Simplification and streamlining of
issue procedure

• The requirement of vetting of offer documents by SEBI prior to a public offer discontinued and replaced by filing of draft prospectus with SEBI prior to public issue. SEBI to convey its observations, if any, within the specified period of 21 days.
  
  
• The mandatory requirement of minimum 90% subscription for an offer for sale of equity dispensed with. However this requirement was still applicable in case of public and rights issues.
  
  
• To further encourage book building, the book building option available for the portion of the issue sold as firm allotment and allowed for public issues of over Rs. 100 crore relaxed and debt issues not accompanied by an equity component and equity issues of less than Rs.100 crore, subject to the compliance with the Securities Contracts (Regulation) Rules allowed.
  
  
• The requirement for the promoters to bring their entire contribution before the opening of an issue in case the promoter's contribution in the company exceeds Rs. 100 crore relaxed and the promoters allowed henceforth to bring in 50% of their contribution before opening of issue and balance 50% in advance pro rata before calls made on the public.
  
  
• The earlier restriction whereby debt securities issued by a corporate not allowed to be listed on an exchange unless the equity of the corporate was already listed, removed to help infrastructure projects.
  
  
• The minimum application size reduced to Rs. 2,000 from Rs. 5,000 to encourage small investors.
  
  
• Restrictions on display of corporate advertisements also removed and corporates allowed to issue corporate advertisements after 21 days from the date of filing the offer document with SEBI till the issue closure date provided all risk factors are mentioned in the advertisement.
  
  
• The front page of the prospectus modified to bring it in line with international practice. The colour of the front page required to be white, no patterns or pictures allowed to be used, and risk factors and other necessary information about the issue such as the registered offices of the issuer and the lead manager.
  
  
• The validity period of letters issued by SEBI giving observations on offer documents filed with SEBI was decided to be extended to 365 days from the date of observation letter.
  
  
• As in the case of underwritten issues, decision to allow promoters of issuers a further period of 60 days from the date of closure of the issue to bring in funds required to meet the minimum 90% subscription clause.
  
  
• Lock-in period for promoters' contribution removed for rights issues at a premium, and for all other issues where a lock-in of shares was required, the period of lock-in uniformly reduced to 2 years.
  
  
• Companies not fulfilling a requirement of 3 years track record of dividend payment out of the last 5 years and not appraised or funded by scheduled commercial banks/public financial institutions, allowed to raise funds by listing on the OTCEI subject to their meeting the listing criteria laid down by the OTCEI. Past bought out deals which do not meet the 3 year dividend payment criteria or project appraised by bank/financial institution and similar future bought out deals allowed to be listed on the OTCEI. Companies once listed on the OTCEI on the above grounds not allowed to be delisted for a period of three years.
  
  
• In addition to financial institutions and scheduled commercial banks, the sponsors on OTCEI also allowed to give their appraised future projections in the offer document in cases where they undertook market making responsibility.