Mar 16, 2004
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Informal Guidance
Manager
Corporation Finance Department
Division of Issues & Listing
CFD/DIL/IG/PR/ /04
MARCH 16, 2004
ICICI Bank Ltd.
ICICI Bank Towers
Bandra-Kurla Complex
Mumbai – 400 051
Dear Sir,
Sub: Request under Securities and Exchange Board of India (Informal Guidance) Scheme, 2003 for guidance in relation to reservation for retail shareholders of ICICI Bank Limited in its proposed public issue of equity shares
1.0 Please refer your letter dated February 17, 2004 seeking "No-Action Letter" under the captioned scheme. It is inter alia, submitted by you, vide the letter under reference, that –
- ICICI Bank proposes to make reservation of upto 10% of its proposed public issue on a competitive basis for existing resident individual shareholders holding upto 1,000 shares ("retail shareholders") as on a specified record date. There would be no price preference for these reservations and any under subscription in this category would be added back to the net public offer.
- The retail shareholders would also have an option of applying in the net public offer and the same would not be treated as multiple applications.
2.0 The "No-Action Letter" has been sought on the issue that ICICI Bank would be permitted to make the reservation for the retail shareholders to the extent mentioned in your letter . It is also requested that your letter should receive confidential treatment for a period of atleast 90 days from the date of "No-Action Letter" from SEBI.
3.0 Without necessarily agreeing with your analysis made in your letter, it is observed from your submissions that the ICICI Bank is proposing to make reservations in the proposed public issue for the existing shareholders of the ICICI Bank. Our interpretation on the issues mentioned in your letter is as under -
a. In terms of Clause 8.3.4 of SEBI (DIP) Guidelines, 2000, in a public issue the issuer company is free to make reservations on competitive basis to the following categories:
| Sr. No. |
Category of Persons
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(i)
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Permanent employees (including working directors) of the company and in the case of a new company the permanent employees of the promoting companies
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(ii)
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Shareholders of the promoting companies in the case of a new company and shareholders of group companies in the case of an existing company
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(iii)
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Indian Mutual Funds
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(iv)
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Foreign Institutional Investors (including non resident Indians and overseas corporate bodies)
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(v)
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Indian and Multilateral development Institutions.
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(vi)
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Scheduled Banks
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b. As per the provisions of Clause 8.3.4 of the DIP Guidelines, reservations for existing shareholders of the issuer company is not allowed. Therefore, as regards the issue that the ICICI Bank would be permitted to make reservation as submitted, we are of the view that since DIP Guidelines clearly provide for reservation of shares in a public issue to the shareholders of group companies only (in case of an existing company), reservation of shares cannot be possible for existing shareholders of the ICICI Bank. Hence, ICICI Bank’s request cannot be acceded to in this case.
c. In terms of clause 8.5 of the DIP Guidelines, where reservation has been made to specified category, person belonging to category [except employees and shareholders categories] shall not make an application in the `net public offer' category. Since the reservation in favour of the existing shareholders is not permitted in the instant case the benefit of this clause shall not be applicable and the other submissions made in your letter are not acceptable.
- As requested by the ICICI Bank, this letter will not be made available to the public for a period of 90 days from the date of this letter.
- You may note that the above views are expressed only with respect to the clarification sought on applicability of SEBI ( DIP) Guidelines 2000 and do not affect the applicability of any other law.
Yours faithfully,
Pradeep Ramakrishna