred under sub-section (1) of
Section 11 of the Securities and Exchange Board of India Act, 1992. 5.
This circular is
available on SEBI website at www.sebi.gov.in
under the category “Legal Framework”. The entire text of the SEBI (DIP)
Guidelines, 2000, including the amendments issued vide this circular, is
available on SEBI website under the categories “Legal Framework” and “Issues
and Listing”. Yours faithfully, Neelam Bhardwaj Encl.: a/a ANNEXURE I CHAPTER XIII-A OF THE SEBI (DIP) GUIDELINES, 2000 GUIDELINES FOR QUALIFIED INSTITUTIONS PLACEMENT (QIP) 13A.1 Applicability 13A.1.1 This Chapter shall
apply to any issue of equity shares / fully convertible debentures (FCDs) / partly
convertible debentures (PCDs) or any securities other than warrants, which are convertible
into or exchangeable with equity shares at a later date (hereinafter referred
to as “specified securities”), made to Qualified Institutional Buyers (QIBs)
pursuant to this chapter, by a listed company which fulfills the following
conditions: (a)
its equity shares
of the same class are listed on a stock exchange having nation wide trading
terminals; and (b)
it is in
compliance with the prescribed minimum public shareholding requirements of the
listing agreement. Explanation: (i)
The term “Qualified
Institutional Buyers” shall have the same meaning as assigned to it in clause
2.2.2B (v). (ii)
For the purpose
of sub-clause (a) of clause 13A.1.1, securities that are convertible into or
exchangeable with securities which are listed on a stock exchange having nation
wide trading terminals, shall be deemed to be securities of the class into
which they are convertible or with which they are exchangeable. 13A.2 Investors 13A.2.1 Only QIBs shall be
eligible for allotment of specified securities issued pursuant to this Chapter.
13A.2.2 Minimum of 10 per
cent of specified securities issued pursuant to this chapter shall be allotted
to mutual funds. 13A.2.3 If no mutual fund
is agreeable to take up the minimum portion mentioned in clause 13A.2.2 or any
part thereof, such minimum portion or part thereof may be allotted to other QIBs. 13A.2.4 No allotment shall
be made under this chapter, either directly or indirectly, to any QIB being a promoter
or any person related to promoter/s. Explanation: For the
purpose of this clause, QIB who has all or any of the following rights shall
also be deemed to be a person related to promoter/s: (a)
rights under a
shareholders’ agreement or voting agreement entered into with promoters or
persons related to the promoters; (b)
veto rights; or (c)
right to appoint
any nominee director on the board of the issuer. Provided that a QIB who does not hold any shares in the issuer and who has acquired
the aforesaid rights in the capacity of a lender shall not be deemed to be a
person related to promoter/s. 13A.2.5 Investors shall not be allowed to withdraw
their bids after the closure of issue. 13A.3 Pricing 13A.3.1 An
issue of specified securities made under this Chapter shall be made at a price
not less than the higher of the following: i)
The average of the weekly high and low of the closing prices of the
related shares quoted on the stock exchange during the six months preceding the
relevant date; OR ii)
The average of the weekly high and low of the closing prices of the
related shares quoted on the stock exchange during the two weeks preceding the
relevant date. Explanation: a)
"relevant date" for the purpose of this clause means the day
which is thirty days prior to the date on which the meeting of general body of
shareholders is held, in terms of sub-section
(1A) of Section 81 of the Companies Act, 1956 or other applicable provision to
consider the proposed issue. b)
"stock exchange" for the purpose of this clause means any of
the recognised stock exchanges in which the equity shares of the issuer of the
same class are listed and in which the highest trading volume in such shares
has been recorded during the six months immediately preceding the relevant
date. 13A.3.2 Pricing
of shares on conversion 13A.3.2.1 Where securities which are convertible into
or exchangeable with equity shares at a later date are issued pursuant to this
Chapter, the issuer shall determine the price of the resultant shares in terms
of clause 13A.3.1 above, subject to clause 13A.3.2.2. 13A.3.2.2 The relevant date for the above purpose may, at the option of
the issuer, be either the one referred in Explanation (a) to clause 13A.3.1 or
a day thirty days prior to the date on which the holder of the securities which
are convertible into or exchangeable with equity shares at a later date becomes
entitled to apply for the said shares. 13A.3.3 The specified
securities allotted pursuant to this Chapter shall be made fully paid up at the
time of their allotment. 13A.4 Adjustments in price 13A.4.1 The prices
considered for determination of issue price of specified securities as provided
in clause 13A.3.1 and 13A.3.2.1 shall be subject to appropriate adjustments if
the issuer company: a. makes an issue of shares
by way of capitalization of profits or reserves (other than by way of a
dividend on shares); b. makes an issue of shares on rights
basis c. consolidates its outstanding shares
into a smaller number of shares; d. divides its outstanding shares
(including by way of stock split); e. re-classifies any of its shares into
other securities of the company; f.
is
involved in such other similar events or circumstances, which in the opinion of
the concerned Stock Exchange, requires adjustments. 13A.5 Currency of the Security 13.A.5.1 In case of a
security which is convertible into or
exchangeable with equity shares at a later date, the same may be converted/
exchanged in to equity shares at any
time after the date of allotment of the security, no later than sixty months
from the date of allotment. 13.A.6 Shareholders’ Resolution 13A.6.1 Allotment
of specified securities issued pursuant to this Chapter shall be completed
within twelve months from the date of passing of the resolution in terms of
sub-section (1A) of Section 81 of the Companies Act, 1956 or any other
applicable provision. 13A.6.2 The
resolution passed at the meeting of shareholders referred to in clause 13A.6.1
above shall specify that the allotment is proposed to be made to QIBs pursuant
to this Chapter and shall also specify the relevant date on the basis of which
price of the resultant shares as specified under clause 13A.3.2.2 shall be
determined. 13A.6.3 The
placements made pursuant to authority of the same shareholders’ resolution
shall be separated by at least six months between each placement. 13A.7 Placement
Document 13A.7.1 Specified
securities shall be issued pursuant to this Chapter on the basis of a placement
document. 13A.7.2 The placement document
shall contain all material information, including the information specified in
Schedule XXIA. 13A.7.3 The placement
document shall be a private document provided to select investors, through
serially numbered copies. 13A.7.4 The placement document
shall also be placed on the website of the concerned stock exchange and of the
issuer with a disclaimer to the effect that it is in connection with an issue
to QIBs under this Chapter and that no offer is being made to the public or to
any other category of investors. 13A.7.5 A copy of the
placement document shall be filed with the Board for record purpose within 30
days of the allotment of specified securities. 13A.8 Number of allottees 13A.8.1 The minimum number
of allottees for each placement of specified securities made pursuant to this
Chapter shall not be less than: (a) two, where the issue size
is less than or equal to Rs. 250 crores; (b) five, where the issue
size is greater than Rs. 250 crores. Provided that no single allottee shall be allotted more than 50% of the issue size. Provided further that QIBs belonging to the same group or those who are
under common control shall be deemed to be a single allottee for the purpose of
this clause. Explanation: For the purpose of this clause – (i)
The expression
‘QIBs belonging to the same group’ shall derive meaning from the concept of
‘companies under the same group’ as provided in sub-section (11) of Section 372
of the Companies Act, 1956; (ii)
“Control” shall
have the same meaning as is assigned to it by clause (c) of Regulation 2 of the
Securities and Exchange Board of India (Substantial Acquisition of Shares and
Takeovers) Regulations, 1997. 13A.9 Restrictions on amount raised 13A.9.1 The aggregate of the proposed placement and all previous
placements made in the same financial year pursuant to this Chapter shall not
exceed five times the net worth of the issuer as per the audited balance sheet
of the previous financial year. 13A.10 Transferability of specified securities 13A.10.1 Specified securities
allotted pursuant to this Chapter shall not be sold by QIB for a period of one year from the date of
allotment, except on a recognised stock exchange. Explanation: For the
purpose of this clause, it is clarified that any sale by way of a bulk or block
transaction in accordance with the procedures prescribed by the Board and the
stock exchange, shall also be treated as a sale on a recognised stock exchange. 13A.11 Obligations of Merchant Bankers 13A.11.1 Any issue and
allotment of specified securities pursuant to this Chapter shall be managed by Merchant
Banker(s) registered with SEBI. 13A.11.2 The merchant banker
shall exercise due diligence. 13A.11.3 The merchant banker
shall furnish to each stock exchange on which the same class of shares or other
securities are listed, a due diligence certificate stating that the issue is
being made pursuant to this Chapter and complies with its requirements, along
with the application made for seeking in-principle approval for listing of the
specified securities. 13A.11.4 The merchant banker
shall also furnish to each stock exchange on which the same class of shares or
other securities are listed, the documents, undertakings, etc, if any,
specified in the listing agreement for the purpose of seeking in-principle
approval and final permission from Stock Exchanges for listing of the specified
securities. 13A.12 Issuer Certification 13A.12.1 The issuer shall furnish
a copy of the placement document to each stock exchange on which the same class
of shares or other securities are listed. 13A.12.2 The issuer shall
also furnish to each stock exchange on which the same class of shares or other
securities are listed, a certificate stating that the issue is being made
pursuant to this Chapter and complies with its requirements, along with the
application made for seeking in-principle approval for listing of the specified
securities. 13A.12.3 The issuer shall
also furnish to each stock exchange on which the same class of shares or other
securities are listed, the documents, undertakings, etc, if any, specified in
the listing agreement for the purpose of seeking in-principle approval and
final permission from Stock Exchanges for listing of the specified securities. 13A.13 Non-applicability of Chapter XIII 13A.13.1 Nothing contained
in Chapter XIII shall apply to an issue of specified securities made pursuant
to this Chapter. SCHEDULE
XXIA [Clause
13A.7.2 ] DISCLOSURES
IN PLACEMENT DOCUMENT 1.Disclaimer
to the effect that the Memorandum relates to an issue made to Qualified
Institutional Buyers under Chapter XIIIA and that no offer is being made to the
public or any other class of investors. 2. Glossary
of Terms/Abbreviations 3. [Financial
Statements Contained Herein] 4.Merchant
Bankers/Managers to the placement and other advisors 5.Summary of
the Offering and Instrument 6.Risk
Factors 7.Market
Price Information Disclose particulars of:- a.
high, low and average market prices of shares of the company during the
preceding three years b.
monthly high and low prices for the six months preceding the date of
filing of the prospectus c.
number of shares traded on the days when high and low prices were
recorded in the relevant stock exchange during period of (i) and (ii) above,
and total volume traded on those dates d.
the stock market data referred to above shall be shown separately for
periods marked by a change in capital structure, with such period commencing
from the date the concerned stock exchange recognizes the change in the capital
structure (e.g., when the shares have become ex-rights or ex-bonus) e.
the market price immediately after the date on which the resolution of
the Board of Directors approving the issue was approved f.
the volume of securities traded in each month during the six months
preceding the date on which the offer document is filed with ROC g.
Along with high, low and average prices of shares of the company,
details relating to volume of business transacted should also be stated for
respective periods. 8.Use of
proceeds a. purpose of the issue; b. break-up of the cost of
project for which the money is raised
through issue; c. the means of financing
such project; and d. proposed deployment
status of the proceeds at each stage of the project. 9.Capitalization
Statement 10.Dividends 11.Selected
Financial and Other Information The audited consolidated
or unconsolidated financial statements prepared in accordance with Indian GAAP
shall contain the following: a. Report of Independent
Auditors on the Financial Statements b. Balance Sheets c. Statements of Income d. Schedules to Accounts e. Statements of Changes
in Stockholders’ Equity f. Statements of Cash
Flows g. Statement of Accounting
Policies h. Notes to Financial
Statements i. Statement Relating to
Subsidiary Companies (in case of unconsolidated financial statements) 12.Management’s
Discussion and Analysis of Financial Condition and Results of Operations 13. Industry
Description 14.Business
Description 15.Organizational
Structure and Major Shareholders 16.Board of
Directors and Senior Management 17.Taxation
Aspects relating to the Instrument 18.Legal
Proceedings 19.Accountants 20.General
Information 21. Such Other information as is appropriate to enable the investor to
make an informed decision. |
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