"Disclaimer:
The letter issued by a Department of SEBI constitutes the views of the Department in respect of the particular case and under the facts and circumstances of the particular case and cannot be applied in general. The views expressed therein are not binding on the Board and shall not be construed as a conclusive decision or determination of any question of law or fact by SEBI. Such a letter cannot be construed as an Order made by the Board"
Deputy General Manager
Corporation Finance Department
Division of Issues and Listing
( (Board) : 22850451- 56 , 22880962 - 70 (Extn. : 367)
Fax : 22045633
Email : neelamb@sebi.gov.in
CFD/DIL/UR/ /2003
January 12, 2004
SBI Capital Markets Ltd.
202 Maker Tower E
Cuffe Parade
Mumbai 400 005
Kind Attn.: Mr.Vimal Bhutani, Vice President & Head (Capital Markets Group)
Dear Sir,
Reg.: Application under SEBI (Informal Guidance Scheme) 2003
We refer to your letters dated November 5, 2003 and December 22, 2003 seeking no action letter under SEBI (Informal Guidance) Scheme 2003.
Without necessarily agreeing to your analysis, we clarify as under :
It is observed that share application money in respect of rights issue brought in by promoters is pending allotment. The allotment of shares to promoters is to be made simultaneously with allotment to IPO applicants.
Clause 2.6 of DIP restricts an unlisted company from making a public issue if there is any outstanding rights are to receive equity shares after IPO.
As outstanding rights issue allotment is proposed to be made simultaneously with IPO and not after IPO, clause 2.6 of DIP will not be applicable.
(2)No action letter for possible technical violation of clause 4.9.2 and clause 4.9.3
As per facts stated, there is a prima facie violation of clause 4.9.2 and clause 4.9.3. Hence no action letter as sought for cannot be issued.
It is observed that Petronet LNG Ltd. (PLL) has undertaken to comply with pricing requirement of proviso to clause 4.6.2 i.e., to subscribe to 4 crore shares at IPO price i.e., as determined through book building.
In case of book built issue it is not possible to bring premium etc., as balance promoters contribution before opening of issue at the same price as IPO price which has to be determined through book building process. In case of book built issue the requirement of bringing balance promoters contribution will be met if same is brought before or on filing of final prospectus with ROC.
Thus application money received by PLL pending allotment can be considered for eligible for computation as promoters contribution subject to the condition that premium on 4 crore equity shares which is to be determined through book built process shall be brought in by promoters before or on filing of final prospectus with ROC.
Clause 8.7.1 of DIP bars further issue of capital through bonus, preferential issue etc., after filing of an offer document with SEBI and before securities as referred to in such documents are listed.
It is observed that 3.9 crore shares are proposed to be issued and offered to ADB through preferential allotment prior to IPO but allotment will be made alongwith IPO allotment,. It is further observed that ADB would be subscribing to 1.95 crore shares (50%) at par and remaining 1.95 crore shares at IPO price to be determined at Book Building process.
Thus in view of the above, the requirement of clause 8.7.1 will be deemed to be met if full and complete disclosures about ADB subscription to preferential allotment is made in the draft offer document filed with SEBI and in the event of ADB’s subscription not received before filing of draft Red Herring Prospectus with ROC, PLL will not proceed further on the issue.
If said allotment to ADB is considered as firm allotment in, ADB would be required to subscribe at higher price then the price at which securities are offered to public in IPO in terms of clause 3.4.1 DIP guidelines.
Yours faithfully,
NEELAM BHARDWAJ