Parag Basu
Deputy General Manager
Corporation Finance Department
Division of Issues and Listing-II
Phone: +91 22 2285 0451-56, (Extn: 410) 22871582
Fax: +91 22 2204 5633. Email: paragb@sebi.gov.in
SEBI/CFD/DIL/DIP/20/2006/3/4
April 3, 2006
To all Merchant Bankers
Dear Sir(s)/Madam(s),
Sub: Introduction of new Chapter VIA in the SEBI (DIP) Guidelines, 2000
1. The Central Government, on February 23, 2004 issued the Companies (Issue of Indian Depository Receipts) Rules, 2004 (IDR Rules), under Section 605A of the Companies Act, 1956. Under Rule 4(d) of the IDR Rules, SEBI has the power to specify eligibility criteria for IDR issuers in addition to what is contained in the IDR Rules. Under Clause 9 to the Schedule to the IDR Rules, SEBI can specify any information to be included in the prospectus from time to time.
2. Accordingly, for companies desirous of coming out with IDR issues, a new Chapter VI A has been added in the SEBI DIP Guidelines, 2000, containing the guidelines to be followed by an IDR issuer for coming out with such issue. A copy of Chapter VIA is enclosed herewith in the Annexure.
3. This circular is being issued in exercise of powers conferred by Sections 11(1) and 11A of the Securities and Exchange Board of India Act, 1992 to protect the interests of investors in securities and to promote the development of, and to regulate the securities market.
4. These amendments shall come into force from the date of the circular. This circular, along with the annexure, is available on SEBI website at www.sebi.gov.in. The entire text of SEBI (DIP) Guidelines, 2000, including the amendments issued vide this circular, is also available on SEBI website under the category “Issues and Listing”.
Yours faithfully,
Parag Basu
Annexure
CHAPTER VIA OF THE SEBI (DIP) GUIDELINES, 2000
ISSUE OF INDIAN DEPOSITORY RECEIPTS (IDRs)
PART I – GENERAL REQUIREMENTS
6A.1 PRELIMINARY
The guidelines given in this chapter are in addition to the provisions of the Companies (Issue of Indian Depository Receipts) Rules, 2004 (hereinafter referred to as the IDR Rules) and not in derogation thereof.
6A.2 ELIGIBILITY FOR ISSUE OF IDRS
No issuer shall make an issue IDRs unless:
(i) it fulfills the eligibility criteria as specified in Rule 4 of the IDR Rules
(ii) It is listed in its home country;
(iii) it has not been prohibited to issue securities by any Regulatory Body; and,
(iv) it has good track record with respect to compliance with securities market regulations.
6A.3 INVESTORS
1. NRIs and FIIs cannot purchase or possess IDRs unless special permission of the Reserve Bank of India is taken.
2. Investments by Indian Companies in IDRs shall not exceed the investment limits, if any, prescribed for them under applicable laws.
3. Automatic fungibility of IDRs is not permitted.
4. An issue of IDRs is open to QIBs (as defined in clause 2.2.2.B. of these Guidelines) only.
5. The minimum application amount in an IDR issue shall be Rs.2,00,000/-
6. Procedure to be followed by each class of applicant for applying shall be mentioned in the prospectus.
6A.4 MINIMUM ISSUE SIZE:
The size of an IDR issue shall not be less than Rs.50 crores
6A.5 MINIMUM SUBSCRIPTION:
If the company issuing the IDRs does not receive the minimum subscription of 90% of the issued amount on the date of closure of the issue, or if the subscription level falls below 90% after the closure of issue on account of cheques having being returned unpaid or withdrawal of applications, 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 at the rate of 15% per annum for the period of delay.
PART II - DISCLOSURES IN A PROSPECTUS FOR IDRs
A prospectus for issue of IDRs shall contain all details as prescribed herein.
6A.6 GENERAL INSTRUCTIONS WITH RESPECT TO CONTENTS OF THE PROSPECTUS:
1. The Merchant Banker has the option to file the draft prospectus as a public filing or a confidential filing. In both the cases, the initial fee as prescribed in Rule 5 (i) (b) of the IDR Rules shall accompany such filing.
2. The contents of the prospectus including the financial statements of the issuer company, its subsidiaries and associates shall be in plain English.
“Associate” for the purpose of this chapter would mean “associate” as defined in Indian GAAP or IFRS or US GAAP in which the financial statements of the issuer are disclosed.
3. The prospectus shall contain all material information which shall be true and adequate so as to enable the investors to make informed decision on the investments in the issue.
4. The prospectus shall also contain the information and statements specified herein
5. The issuing company shall, through a Merchant Banker file a prospectus or letter of offer certified by two authorized signatories of the issuing company, one of whom shall be a whole-time director and other the Chief Accounts Officer or the Chief Financial Officer, stating the particulars of the resolution of the Board or the shareholders by which it was approved, with the SEBI and Registrar of Companies, New Delhi, before such issue. They shall also certify that all the disclosures made in the prospectus are true and correct.
6. The agreement made with the domestic depository shall also be furnished along with the prospectus.
6A.7. DISCLAIMER
1. A disclaimer shall be made by the Merchant Banker (including a due diligence certificate) in the format specified in Schedule III
2. A statement will be made by the Issuer disclaiming responsibility for statements made otherwise than in the prospectus, as follows:
“Our company, our directors and the Merchant Banker accept no responsibility for statements made otherwise than in the prospectus or in the advertisements or any other material issued by at our instance and anyone placing reliance on any other source of information including our website_ shall be doing so at his or her own risk.”
6A.8 THE ISSUE
Summary of the terms of offer shall be incorporated, including:
1. Offer and Listing Details
2. Plan of Distribution
3. Markets
4. Selling Shareholders, if any
5. Dilution
6. Expenses of the Issue
6A.9 FORWARD LOOKING STATEMENTS
A paragraph on the statements that are forward looking statements and not matters of historical facts shall be incorporated. A statement on the sources of data used in the prospectus and their accuracy shall also be incorporated. A line should also be incorporated on whether these have been independently verified.
6A.10 GENERAL INFORMATION
1. Definitions/terms used in the prospectus
2. Name, address and contact information of the registered office of the company;
3. Name, address and contact information of the Domestic Depository, the Overseas Custodian Bank with the address of its office in India, the Merchant Banker, the Underwriter to the issue, Advisors to the issue and any other intermediary which may be appointed in connection with the issue of IDRs;
4. Interest of Experts and Counsel
5. Name, address and contact information of the compliance officer in relation to the issue of IDRs. The compliance officer should be placed in India
6. Name, address and contact information of Stock Exchanges where applications are made or proposed to be made for listing of the IDRs;
7. Disclosure about provisions relating to punishment for fictitious applications;
8. Statement/declaration for refund of excess subscription
9. Statement that an interest of 15% p.a. would be paid to the investors if the allotments letters / refund orders are not despatched within 30 days of the closure of the public issue
10. Declaration about issue of allotment letters/certificates/ IDRs within the stipulated period;
11. Date of opening of issue;
12. Date of closing of issue;
13. Method and Expected Timetable of the issue
14. A statement that subscription to the issue shall be kept open for atleast 3 working days and not more than 10 working days
15. Date of earliest closing of the issue;
16. Declaration by the Merchant Banker with regard to adequacy of resources of underwriters to discharge their respective obligations, in case of being required to do so;
17. A statement by the issuing company that all moneys received out of issue of IDRs shall be transferred to a separate domestic bank account, name and address of the bank and the nature and number of the account to which the amount shall be credited;
18. Details of availability of prospectus and forms, i.e., date, time, place etc;
19. Amount and mode of payment seeking issue of IDRs
20. Disclosure on Investor Grievances and Redressal System:
a. The arrangements or any mechanism evolved by the company for redressal of investor grievances.
b. The past record (for a min period of 3 years before the date of the prospectus) of investor grievance redressal of the company and its listed subsidiaries/associates including details as to the time normally taken by it for disposal of various types of investor grievances.
c. That the company undertakes to subject itself to the jurisdiction of Indian Courts having jurisdiction over the place where the stock exchange is situated regarding grievances of the applicants for IDRs
6A.11 RISK FACTORS & MANAGEMENT PERCEPTION, IF ANY
1. Risk factors shall be disclosed as follows:
a. Risk factors associated with the company’s business
b. Risk factors associated with the country of the company proposing to issue IDRs
c. Risk factors associated with the IDRs / underlying shares
2. 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.
3. Risk factors shall be determined on the basis of their materiality.
4. 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.
5. The Risk factors shall appear in the prospectus in the following manner:
a. Risks envisaged by Management.
b. Proposals, if any, to address the risks.
c. Any ‘notes’ required to be given prominence shall appear immediately after the Risk factors.
6A.12 RECENT DEVELOPMENTS
Important events in the recent past (2 FY preceding the issue) providing details of important developments on 3 key areas: Operations & Management, Shareholding patterns and Business Environment
6A.13 MARKET PRICE INFORMATION AND OTHER INFORMATION CONCERNING THE SHARES IN THE DOMESTIC MARKET OF THE ISSUER
1. Market price of shares for each quarter of the last three calendar years preceding the calendar year preceding the year of the issue of Prospectus (High, Low, Average Daily Trading Volume)
2. Market price of shares for each month of the calendar year preceding the year of the issue of Prospectus (High, Low, Average Daily Trading Volume)
3. Market price of shares for the month preceding the date of Prospectus (High, Low, Average Daily Trading Volume)
4. The Opening and Closing price on the last day of the preceding month of the date of Prospectus along with the volume
5. This information should be provided, exchange wise, if the securities are listed in more than one exchange
6. This information should updated as on last available date before the date of prospectus
7. If it is a further issue of IDRs which are already listed in India, the above information should be given about such IDRs also
6A.14 DIVIDENDS
1. Dividend policy of the Company
2. Rate of Dividend and Amount of Dividend paid for the last five financial years
3. Regulatory framework in the Country of Incorporation/share listed concerning Dividends
4. Details of Arrangement with the Depositories for payment of Dividend to the IDR holders
5. Information about changes, if any, in dividends announced and dividends paid and time gap between the dividends announced and dividends paid.
6. Information about Dividend Yield.
7. Taxation aspects of dividend distribution.
6A.15 EXCHANGE RATES
1. Brief history of the pattern of Exchange rates between the Country of Incorporation/where shares are listed and India
2. High, Low, Average Rates for the last five years
3. High, Low, Average Rates for the last twelve months
6A.16 FOREIGN INVESTMENT AND EXCHANGE CONTROLS OF THE COUNTRY OF INCORPORATION/ WHERE SHARES ARE LISTED
Information relating to the relevant foreign investment laws and exchange control regulations of the Country of Incorporation or country where the underlying equity shares are listed.
6A.17 OBJECTS OF THE ISSUE / USE OF PROCEEDS
The following shall be disclosed:
1. purpose of the issue;
2. break-up of the cost of project for which the money is raised through the IDR issue;
3. the means of financing such project; and
4. proposed deployment status of the proceeds at each stage of the project.
6A.18 CAPITALISATION STATEMENT
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Pre-issue as (Figures in Rs.crores)
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Short-Term Debt
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Long Term Debt
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Shareholders Funds
Share Capital
Reserves
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Total Shareholders Funds
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Long Term Debt/Equity
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6A.19 CAPITAL STRUCTURE
1. Authorised, issued, subscribed and paid up capital (Number of instruments, description, aggregate nominal value).
2. Size of present issue.
3. Paid-up Capital:
- before the issue;
- after the issue (if the IDR issue involves issue of fresh equity shares); and
- share premium account (before and after the issue)
4. Detailed notes to Capital Structure
Capital Structure shall also contain details regarding holdings of major shareholders i.e., the person or persons who are in over-all control of the company.
6A.20 FINANCIAL INFORMATION
1. The audited consolidated or unconsolidated financial statements prepared in accordance with Indian GAAP or IFRS or US 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)
2. Report of the statutory auditor on the financial results and financial status of the company for each of the five financial years immediately preceding the issue of prospectus including the profits or losses and assets & liabilities of the issuing company at the last date to which the accounts of the company were made in the specified form; provided that the gap between date of issue and date of report shall not be more than 120 days up to a period not being more than 120 days before the opening of the issue, wherever statutory audit is required under the law of the country in which the issuing company is incorporated;
a. The above report needs to be stated in Indian Rupees in addition to home country currency and shall be prepared either in Indian GAAP (including all Accounting Standards issued by the Institute of Chartered Accountants of India) or with the International Financial Reporting Standards (IFRS) [including the International Accounting Standards (IAS)] or US GAAP, with a reconciliation statement vis-à-vis Indian GAAP. If the same is prepared according to IFRS or US GAAP, a paragraph on summary of significant differences between Indian GAAP and IFRS or Indian GAAP and US GAAP, as the case may be, shall also be incorporated.
b. Further, in case the report is prepared as per IFRS or US GAAP, the annual and quarterly financial results shall be audited by a professional accountant or certified public accountant or equivalent (by whatever name called in the issuer country) .in accordance with the International Standards on Auditing (ISA). The auditor’s report shall also be prepared in accordance with the ISA.
c. The above report needs to be stated on consolidated Basis or stand alone basis
d. In case issuer country’s accounting norms do not require a statutory Audit, such accounts shall be audited by a professional accountant or a certified public accountant
3. A report by domestic depository, as certified by an Accountant who is member of Institute of Chartered Accountants of India holding certificate of practice, upon profits or losses of the issuing company for each of the five financial years immediately preceding the issue of prospectus and upon the assets and liabilities of the issuing company at the last date to which the accounts of the company were made in the specified form; provided that the gap between date of issue and date of report shall not be more than 120 days
4. If the proceeds of the IDR issue are used for investing in other body(ies) corporate, then following details of such body(ies) corporate shall be given :
a) Names and address(es) of the bodies corporate;
b) The reports as stated above in respect of those bodies corporate also.
5. Related Party transactions
6. Liquidity and Capital Resources
6A.21 STATEMENT ON MATERIAL DEVELOPMENTS SUBSEQUENT TO THE DATE OF THE LAST FINANCIAL STATEMENTS AS DISCLOSED IN THE PROSPECTUS
An statement by the directors whether in their opinion there have arisen any circumstances since the date of the last financial statements as disclosed in the prospectus any which materially and adversely affect or is likely to affect the trading or profitability of the company, or the value of its assets, or its ability to pay its liabilities within the next twelve months, and if so, an outline of such circumstances and an assessment of their likely impact.
6A.22 MANAGEMENT DISCUSSION AND ANALYSIS OF THE FINANCIAL STATEMENTS (BY COMPARING THE RECENT FINANCIAL YEAR WITH THE PREVIOUS THREE FINANCIAL YEARS)
1. A summary of past financial results after adjustments as given in the auditors report for the past three years containing significant items of income and expenditure shall be given.
2. Overview of the business of the issuer company.
3. Factors that may affect Results of the Operations.
4. An analysis of reasons for the changes in significant items of income and expenditure shall also be given, inter alia, containing the following:
a. unusual or infrequent events or transaction;
b. significant economic changes that materially affected or (are likely to effect income from continuing operations;
c. known trends or uncertainties that have had or are expected to have a material adverse impact on sales, revenue or income from continuing operations;
d. future changes in relationship between costs and revenues, in case of events such as future increase in labour or material costs or prices that will cause a material change are known;
e. the extent to which material increases in net sales or revenue are due to increased sales volume, introduction of new products or services or increased sales prices;
f. total turnover of each major industry segment in which the company operated
g. status of any publicly announced new products or business segment;
h. the extent to which business is seasonal;
i. any significant dependence on a single or few suppliers or customers;
j. competitive conditions.
6A.23 INDUSTRY AND BUSINESS OVERVIEW
Market including details of the competition, past production figures for the industry, existing industry capacity, past trends and future prospects regarding exports (if, applicable), demand and supply forecasts (if given, should be essentially with assumptions unless sourced from a market research agency of repute), etc. to be given. Source of data used shall be mentioned.
6A.24 DETAILS OF THE ISSUER
1. Main object, history and present business of the company;
2. location of the project, if any;
3. Installed capacity and the details of plant and machinery, infrastructure facilities, technology etc., where applicable;
4. schedule of implementation of project and progress made so far, if applicable;
5. nature of product(s), consumer(s), industrial users;
6. Research and Development, Patents and Licenses, etc.
7. Property, Plants and Equipment
8. particulars of financial and other defaults, if any;
9. Underwriting
10. Experts
11. Where You Can Find Additional Information
12. Enforcement of Civil Liabilities Against Foreign Persons
6A.25 SUBSIDIARIES AND ASSOCIATES OF THE ISSUER
The following information for the last 3 years based on the audited statements in respect of subsidiaries and associates of the Issuing Company:
1. Date of Incorporation;
2. Nature of activities;
3. Equity Capital;
4. Reserves (excluding revaluation reserve);
5. Sales;
6. Profit after tax (PAT);
7. Earnings per share (EPS); and
8. Net Asset Value (NAV);
If the subsidiaries and associates are not required to prepare such audited statements as per the laws prevailing in those countries, the same may be certified as true and correct by the Board of Directors and the management of such companies, provided a certificate from a certified public accountant or equivalent practicing in the concerned country is submitted to SEBI.
6A.26 MANAGEMENT
1. Controlling shareholders and their Background
2. Details of the Board of Directors and the Key Managerial Personnel (i.e. Name, address(es) of Directors, Manager, Managing Director or other principal officers of the company, age, qualification, industry experience, other directorships)
3. Remuneration of the Directors and the Key managerial personnel with detailed breakup, sitting fees, their relation with promoters / controlling shareholder(s), if any, their equity holding in the company, duration of their association with the company.
4. Organisational Structure
5. Board Practices
6. Employees
6A.27 SECURITIES MARKET OF THE COUNTRY OF INCORPORATION/ WHERE SHARES ARE LISTED
1. Brief History
2. Stock Exchange Regulation
3. Listing Regulations
4. Details of the Securities market regulator of the country of the issuer company
5. Whether the Securities market regulator of the country of the issuer company has signed any MoU with SEBI/IOSCO
6. Disclosure under the Companies Act and Securities Regulations (or equivalent thereof)
7. Stock Exchanges
8. Takeover Code/Buyback Code
9. Reforms in Some Key Sectors of the Economy
10. Restriction on Foreign Ownership of Securities
11. Overview of the Financial Sector
12. Nature of the Securities Trading Market in that country
13. A statement of how the enforcement of Indian Securities Laws would be affected by the fact that the issuer is located outside India
6A.28 DESCRIPTION OF THE INDIAN DEPOSITORY RECEIPTS AND RIGHTS OF IDR HOLDERS
1. Brief description of the Indian Depository Receipts
2. Dividends, Other Distributions and Rights of IDR holders
3. Voting rights and their manner of exercise by IDR holders, if any.
4. Record dates and how the same will be disclosed.
5. Reports and other communication to which the IDR holders will be entitled.
6. Conversion procedure of IDRs into shares
7. Governing Law regarding various aspects of IDRs and transactions therein.
6A.29 PROVISIONS REGARDING TRANSFER OF SHARES AND DEPOSITORY RECEIPTS
1. Provisions regarding transfer of IDRs
2. Outline of provisions regarding transfer of underlying shares after conversion
6A.30 INFORMATION RELATING TO THE DEPOSITARY - INDIAN & INTERNATIONAL
Brief details of the Domestic Depositary, Overseas Custodian Bank and Depositary Agreement.
6A.31 APPROVALS OF THE GOVERNMENT/REGULATORY AUTHORITIES
Information relating to statutory and regulatory approvals required in home country for the Issue and the related aspects and their status, and approvals from Indian Regulatory authorities.
6A.32 TAXATION FRAMEWORK IN INDIA AND THE COUNTRY OF INCORPORATION / WHERE SHARES ARE LISTED
Information relating to relevant provisions of Taxation law, Tax Treaties and their impact for IDR holders.
6A.33 OUTSTANDING LITIGATIONS AND DEFAULTS
1. Material litigation / liabilities/defaults including arrears / potential liabilities of the issuer, its promoters / controlling shareholders / directors and its subsidiaries and associates.
2. Materiality shall be determined on the basis of factors which are specific to the project and to the issuer, its promoters / controlling shareholders / directors, its subsidiaries and associates, which may have a bearing on the performance of the issuer company. .
Materiality shall be decided taking the following factors into account:
a. Some litigation/defaults may not be material individually but may be found material collectively.
b. Some litigation/defaults may have material impact qualitatively instead of quantitatively.
c. Some litigation/defaults may not be material at present but may be having a material impact in future.
6A.34 BASIS OF ISSUE PRICE
1. Earnings per share i.e. 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. minimum return on increased net worth required to maintain pre-issue EPS;
5. Net Asset Value per share based on last balance sheet;
6. Net Asset Value per share after issue and comparison thereof with the issue price.
7. 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)
8. The face value of shares (including the statement about the issue price being “X” times of the face value) and that of the IDRs. The aggregate face value of the total equity shares underlying a single IDR also shall be given.
Provided that the projected earnings shall not be used as a justification for the issue price in the prospectus.
Provided further that the accounting ratios disclosed in the prospectus in support of basis of the issue price shall be calculated after giving effect to the consequent increase in capital on account of compulsory conversions outstanding, as well as on the assumption that the options outstanding, if any, to subscribe for additional capital will be exercised.
6A.35 MAIN PROVISIONS OF ARTICLES OF ASSOCIATION / MAIN CHARTER OF THE ISSUER
6A.36 MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION
Place at which inspection of the documents specified under Rule 6 of the Companies (Issue of Indian Depository Receipts) Rules, 2004, the prospectus, the financial statements and auditor's report thereof will be allowed during the normal business hours.
6A.37 OTHER INFORMATION
1. Disclosure of mandatory vetting of the prospectus by the legal counsel to the Issuer operating at the place where the registered office of the Issuer is situated.
2. Consent of Merchant Bankers, overseas custodian bank, the domestic depository and all other intermediaries associated with the issue of IDRs.
3. Fees and expenses payable to the intermediaries involved in the issue of IDRs
PART III: APPLICABILITY OF THE PROVISIONS OF THE SEBI (DIP) GUIDELINES, 2000
Except Chapter VI, all other chapters of the SEBI (DIP) Guidelines, 2000 would apply to an issue of Indian Depository Receipts (IDRs) to the extent as may be prescribed by SEBI for such issues.
PART IV: CONTENTS OF ABRIDGED PROSPECTUS (See Rule 8(i) of the IDR Rules)
1. General Instructions: The information to be provided under each of the heads specified below shall be as per the requirement of Part I of Chapter VI except when specified otherwise.
2. The Abridged Prospectus shall be printed in a font size which shall not be visually smaller than TIMES NEW ROMAN Size 10.
3. The order in which items appear in the Abridged Prospectus shall correspond, as far as may be applicable, to the order in which items appear in the Prospectus.
4. The application form shall be so positioned that on the tearing-off of the application form, no part of the information given in the Abridged Prospectus is mutilated.
5. General Information
5.1 The name of the issuer company and address of the registered office of the issuer company, along with telephone number, fax number, e-mail address and website address, and where there has been a change in the address of the registered office or name of the Issuer, details thereof.
5.2 Name, address and contact information of the registered office of the company;
5.3 Name, address and contact information of the Domestic Depository, the Overseas Custodian Bank with the address of its office in India, the Merchant Banker, the Underwriter to the issue, Advisors to the issue and any other intermediary which may be appointed in connection with the issue of IDRs;
5.4 Interest of Experts and Counsel
5.5 Name, address and contact information of the compliance officer in relation to the issue of IDRs. The compliance officer should be placed in India
5.6 Name, address and contact information of Stock Exchanges where applications are made or proposed to be made for listing of the IDRs;
5.7 Disclosure about provisions relating to punishment for fictitious applications;
5.8 Statement/declaration for refund of excess subscription
5.9 Statement that an interest of 15% p.a. would be paid to the investors if the allotments letters / refund orders are not despatched within 15/30 days of the closure of the public issue, as the case may be
5.10 declaration about issue of allotment letters/certificates/ IDRs within the stipulated period;
5.11 date of opening of issue;
5.12 date of closing of issue;
5.13 Method and Expected Timetable of the issue
5.14 a statement that subscription to the issue shall be kept open for atleast 3 working days and not more than 10 working days
5.15 date of earliest closing of the issue;
5.16 declaration by the Merchant Banker with regard to adequacy of resources of underwriters to discharge their respective obligations, in case of being required to do so;
5.17 a statement by the issuing company that all moneys received out of issue of IDRs shall be transferred to a separate domestic bank account, name and address of the bank and the nature and number of the account to which the amount shall be credited;
5.18 details of availability of prospectus and forms, i.e., date, time, place etc;
5.19 amount and mode of payment seeking issue of IDRs
5.20 Disclosure on Investor Grievances and Redressal System:
5.21 That the company undertakes to subject itself to the jurisdiction of Indian Courts having jurisdiction over the place where the stock exchange is situated regarding grievances of the applicants for IDRs
6. Capital Structure of the issuer company
Following details to be furnished:
6.1 Authorised, issued, subscribed and paid up capital (Number of instruments, description, aggregate nominal value).
6.2 Size of present issue.
6.3 Paid-up Capital:
- before the issue;
- after the issue (if the IDR issue involves issue of fresh equity shares); and
- share premium account (before and after the issue)
6.4 Detailed notes to Capital Structure
7. Terms of the Present Issue
7.1 Authority for the issue, terms of payment and procedure and time schedule for allotment and issue of certificates/ refund orders.
7.2 The clause "Interest in Case of Delay in Despatch of Allotment Letters/ Refund Orders in Case of Public Issues" shall appear.
8. Instructions for applicants
8.1 How to Apply, Availability of Prospectus, Abridged Prospectus and Application Forms, Mode of Payment and Book building procedure, if relevant.
8.2 In the application form, the declaration relating to Nationality and Residentship shall be shown prominently as under:
"Nationality and Residentship (Tick whichever is applicable)
i. I am / We are Indian National(s) resident in India and I am/we are not applying for the said equity shares as nominee(s) of any person resident outside India or Foreign National(s).
ii. I am / We are Indian National(s) resident in India and I am / We are applying for the said equity shares as Power of Attorney holder(s) of Non- Resident Indian(s) mentioned below on non-repatriation basis.
iii. I am / We are Indian National(s) resident outside India and I am/we are applying for the said equity shares on my / our own behalf on non-repatriation basis."
8.3 The application form should contain necessary instructions/ provisions for the following:
i. Instructions to applicants to mention the number of application form on the reverse of the instruments to avoid misuse of instruments submitted along with the applications for shares/ debentures in public issues.
ii. Provision in the application form for inserting particulars relating to bank account number and the name of the bank with whom such account is held, to enable printing of the said details in the refund orders or for refunds through Electronic Clearing System.
iii. Disclosure of PAN/GIR number.
iv. Details of options, if any, to receive securities subscribed for and a statement that trading in securities on the stock exchanges in physical form will be available only subject to limits prescribed by the Board for time to time.
8.4 Any special tax benefits for company and its shareholders (Only section numbers of the Income Tax Act and their substance should be mentioned, without reproducing the text of the sections)
8.5 Restrictions on investments in IDRs / fungibility of IDRs
9. Particulars of the Issue
9.1 Objects of the issue
9.2 Project cost
9.3 Means of financing
9.4 Name of Appraising Agency, if any
9.5 Name of Monitoring Agency, if any
10. Description of the Indian Depository Receipts and Rights of IDR Holders
10.1 Brief description of the Indian Depository Receipts
10.2 Dividends, Other Distributions and Rights of IDR holders
10.3 Voting rights and their manner of exercise by IDR holders, if any.
10.4 Record dates and how the same will be disclosed.
10.5 Reports and other communication to which the IDR holders will be entitled.
10.6 Conversion procedure of IDRs into shares
10.7 Governing Law regarding various aspects of IDRs and transactions therein.
11. Company, Management and Project
11.1History and main objects and present business of the company.
11.2Promoters / controlling shareholders and their background.
11.3Names, address and occupation of manager, managing director, and other Directors (including nominee-directors and whole-time directors) giving their directorships in other companies.
11.4Location of the project
11.5Plant and machinery, technology, process, etc
11.6Collaboration, any performance guarantee or assistance in marketing by the collaborators
11.7Infrastructure facilities for raw materials and utilities like water, electricity, etc.
11.8 Schedule of implementation of the project and progress made so far, giving details of land acquisition, civil works, installation of plant and machinery, trial production, date of commercial production etc
11.9Nature of the products/services and end users
11.10 Existing, licensed and installed capacity of the product, demand of the product-existing, and estimated in the coming years as estimates by a Government authority or by any other reliable institution, giving source of the information. In case the company is providing services, relevant information with regard to nature/ extent of services, etc., have to be furnished.
11.11 Approach to marketing and proposed marketing set up
11.12 Export possibilities and export obligations, if any.
11.13 Stock Market Data: Disclose particulars of:-
a. Market price of shares for each quarter of the last three calendar years preceding the calendar year preceding the year of the issue of Prospectus (High, Low, Average Daily Trading Volume)
b. Market price of shares for each month of the calendar year preceding the year of the issue of Prospectus (High, Low, Average Daily Trading Volume)
c. Market price of shares for the month preceding the date of Prospectus (High, Low, Average Daily Trading Volume)
d. The Opening and Closing price on the last day of the preceding month of the date of Prospectus along with the volume
e. This information should be provided, exchange wise, if the securities are listed in more than one exchange
f. This information should updated as on last available date before the date of prospectus
g. If it is a further issue of IDRs which are already listed in India, the above information should be given about such IDRs also
12. Particulars with regard to the subsidiaries / associates of the issuer
The following information for the last 3 years based on the audited statements in respect of subsidiaries and associates of the Issuing Company:
12.1 Date of Incorporation;
12.2 Nature of activities;
12.3 Equity Capital;
12.4 Reserves (excluding revaluation reserve);
12.5 Sales;
12.6 Profit after tax (PAT);
12.7 Earnings per share (EPS); and
12.8 Net Asset Value (NAV);
13. Basis for Issue Price
13.1 Earnings per share i.e. EPS pre-issue for the last three years (as adjusted for changes in capital);
13.2 P/E pre-issue
13.3 Average return on net worth in the last three years
13.4 Minimum return on increased net worth required to maintain pre-issue EPS;
13.5 Net Asset Value per share based on last balance sheet;
13.6 Net Asset Value per share after issue and comparison thereof with the issue price.
13.7 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)
Provided that the projected earnings shall not be used as a justification for the issue price in the prospectus.
Provided further that the accounting ratios disclosed in the prospectus in support of basis of the issue price shall be calculated after giving effect to the consequent increase in capital on account of compulsory conversions outstanding, as well as on the assumption that the options outstanding, if any, to subscribe for additional capital will be exercised.
13.8 The face value of shares (including the statement about the issue price being “X” times of the face value) and that of the IDRs. The aggregate face value of the total equity shares underlying a single IDR also shall be given
14. Outstanding Material Litigations and Defaults (in a summarised tabular form)
14.1 Material Litigation / Liabilities including arrears/Potential liabilities of the issuer, its promoters / controlling shareholders / directors and its subsidiaries and associates.
15. Material Development: Any material development after the date of the latest balance sheet and its impact on performance and prospects of the company.
16. Expert opinion obtained, if any.
17. Change, if any, in directors and auditors during the last three years and reasons thereof.
18. Time and Place of Inspection of material contracts (List of material contracts not required)
19. Financial Performance of the Company for the Last Five Years (Figures to be taken from the audited annual accounts in a tabular form)
19.1 Balance Sheet Data: Equity Capital, Reserves (State Revaluation Reserve, the year of revaluation and its monetary effect on assets) and borrowings
19.2 Profit and Loss data: Sales, Gross profit, Net profit, dividend paid, if any
19.3 Any change in accounting policies during the last three years and their effect on the profits and the reserves of the company
19.4 Following information as extracted from the report of the auditors reproduced in the main prospectus:
i) net profit before accounting for extra ordinary items
ii) extra ordinary items
iii) net profit after accounting for extra ordinary items
20. Management Discussions and Analysis on Accounts
21. Listed Ventures of Promoters / controlling shareholders
22. Disclosure on Investor Grievances & Redressal System
23. Statement regarding minimum subscription clause:
The following statement shall appear:
If the company issuing the IDRs does not receive the minimum subscription of 90% of the issued amount on the date of closure of the issue, or if the subscription level falls below 90% after the closure of issue on account of cheques having being returned unpaid or withdrawal of applications, 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 at the rate of 15% per annum for the period of delay.
24. Information relating to relevant provisions of Taxation law, Tax Treaties and their impact for IDR holders.
25. Brief details of the Domestic Depositary, Overseas Custodian Bank and Depositary Agreement.
26. Information relating to statutory and regulatory approvals required in home country for the Issue and the related aspects and their status, and approvals from Indian Regulatory authorities.
27. Signatories to the Prospectus.