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.