SEBI Guidelines for IPOs 1.

IPOs of small companies Public issue of less than five crores has to be through OTCEI and separate guidelines apply for floating and listing of these issues. (Public Offer By Small Unlisted Companies) 2. Size of the Public Issue Issue of shares to general public cannot be less than 25% of the total issue, incase of information technology, media and telecommunication sectors this stipulation is reduced subject to the conditions that:

y y y

Offer to the public is not less than 10% of the securities issued. A minimum number of 20 lakh securities is offered to the public and Size of the net offer to the public is not less than Rs. 30 crores.

3. Promoter Contribution y y y y Promoters should bring in their contribution including premium fully before the issue Minimum Promoters contribution is 20-25% of the public issue. Minimum Lock in period for promoters contribution is five years Minimum lock in period for firm allotments is three years.

4. Collection centers for receiving applications y y There should be at least 30 mandatory collection centers, which should include invariably the places where stock exchanges have been established. For issues not exceeding Rs.10 crores (including premium, if any), the collection centres shall be situated at:-

o the four metropolitan centres viz. Bombay, Delhi, Calcutta, Madras; and o at all such centres where stock exchanges are located in the region in which the registered office of the company is situated. 5. Regarding allotment of shares y y y y y Net Offer to the General Public has to be at least 25% of the Total Issue Size for listing on a Stock exchange. It is mandatory for a company to get its shares listed at the regional stock exchange where the registered office of the issuer is located. In an Issue of more than Rs. 25 crores the issuer is allowed to place the whole issue by book-building Minimum of 50% of the Net offer to the Public has to be reserved for Investors applying for less than 1000 shares. There should be atleast 5 investors for every 1 lakh of equity offered (not applicable to infrastructure companies).

A public issue is effected if the issue is able to procure 90% of the Total issue size within 60 days from the date of earliest closure of the Public Issue. and if the rights under warrants or other instruments have been exercised within the twelve months prior to such offer. There should not be any outstanding warrants or financial instruments of any other nature. In case of oversubscription the company may have the right to retain the excess application money and allot shares more than the proposed issue.e.000/. Refunds of excess application money i. The minimum period for a rights issue is 15 working days and the maximum is 60 working days. If the issue is undersubscribed then the collected amount should be returned back (not valid for disinvestment issues). Despatch of Refund Orders y y Refund orders have to be dispatched within 30 days of the closure of the Public Issue. 6.Issue formalities y The minimum period for which a public issue has to be kept open is 3 working days and the maximum for which it can be kept open is 10 working days. Allotment has to be made within 30 days of the closure of the Public Issue and 42 days in case of a Rights issue. If the issue size is more than Rs.or above. which is referred to as the µgreenshoe¶ option. Timeframes for the Issue and Post. y y y .50. Indian development financial institutions and Mutual Fund can be allotted securities upto 75% of the Issue Amount.y y y y Quoting of Permanent Account Number or GIR No. 8. All the listing formalities for a public Issue has to be completed within 70 days from the date of closure of the subscription list. which can be further extended to 30% by an application to the RBI . the resultant shares will not be taken into account for reckoning the minimum promoter's contribution and further. A Venture Capital Fund shall not be entitled to get its securities listed on any stock exchange till the expiry of 3 years from the date of issuance of securities.supported by a resolution passed in the General Meeting. A rights issue has to procure 90% subscription in 60 days of the opening of the issue. in application for allotment of securities is compulsory where monetary value of Investment is Rs. for un-allotted shares have to be made within 30 days of the closure of the Public Issue. Allotment to categories of FIIs and NRIs/OCBs is upto a maximum of 24%. the same will also be subject to lockin. y y y y 7. at the time of initial public offer. 500 crores voluntary disclosures should be made regarding the deployment of the funds and an adequate monitoring mechanism to be put in place to ensure compliance. Other regulations pertaining to IPO y y y Underwriting is not mandatory but 90% subscription is mandatory for each issue of capital to public unless it is disinvestment in which case it is not applicable. Code of advertisement specified by SEBI should be adhered to. In the event of the initial public offer being at a premium.

in the event of under subscription in the public issue. Within twelve months of the public/rights issue no bonus issue should be made. 1 lakh of offer is also waived in case of offerings by infrastructure companies. Infrastructure companies are permitted to freely price the offerings in the domestic market provided that the promoter companies along with Equipment Suppliers and other strategic investors subscribe to 50% of the equity at the same or a higher price than what is being offered to the public. y y y y y y The infrastructure companies will be exempted from the requirement of making a minimum public offer of 25 per cent of its securities. For public issues by infrastructure companies. 10. These relaxations would be applicable to Infrastructure Companies as defined under Section 10(23G) of the Income Tax Act. provided their projects are appraised by any Developmental Financial Institution (DFI) or IDFC or IL&FS. FIIs and employees not subject to any lock-in period. The relaxation would give infrastructure companies sufficient time to mobilise funds for their issues. The requirement of 5 shareholders per Rs. minimum subscription of 90% would no longer be mandatory provided disclosure is made about the alternate source of funding which the company has considered. Maximum percentage of shares. Restrictions on other allotments y y y Firm allotments to mutual funds. . Adequate disclosures about the justification for the pricing will be required to be made in the offer documents. 9.y Draft prospectus submitted to SEBI should also be submitted simultaneously to all stock exchanges where it is proposed to be listed. The projects must also have a participation of at least 5% of the project cost (in debt and/or equity) by the appraising institution. Relaxations to public issues by infrastructure companies. Infrastructure Companies would not be required to create and maintain a Debenture Redemption Reserve (DRR) in case of Debenture Issues. 1961. The Infrastructure Companies would be allowed to keep their issues open for 21 days. which can be distributed to employees cannot be more than 5% and maximum shares to be allotted to each employee cannot be more than 200.