Clear? Yes, yes. Huh. So all already, you know, Jason. Silence. Hello.
Yes, so will be joined dominate
May. Your participants maybe what? Yes. So, quick mail welcome now. Yeah. Silence. Silence. Eva. Eva, Hello. Hello? Hello? Yes, sir already hear me. Yes. Good afternoon. Sir you send me also. Yes, we can see you. Okay. There will be starting soon in a minute or so. We just we are just waiting for the participants. Okay, who else are there in the show? I mean, on the. Sorry, who are all there? Only students. Yes, sir. Only students. Okay. But how will you get to know about me? And why did you connect contact me? I don't know. So, uh, professor asked me to contact you, but how does he know me? The question. So he must have maybe okay fine. That's fine. Okay. Okay. Will be there on this seminar or? No. Yes, I will be. There is the only Hello, sir can you hear me. Yeah, I've already had you, sir. Good afternoon, sir how are you? I'm fine. Good afternoon. I'm not able to see you, but yeah, just a 2nd, sir. Hello? Yes, sir. All right. Yeah. Yeah. No, but I haven't received. Yeah, exactly. Yeah. It's a pleasure to meet you for the 1st time. I will come. Yeah, I was reading your profile on a LinkedIn and I was calling a, and frequently. Okay, if I came to know that you have done a lot on. Securities market and deposit. Very impressive that I read about your. Experience so the thought that if we could have you to discuss, uh, your views and share your views with students. On fundraising, because, uh, it's a very, very technical subject, even. But, uh, I'm making it a little like a lecture, only not as a. Discussion more and more. Yes, absolutely. Yes. Yeah, that is very fine, sir. Yeah. Mr. is a good friend of mine and that's easier to me. Yes, yes, he takes classes for your MV income, right? Yes, yes, yes, we know that. Yeah so I deferred my name to you guys. No, sir, it was me. I'm frequently reading uh. About, uh, the experts, uh, who are dealing with a financial market and financial laws. Oh, okay fine. Okay. It's a pleasure, uh, that we have you, thank you very much for calling me. It's an opportunity for us to share knowledge. And we should be keep doing it because unless we speak, how do we, how do ours. Snow it give it to this is so, let's say that might be idea. Yeah, absolutely. So. Appreciate can how many students are there we waiting for them. The 1, who will run the presentation I will then the presentation or you will run the validation now is if we can make you, you can also do it. And so if you want, I can also run the presentation. I think I would prefer the presentation myself. Okay, because I know that speed I've split, which I'm going and what I want to escape room escape. I think I will run the, uh, or do you call the presentation. If we do it, you can. And I share content. There's 1 optional. Yeah. Why don't you make Sur, cohost and then it will be easy for him. So, you can share. I can share, I will just say hello to. Yeah. Yeah, I'll be sure can we can we start. Absolutely. Okay. Okay. Go ahead. Good afternoon everyone I am on behalf of the center for corporate studies Institute of London. My University extend my hurtful times to all of you for being present on the Sunday afternoon. Today for the experts, we have a personality who has been the division chiefs of secondary markets are savvy has played a role in popular, rising. The concept of demat in India, while being in his deal, and is currently serving as the dean and professor of practice school for regulatory studies and supervision and school for competent governance as National Institute of securities management with a span of more than 40 years. And the capital and finance markets for those tools. Crown certainly numerous is none other than doctor. Riyadh. Sir we are truly related to have you with us. So, we'll be discussing about fundraising and its practical aspects. The session shall be of 1.5 hours, including 15 minutes of qn towards the end without any further ado. I introduced to you the moderator for the session professor, and request him to take the lead and start the session. Thank you. I'm in so you're on mute. Yeah. Hello everyone. Uh, am I audible. Yeah, yeah, okay. So a, be a welcome all of you to today's webinar respected speaker. 1st today's webinar. Dr. we are now Steven bean school of corporate governance and school of regulatory studies, National Institute of securities market mombai students of a Institute of law, nearby university, and member of central studies on behalf of center for corporate law studies. I welcome you all to today's webinar on fundraising and we are honored to have someone among us as an expert for today's session. And I'm, I'm very much thankful to him that he spent some time for students interaction on Sunday because Sunday is quite a busy day in these days. So so I'm delighted to see even the large participation of the students, uh, on this Sunday. The center a focus on study involved in wide range of contemporary, uh, corporate law issues. And undertake, uh, discussions, export lectures to inculcate, uh, and facilitate the students to have a thorough understanding of corporate laws. Financial market and regulatory practices with this objective. Today's a webinar on fundraising is very apt because if you want to succeed as a corporate lawyer and a financial consultant, you need to be well versed with the technicalities of fundraising. And how savy is, uh, making this market. Very much accessible to the to the corporate so, say, we take the initiatives to ease the market accessible to the companies. On the other hand, it also takes responsibility for the protection of investors. Does the understanding of fundraising, and its technicality has become very much important, because it is, uh, almost an interdisciplinary aspect, which is associated with the fundraising. So, I'm sure that today's session will be of great benefit to all of us and all those who are interested in financial laws. I request everyone to be, uh, to please stay on mute. Uh, we will have a session for almost 1 and a half hour to 1 for a 1 hour and 45 minutes. And after that, we will have some question answers, uh, from the students. If they have, you can also write, uh, your issues and questions on chatbot that would be taken later after presentation upset. Having said that I would like to now join and sit with all the participants and not just pass further on your limited time available that we have. So I request a sir to take this session for. Yeah, thank you sir. And a other organizing committee members. Thanks for giving this opportunity to meet to share my whatever I know about the subject with all you all of you. Uh, I'll be taking you through a presentation. Which is put together and I guess if you go about trust and a half hour time. As, as students are concerned, you are free to ask me questions any stage. No problem at all. Absolutely. No issue. You don't have to wait until questions decision. If it is a discussion mode, I may want to defer that. And I will request you to come back, but if a question of classification of a doubt. Please take the on spot. Uh, I was asked to talk about the I didn't want to talk only about because. Fundraising is much more larger canvass and I wanted to take you through the fundraising, the practical aspects. Law you can read from books, not a problem, but she didn't practical aspects. I wanted to bring to a understanding because. Being 1st, you should know all these matters when you go to your law firm to join a law firm, you need to know these words and these terminologies. So I made control practical oriented. For the legal students who are sitting before me in this, that makes me now. Feel free to ask me questions as you ask questions it was more interactive, more lively and more useful. Okay, are you all on there? Hello? Yes, yes, sir. You're all there right? Okay. Fine. Okay, now, what I'll do is that I generally you can take you through. What is the primary market rule of primary market? Create a primary market sometime they should be very clear with. I will not talk about the issue process. I will not talk about prospectus in greater link. I will not talk about which you can read for yourself. Not a big deal at all, but what I'm going to talk about is is the practical elements of. A fundraising? No, what does the private market do? What is the primary market? Primary market is a market in which investor and ensure connected with 1 another. Issue is 1 who wants money for his capital raising purpose for his industry. Investor is 1 who has got money to invest and those people who save money. They would like to always diversify their portfolio. And put money in different asset classes when we say asset classes, what we mean is fix positive class. Board is an asset class, real estate in asset class. Your wake is another asset class commodities asset class. Mutual fund units, plus equal shares and asset class, given in class. Government savings because Petra and. Asset class problem for the asset class, so you are various types of asset classes. People who think that they can make little more money. Are people who think that they would like to connect themselves with. Certain industry in the country such people would like to contribute to this type publicly to processes. And give the money to the investor a source. Sure, so we'll look at this funny because they are, they don't, they want capital. They want only capital and not to loan when they want capital, they come to private market and say, hey, I'm running this industry. For the last 3 years have been profitable wanting to please give me money because I won't take and. So then, 1st feel sure come to the market for money. And investors find that the sure is a label and good enough. They will put money into that industry and that's so be sure. And the investor connected. The marketplace or the process through which. The sure investor connected directly without the, without. Uh, directly is called primary market. And the sures raise the resources to meet the requirements. And printing the understand is, what is the primary market do? The primary market will try to give money. Too most efficient economic purposes, for example. We find that most of the industries are failing. Then wanted to illustrate the time we don't. We go and put our money into deposit. Person's giving scheme, but we find that many industries are doing well. Then you bring the money out of the deposit and give it to the. You get little better returns that is whichever the industry or whichever the activity that is actually working very well. And whatever is actually giving good returns to the people. Such industries, such companies are giving money. When you hear the words, our subscription and subscription, what do you mean means when it's over subscribe it means that insurers have got investors have got a fate. In that particular investor in nature, and therefore they're willing to give money. So, unknowingly automatically. You get what you call some issue or selected for funding. Publishers not selected for running that is a cloud understanding or public understanding and assessment. About the particular issue, or is reflected by. Will subscription rates it is like, say. Some movies there hit it. Why some of these many people go and watch the movie. And some movies, which are not hit, because people don't go, it's not hit picture. Therefore, public will actually pronounce their opinion about a pretty sure. And the line of activity, depending upon what their assessment is. Depending upon the prospect as close as you make, et cetera, et cetera. That is how broadly from the economic purpose point of view. Primary, okay, so the purpose of what is called, channeling the savings into. Economically efficient purposes and more importantly and very, very importantly. They are also unravel the value of the form. Let us say. Uh, well, how many people if you understand value of firms. Okay, we start there line. It's incurring losses do we want to buy the shares of this company or not? Data company Motors. He's not in profit. Do you want in this guy invested in this company or not? Value of the firm depends upon. It's, it's the ability to are potential to generate. Profits in future, not necessarily current in addition to the value that you have in addition to the value of the assets you have. If the company has got a good potential to generate profits in future. Such companies are given higher valuation so when you have got evaluation. It tend to be shared it will get solid handbook database and then. 230 rupees share will be solid to the, for example, is. Company share emphasis, there's values under pay, but it's being sold at that. Why, because people believe that enforces can generate. So much of profit and future reliance is about, I think, 5 or so. What is the value working now? It's only 274. Why did so because people believe reliances can can give you so much of money. So, by issuing shares the public at a particular price, and continuous disclosure of. Discovery of price in the secondary market the PO, process primary market process. Will help in the value of a. The reason why we need a primary market in the country. Any questions okay. I see there are no no questions through the primary market. This is how many was raised until 2018. I did not get the status since later on that. I'll have to update this, but 2019 also fairly good year for that matter. But we're not talking about 1 lack 10216 in. Crowds was raised to the primary market during the year. 201718031 issues came. They should purchase the public at there so there is the money. That shows the importance and size and volume of the market. Uh, when you are talking about the primary market. Please understand that to put the interest of the investors and promote development English. The promote the development of the market, we generally regulates the market. Okay, so when you say regulation in the market, what it means is that. The process is made convenient. Investors, we have some method of their grievances if any. All the intermediaries have to behave responsibly. And adequate disclosures that is. Information required for making an investment decision should be made. Available to the all the investors this is not exactly regulated. Is. There's 1 era before error control of capital issues error. During that time, during that time, how much money to raise. Price should be should. When should there is the money for what project there should there is the money. All these things will be decided by government itself, government made they were going to clubs who sit there and they decide whether a company should raise grows and grows. This should take money in September, whatever, all that they were deciding. But after Sydney was established in 1980. Body after that, the whole thing has become. What they call disclosure based era they they have is should the disclosure guidelines? 1st. Which has become regulations now and then. After the regulations have come into play the price discovery what price issue should there should be should. Is now completely left to the public itself public will do what is called a book building that is public, but what price they want to pay for the share. Based on which the monarch prints have done and what it says is what, uh, the, what Soviet ensure is that. The company, which you want to raise money, they sure who wants to raise the money. Has made all the disclosures required in specified format. In the given format, we will have to disclose all the details that. People would like to know, and based on the information that is given to them. These investors will take additional, whether they should invest in to the. Company or not, they will talk about the promoter. This model they talk about the revenue model, they talk about the past history, the business. That over the market of the company they talk about technology is a company. They talk about the litigations if any about the company, they're talking about risk factors the of this business and so on and so forth. That's all the information required for any person to understand the business. All these are disclosed by way of what is called a prospect is. The prospectors, uh, has to very clearly disclose everything. And in case, the disclosures is not good. Savvy will say sorry. Your disclosure is not adequate, make the disclosures and come back. That is a prospect is will be written back. Without having approved, if every disclosure is made and said, he says, you can go to the public, they don't say approved, but you can go to the public. The disclosure is not adequate said, he will say, you can't go with this prospect. The prospect is defective. That's what they do it. And then, uh, uh, there are no surprises sections at all. If somebody wants to ensure 10000 rupees, it's your choice. If you want to say, 10, repeat share will be doing it it's your choice. There there's no price section at all subjective provisions of companies that. You can go for any amount of pricing that you'd like to do and the price is discovered by way as what is called of that book building. For price discovery, but building process I'll talk a little later, but. The broad indirectly any questions please. Hearing me yes. Somebody can you no questions. Yeah. Perfect. Okay. Now, what are the various fundraising options that. A company has when he wants money, when he, he wants money. He has too broad as he can raise money from within the country. He can raise money from outside the country he can for. In the country, he can raise money from outside the country. Within the country, he can issue that. It could be or hybrid from our securities. There are 3 types of securities. Debt security equity, security, hybrid security. Let's understand what is the executed? What the debt. There are issue of bonds pinchers. When you take loan from banks and financial institutions in a simple loan. You'll have it. They'll give you a oh. Where is born. With our for Phil, and each person is subscribed to so many boards, and each 1 will come with a specific base value. And every bond the bond, maybe which some debate is later on. So, you can issue a public call, you will go to the bank and finishes. It should. I think that will take issued images and bonds. Then, a credit rating is a requirement in our country. That is some 3rd party agency called as graduating agency. Will evaluate your company will evaluate your financials your company they will evaluate the purpose for, which are going to. Raise the money, et cetera, et cetera, and then decide whether you are a good person to be given loan to, or not. That is they will call you triple a W. A. B. C. D. And there are some 4 types of there are 4 agencies in the country. Each 1 has got his own methodology, so somebody called them as the triple a. Somebody says people plus people to and so on and so forth. So. They have got they were nominal schedule for that, but they will give and waiting for your company saying that. Learned to play company, went to play a company or the best company in terms of. Risk in terms of returns in terms of reliability or a very good company. If you are a grade, a degrade rating, it means non investable. Great. You can't invest into that. Investment it all because we will be very risky. That's an aid today. They have got. Within the I want to play and then the 3 categories within Excel. So, based on which people will get to know. A, 3rd party, who's not invested a 3rd party was not regulator a 3rd party who has a professional capability of assessing the value of. Any form, or any company they make this particular kind of it. That is how the, the, uh, public issue of bonds and diminishes are allowed if somebody wants to make public issue. Yeah. So, what is the basis of credit rating? How does the creating a credit rating agencies? Data? Mine. The agencies, they take the financials, the leg, the background of the promoter, they take the article. Information about the company, et cetera and on the way and then purpose would be they're going to raise the loan also examine. And they take the past history based on what they do. Take a view, and they will make a presentation to certain experts market experts. Every cultivating agency will have got. Rating committee, and this rating committee will have several, uh, experts, for example, this company is going to be insurance company wants to raise bonds. So, people who know insurance business will be there in the committee. People who, like, they say, somebody like, in this, suddenly we want to take race. Place money, so people who know they'll be there in the committee. As financial experts, legal experts, sector experts, all these people are. Will be there in the committee they sit down, or is going to be the committee expert will not be known to the company, which is done. Uh, the internal officers of creating agency will evaluate the balance sheet. Evaluate the business model, evaluate the promoter, evaluate the historical path. But as past of the companies, I mean. A greeting after giving a rating, they keep monitoring the company in terms of how it has been performing. Well, then whatever the purpose service they're taking money is properly spent or not. And the profitability is as per the expectation or not, they will see that. And they revise the, let's say somebody was going to play. It can be given as double it can be given to the, a, and so on and so forth. In the recent past DHL was doing a triple a, and suddenly it felt. Why did it happen? Whatever happened so we take a take took it serious. You and said people have given the credit rating. They have not done a good done. Not done a good job. And therefore, that imagine that the was questioned, and he was suspended. So that kind of a checks and balances that. Do you answer question? Thank you. So did I answer your question? Yes. Cool. Thank you. Okay, fine now we have equity equity is a risk capital. That is a part of capital itself what you mean by equity or what do you mean by capital? It means that you are actually owner of the company. You will be like, owner of the company the company wants 100 core capital. And the promoter are a person who has initiated this business has got only 40 close with him. He will go to the public and say, please, give me 6 takers. I want to do this business. And he will tell about his business, he will tell about his background all that stuff. We tell. Depending upon how much anybody is convinced all of us will do, but the 40 close, plus 60 close. That's so business will start. What is the purpose of? What is the feature of. A capital, when you have a capital. A risk of business will be activated to the owner. The business is very successful all the profits will go to the owner. If the business is failure, the capital will get lost, let us support for a while. I had 20 libraries with me. I wanted to start a taxi business. I wanted to do the tax, the business I purchase the. Beautiful to a business trip to design cars. And I've integrated port us up could can project here and suddenly. Because I started my business March 1st. February March, 23rd, the code came in and therefore my 2 taxes was standing in the garbage. They could not go out at all. If the not run, it does not earn revenue. If it does not end revenue, I will not get profit. If I don't get profit by cap, then I like to pay the. Uh, drivers add to still maintain the car. Add to pay rent to the carriage. So where do I do all this from? Since I am not generating any revenue by sending the taxes out. Taxi Carson standing the s*** and therefore I had to pay money out of my own. My own capital, my own personal money, I have to keep on chilling down the money. For 6 months after lockdown is gone, then the taxes will start running, they'll generate revenue. So this 6, 8 months time, I had to. Fund the driver salary, maintenance, everything out of. My initial capital at 20 lakhs rupees. From 20 lakhs rupees I spent about 15 laboratories towards 2 cars. I had file is now from the file. I have spent for 6 months salary, guide arrangement, etc. It has taken away some folks for lack of it from me. How much am I live with now? Only 1 lack of if the logged on continuous for 2 more months, I'll be bankrupt. Then what will I do after some time? Let's say extended vendor 8 months what happens? I will sell the car. I will say the 2nd card all that is gone. All my money is out. This is what exactly capital is the risk of the business will go to. On the other hand I am having I'm having a sandwich making activity with me. And I also cooked some good at my kitchen. And, uh, during the log down the takeaways alone. Since takeaways allowed, what I did is instead of buying to taxes, I purchased for motorcycles, employed for boys. I started doing home delivery business. And then is a strategy, and therefore I make a lot of money, I could pay off all the installment or for motorcycles. I'm able to pay the commission for the. More cycle as I'm able to pay the salary for the chef, the cook. Everything is going very well. I'm also making good money. I put a card for myself. All that is my money, because my capital has started working. Well, for me. So, capital is something we can attract the, what is called as ownership risk that's called equity that's called. Uh, risk capital, that's what we call the seed capital. The capital can be raised through initial public offer. And the 1st time, when you go to the public, or you can do what is called a follow on public offer, that is. You can take money for the 2nd, time for the market by doing what's called the fall 1 public offer. 3rd type of thing is called tissue right? Tissue is. When you want more money instead of doing that is. Fall on public offer, you will go and offer shares to the existing shareholders. That's called the right issue. Most of you must be aware on the company's it. So, I will offer need for my money capital to my existing shareholders. They may subscribe that becomes rights issue or 3rd 4 1 is called a preferential issue. What happens is there is in the case of rights issue, or if people. It is necessary in practical terms, which necessary that the business is very successful. Assuming for a while I was running this taxi business. Those taxi, I'm not able to generate any revenue. I need some more money because lockdown is extended by 6 months. I will ask the shareholders to give me some more money. Do you think they will give. I don't think that yeah, well, yeah, that I will not give you. But I believe that after logged on, everybody will start going. Therefore, I don't want to do. Sell my new cards, then what I do is, I will go to some identified a good friends of mine. Who believe in my capabilities and my business, and ask them to subscribe capital. Under the law, whenever a company wants for their money. They have to necessarily offer to the existing shareholders that's called right? Section 2, 2, 2, 3. Check in the companies that but. Incident circumstances when the existing shareholders are reluctant are not willing to are. The time are available for me to go to their existing Gerald, is is not enough. I will do what is called preferential that is I offer. On a preferential basis to some identified investors to subscribe to my company so that I get funds and company starts working again. So, this generally kind of a resurrection or kind of a support financial support. That's so preferential issues also done the 3rd cases. 3rd 1 is called as hybrid forms. Hybrid forms usually are convertible farms securities. What happens is, you must have heard the name. Convertable preferential convertible Ventures. Did you hear these words? Yes, sir did anybody. Yeah. Is. Uh, exactly optionally convertible differentially differently. Ventures. Actually, convert double preferences, et cetera. What happens is in the initial phase of a business it's. Everybody had a doubt whether this business will be successful or not. But at the same time, they don't mind associating with their business because they think that if the business is run well. It can make good money. So what they say, they show the investors will say. For the 1st, 3 years, I will give money as a loan to, you. After 3 years, I will convert my loan to capital and then start participating in your profits. The promoter, all the founder of the business also find is very convenient because. Uh, initially he doesn't have to bother to explain because these people cannot question so long as. He's able to pay interest, et cetera, and therefore, for the 1st of 3 years, he doesn't want to keep answering the questions. He won't show business only and he'll pay keep on paying interest. Today. The venture holder. After 3 years, when the business is, will sit in doing very well. Then he will convert the devices into capital, then they will also come and tell their owners of the company. It's called the convertible instrument. Converter management could be either preferences share or adventure. This is also 1 way of raising the. Forms in the country, any questions on fundraising in India. Okay, then we'll go to fundraising from outside the source. Outside the country also, there are many investors who have got money to invest. And they take what is called as a view on emerging markets and markets. Persons living in, say Dubai persons living in the U. S. Versus living in the Japan versus living in Singapore. People are from Indian origin or whatever they know more things about India. They don't mind investing into India. They won't be English. Yeah. Excuse me success? Yeah please. So, uh, we can see your screen if it. Is that yes, so we can't see the. I'm surprised I, you did not tell me all this time. So, should I share the screen. On behalf of you do that do that do that? Now, is it visible? I stopped sharing it then yes, sir, it's visible now. I'm sharing it, or I'm sharing it rules, sharing it. I'm sharing it, so okay, then fine. So, we are talking about the outside in the situation. That the people who want to take a position about India, they may lend to India. They have 3 options there. 1 is called. External commercial borrowing. Borrowing that ACB is regulated by the bank of India. Their commercial boring is a boring very clearly just like loan that we take from banks and financial institutions within the country. You can borrow from institutions or anybody outside this country. It is possible subject to federal regulations. That is simple. Boring. Or you can issue what is called less equity. In the form of there is American deposit receipt. Our global Depository receipt my dear students. You should understand. That you can't issue SHARES outside the country. You can issue shares only within the country and even if you issue SHARES outside the country. Other countries may not like to trade your shares in their country. Therefore they will not allow. You're coming to their country either, depending upon each country, every country has its own rule. Some countries allow, for example, America. Are you referrals American shares to be sold in the Europe European country? Like. Germany or France are UK and you gave me hello? You get companies to be sold in. America may not allow indeed companies to be sold on their share cases. Quite possibly. Or they may allow only some of our companies to be sold, et cetera. Each country has its own style and method of regulations. What happens is when that is not possible, but. They want to invest in their equity because the liquid is doing very well in the equity. Let us. Running a total of about 12% 14% per annum. And, uh, in that country is about 2% 3%. Investors in investors have Australia, and most of Japan may want to invest in India. I will let do it. To help them invest in this kind of money. What they do is, uh, they have they provide an opportunity. That is let us assume for a statement of India wants to raise money from outside the country. They will appoint a depository. Are a custodian to whom they say, I will give you 1 core deposit. Equal the shares against which you keep the. 1, glory credentials as a deposit with you and against, which you will sure. Your receipt it says, okay for every. 10 shares of statement of India I will issue 1 receipt. Okay, so far how many will be that? Will be 10 lax receipts this 10 lag receipts are sold into the market. And the receipts are considered as securities issued in this with specific country. So, those I will keep telling me in their country. At some point in time, some investor will say no, no, no, no. I don't want this. Receives anymore I want my shares and that type. What happens is. He will send the deposit receipt and when he started his deposit, he 7 does 20 deposit receipts. 1, deposit is equal to 10 chess. 22 is 200 shares separated to his account. The 200 shares can be sold lonely in India. The person will take 200 shares from deposit 3 and coming to India and sell on the stock exchange. Let's call it the deposit receipt method. American deposit receipt is something issued in America. Global deposit, the receipt is something which is within the usually shouldn't. Luxembourg or London market that's 1 area that we proxy that same article substitute way in which equities issued outside the country. This. The 3rd 1, is that. There are again for comfortable bonds. Uh, comparatively convertible bonds are actually convertible etc. They work on the same principles like what we have in the hybrid securities. Next slide any questions. Okay next slide. Okay, the question that comes up is. Whenever it sure wants to issue shares to investors. How does he do? What can he do for this? Assuming for a while, we had happy mines we had, uh, got some issues 3 days back. Also. I'm forgetting that name. Okay, so right as I'm taking a happy minds, because that comes to mind immediately. Happy mindset investor any sure he wants to. Uh, invite people to. How does he do it? Where does it go and ask for chess? We'll go to every. How does he know who's an investor at all? And what are the investor? What is that? You're going to confirm it? Information should be given to him. And worst part of it is, if he comes and tells me saying that company. Will you believe him with the unless I believe him. Therefore, there is a need to connect to insure the investor. For that an intermediary will do the role of vertical connecting is your investor. He will say I want to raise 1000 quotes for my project. And I'm going to manufacture in this country. But the, I want 1000 crosses capital and, uh, uh, I, anybody who wants to invest in this company can invest. So he will say this is also looking to invest in so I kind of just because a good opportunity. But investors don't know who they sure is. It sure does not know who the investor is. So, intermediaries play a role here there are different types of intermediaries and come to that in the next few slides. This is ready to correct issue or investors. What is the next few is what are the various questions that ensures have in their mind? What are the service of intermediary they do and what are the issue? What are the rules and. Views about investors I'll talk to you in the next few slides next slide. Please. Any questions in this okay, next slide. Okay, so. When you talk about assures there are 2 types of assures. Called as unlisted company, and another is called is listed company. So, unlisted a company is a company, which is not listed who shares are not bought and sold and. I also need money when they also need money. They also have to. Please share here and there all the is required for them also, for example. Zomato sergaid are they companies destroyed the stock exchange. No, but do they do don't they need money? They do. Where the why they need money they have to have their brand their to pack so many. Article kitchens that to talk to so many hotel hotel people. There will be some network of people that recruit the agents. Uh, agents are going to deliver the full stuff to people, et cetera, et cetera. It means a lot of money required. And if they have to if and have to have a good good, uh, business, they're to spread their work. In all the terms in the country to go to all the towns recruit delivery boys. Identify good kitchens it means a lot of effort on their part, which, which requests a lot of money. Even the listed companies also require money. There's no doubt about that. Similarly company, which are already starting the stock exchange. They also need for their money or people who want to just list about the. List themselves in the stock exchange also had so many preparatory works. So there are 2 broad types of companies issuers called listed companies and unlisted companies. I'll come to them in detail a little later next. As an intermediate as concerned there are no, no, we are saying the site. Please go back the. On the Internet is concerned, these are intermediaries generally work in any issue fundraising activity. Much and bankers syndicate members, underwriters oriented agents, depositories and stock exchanges. Now I talked about each of them very quickly. What does the merchant manager do? What a syndicate member do. What does that do? What does our agent do? What does the deposit redo? What the exchanges do. Let us spend some 5, 5 minutes on all of them. Um. Martin, let's say, I told you that a company wants to. Uh, tell about itself and invite investors to invest money. No, I don't know. There's a good picture. Surely. How many of you have seen that are? No, you're all. But there are 2 friends. Okay that means that I wanted to marry him. So that he sent me that, but and his friend. To mother of that table Ali to tell about this. Hey. With a check. Tracker type. The the degree the come N*** type. Okay then he says. Can be very important. Okay. And any secret period. Do you agree with that many? There was good. The Diana fabulous coupon or. Then it for that. That is your about every aspect about this. Who is selling is saying, I would that budget is being the intermediary. And describing the by to the mother's investors mother saying that, okay, this is the quality of the person. Interrupt himself saying it similarly, I will myself. As a very good interpreter, it's not right to say that. I'm good. Somebody else has to say that I am good. And that's that saying good should be based on. Fact, finding what is called a due diligence I'm sure all large students will be understanding the word due diligence. Martin banker is the person who conducted due diligence on the issuer. And verifies all the facts that. The sure is claiming in the prospectus in the prospect. And offer document or replacement document, whatever that is called, they describe themselves in so many ways. All those facts need to be verified by somebody, and that somebody's calling the mentioned banker. In addition to this bank, and also does some other jobs like. He will have to have some lawyers verify. The legal aspects of the company, he will have some accountants to check the taxation aspects of the company. They will have to organize brokers to sell the shares in the market. And inform the brokers about what good and what bad about this company. They are to help the sure appoint the. Our transit registers and transfer agents. The underwrite the budget bank and have to help what is called as appointing of underwriters. Who is an underwriter and the right? There is a kind of a I should I shouldn't given giving agency. What it says is, let's say, 100000 to the market under it says. You will get 10000 cross in the market. If you don't get I will pay the balance. So, when you, I want to why it doesn't grows. I go to the market. As we will do subscribe, I got only 850 gross. The balance of 150 closely paid by the writers, they will subject themselves. Or I got 1500 close. The underwriter has no obligation. So, under will assure that the subscription be done. To 100% of the issue, that's what directors do. So my bank and have to do due diligence and so many other aspects. With respect to assure and tell the regulator and tell the investor saying that I have verified all the background of the person and whatever is claiming the prospect. Is it true? That's what exactly merchant manager does. Then underwriter I told you already there. I showed that this happen. There's something going to syndicate members. Syndicate members are, those are registered brokers. Who will accept the application for subscription? From the investors from the investors, the active, the application and upload into the stock and system. Not every broker is allowed. Some brokers are selected on those brokers are given ability to upload. That is. Put the transaction, or the, the application on the computer system of this stock exchange that's called cardless syndicate member. Then recent agencies person who will receive all. Whereas the syndicate number will upload the application. So the stocking system. And register in translations are those people who are. Download the application forms and keep them ready for allotment purpose. Assuming for a while for a 1000 clothes, I got 1500 rows. What the obligations. How do I allotted? How do I ensure that the shares actually are given to the Depository account of the. Allotted applicant how do we ensure that I will give the money back to the shareholder to, for whom. I'm not allowed to chase all this activity. Service activities are done by what is called today. These are and. Will work on behalf of the sure or the company. To see that the shares are a lot of shares are created to the accounts of the. Shareholders and money returned where money has to return and money is given to the company for to the extent of allotment is done. That's what agent does and depositories are those. Now, most of you are available through students, all of you around 30 years age now. You may not have understood a scene what is called as a physical indicate. Now, everybody knows only about Depository based share certificates. What happens is Depository is a, an institution. Wherein through a Depository participant mechanism. Accounts are opened for all the missus. Who are interested in investing in shares and whatever the investments they make or what are the shares and divisions they purchase. Those SHARES individuals are created to the account to open for the invoice. The deposit system and account is kept for the investor. Please understand, because it very easy like a bank only. Whereas they gives her bank to have an account of your money. Deposit is like a bank of for your securities, like. Shares and dimensions, so individuals will keep their chairs and adventures in accounts. Deposit the system, so, deposit are also very important institution. Pricing process and stock exchange also important role. For all those companies, they want to list on the stock exchanges. Stock Exchange is provided what is called as a market for secondary issues. That is a purchase shares in your company if they want to sell the shares. They need a high marketplace where they can sell and the marketplace where they can sell their shares is called in the stock exchange is the place where. Investors who have got allotments from the company directly. Will be able to sell it to other investors that is investors to investors interface will happen. What is called. Stock exchanges this is various type of intermediaries that are involved in it. Public issue fundraising process any questions please. Okay, I hope they have no questions. Then I'll go to the investors, what are the types of illnesses we have. Even invested variety of investors 1 is called less. Non institutional investors and institutional investors. When you said, non institutional investors, we talk about households that is you and me are non institutional investors. That is we, you and me, I mean, as simple as that any individual is it. Retail investor household investor within this non institution with category There'll be some. Public companies, private companies who want to invest. As a company, and not as individuals, they are also included in our institutional investors category. There is something called an institutional versus category. I forgot to put the year. Institutional investors category is category wherein. You have mutual funds portfolio abandonments services. Foreign institutional investors, financial institutions, et cetera, et cetera. They're called institutional investors. There's 1 more category called as qualified institutions. Qualified institutions are institutions which are recognized for their ability to. Assess an investment in investor's called qualified investors. For example, a mutual fund, for example, a bank, for example, a financial institution. There are called as qualified institutional investors because. They know how to evaluate their business, they know how to value the promoter. Then how to evaluate it business model as such. And based on with, they'll make it list for the current qualified institution, was they have. Ability to assist the issue, therefore, call qualify institutions. There is something called the foreign investors people who are not India. He are coming from the country, they also can invest general country their corporate foreign investors. So, we can talk about 3 eyes. We're got insurers. Listed listed companies intermediaries that's the merchant bankers indicate members underwriters. Aren't the deposit and exchanges investors investors. Solution investors, institutional investors, qualified investors and. For him is social, but I do, we have any questions on this please. Uh, so, yeah, please, please explain again what who are last indicate members. Okay, syndicate members are registered brokers. Appointed by the sure to accept the applications from public in general. For example, in in. There will be 10 routing officers, but not all 10 broken offices are to accept the application funds. Only 1 out to that, when you are allowing only 1 or 2 of them, they are syndicate members. That syndicate the public issue process. They will accept your broker who is not syndicate member mails, a particular application, but he has submitted to me. Syndicate member, only there is syndicate member is authorized to upload the applications and. Stock Exchange system or upload to this day into the public issue system. Okay, that's what it's going to get them really be. Registered stockbrokers registered with any of these stock exchanges. Before it is, did I answer a question. Yes, sir, thank you. Okay. Next slide please what a next step is. Okay. Now, we have seen, what are the various, uh, 3 ice we have generally brought the same. Now will come to these shows investors when you make a public issue. When you make it public issue for a investors coming into that. Of the public or public at large can invest in the public issue. That's the public issues I initial public offer are a follow on public offer. That is, I will decide different initial public offerings for. The company is coming for the 1st time to public. Life in just corporation in New York life insurance coverage of India. It is all though it is about 70 of the company. It has not raised money from public so far at all. Now, next year we have heard that couple minutes to. Finance business saying that he should be listed, et cetera. But when unless is going to illustrate, it will come to the public for the 1st time saying that I want I want money from public issue public. Chase the public, so then all the public will apply. So, see, there is a very old company. It is coming for the 1st time the public there for initial public offer. Whereas GSC of India, dental insurance corporation already issued chairs about 3 years back. They want to increase their capital. They have to go for rights issue only. But the capital required is so much that price issue may not be sufficient for them. That is not sufficient for them to go to only existing shareholders. They will take special permission from the shareholders and Debbie to come from. What is called a follow on public official public offer. There is 2nd public offer a 3rd public offer. This quarter that followed public offer again in this case, public will be the investors. In the right tissue only is it your journalists can be the investors. Only exist here can be the terrorists. Preferential issues referential issues. No, you will have I didn't fight individually. Specific preferential issue is a situation where. The company will identify that an individual to subscribe to their chest. When you say individuals, I include the entities also of course. The identify Central, just specific parties to subscribe to the capital. So that's core last preferential issue in all this in the, in this next block. Preferential issue private placements are equally qualified placements. Issue or deposit received the various types of other issues. A various types of investors that can come in in private placements. It. There are implies I'll tell you what private placement is. In the kind of preferential issue, it is also private and because they have identified a few people to whom they make the. Offer in the private placement after Sahara case was issued a condition has come in. Private placement is fairly well defined now in the law privately. It will not be 4 or 5 people it up to 200 people already identified very clearly. And only 200 people are invited up to 200 people are invited to subscribe to the shares of the company. It is called as a private placement difference between professional issue and private placement is. In the case of a preferential issue, the company would have taken shareholder's permission. To issue shares to some specific named set of people 5 610, whatever they are. And they get a private placement, they have a permission to. Issued to any 200 people that is people are not identified specifically, but private placement is done that way. And when private placement is, then it could be done for it can be the private placement can be done to individuals or corporate, or. The 3rd category is called a 30 equity or a. This is again a very important area sweat, equity, and ease of subtitle, different certain, for example. I'm now trying to work on call with Jackson. And my mind, I myself, a very good, a scientist. And I was 6 other scientists friends with me. All 7 of us have worked for about 3 months, 4 months day or night. And now we have identified a very good vaccine for government if it will work very well. What did we spend all these days? We spent our time and maybe some little amount of when to turn on. The lab equipment, etc, but the, most of the time we have expanded only our brain, our efforts and intelligence. Now, at this stage, now, the covert accent has been successfully invented by us. There are many people who say, no, we would like to manufacture discovered vaccine now that you have invented it. Please give 3 rights to me. Are we 7 people ourselves would like to now start manufacturer? Nicole we license. When we want to manufacture Coby license, so we want missionary, we want distribution capability. We want so many other things that that we did not require when we were a lab phase in the lab we have to identify idea was only to find out. The, the vaccine medicine itself. But once I want to manufacture and distribute it request 1 thing is, you. So the biggest scale that they will pack, so it's not become. Terminated not really good. It has to reach the people within the expiry time within, which it has to be administered. It has been saved, kept safe in refrigerator, etc. And where to tell the distributors to sell the covered vaccine, where to give commissions to them, there is business comes out of it. So now, we know very well, that cold vaccine once we identify it good to be very. Profitable business so what will you do now? I go to the bank and say. Me and my, I go to the banker and say me and my 6 friends have I invented covered. And please give us some loans so that we can start manufacturing. How much you want? I will ask, but. What what is the investment that we have made me? My friends. We have invested what is called sweat. So, again, this sweat again is the hard work. Will be a lot to share as our capital when you go to back for a loan. It will say, what is your contribution and what is your seed money or what's your margin money? At that time, we will say our margin money is our effort. And our effort, we're valuing it as say. 30 40, 47 we are 7 people. So, we are tending to why each 10 course what 70 across the value of our invention. You give me 200 cross total to 70 crores. Are the total warranty cross toned and cross is the cash capital. 70 crosses the intellectual capital, which is called. Just for the equity employee stock option also, based on the efforts of employees. But not, this is really for a startup kind of situation. He's running company where, in order to motivate people in order to motivate employees and make them partners in the benefits of the company, profits of the company, he's ups are given. Share these implies are allowed to buy shares. Today price, which is generally it's likely discounted to the market price. And they're allowed to chase to them, and the shares are purchased the employees when she has purchased by employees. They become shareholders of the company being shareholders of the company. They will get a profit share also. And other shareholders, they would like to increase the profits of the company so that they also get. Increase the share the profit that's an ESOP issued again. In this case, individuals will be the. The investors in this case, qualified, institutional placement, I told you. There are some people who are qualified to be able to. Assess an issue, then qualified institutional buyers delivery investors. It's quite possible that professional not 20 or sometimes what happens is. I'm not a user company yet. I have not had gone for listed company. I have invented the corporate vaccine. I don't go to the bankers I go to the is qualified instituted by us and say. Yeah, I yeah, I'm good. They say, yes, we'll give you a equity and they will look at our project. They'll look at our inventions, et cetera, etcetera. They will give total close to me is the banker, then they go qualified institutional placement or qualified institution. By it that's so it's called us and ensure deposit risk receipts. Then it is done to the foreigners who cannot buy shares directly in our country. For them, we should the deposit receipts. That's not exactly the. Various activities up, it just scared the slide clear to, you. So, yeah, please so, could you please explain the difference between preferential issue and private placements again? Okay, the differential issue and private placement both of them are in a way private placement only. Okay, there is there's no public invited to that. And to the extent, they can be called as private in placements. But in the case of preferential issue, the company would have taken permission from the existing shareholders to issue shares. To specified and the identified setup people. That is possible solution saying that. Mr. Mr. Mr. D. will be invited to the chase. Only this code can be subscribed in the private placement, shared as we go to the shareholders and say. My dear shareholders please permit me to place the shares to some private people called people any 200 people. Who maybe will link. So, therefore, what I do is instead of giving the names of 4 people. I will take what Michelle the shareholders to build place it privately to some people. And I then would invite able to subtract measures. In together, provincial shares, usually prevention issue substitute for. Rights issue private placement can happen either by a listed company or unlisted company. It was happening with the company initially to come with a private placement. Then it has get listed in the company. You privately placed the people. And whenever they list, they will list they when there's not at all. The private placement can happen with listed and listed companies. Preferential issue is specifically reference to little companies only. In the case of preferential issue, identify, people only can be invited to shares. Whereas we get the private placement identified, but not. Approved by the shareholders identified by the company, they can offer she has up to 200 people. That's what it is. So, is there a maximum cap on people who can differential issues. Uh, usually there's a cap is by not necessarily by a number of people. And it's not in practical terms. It cannot be many people only a few people will be. But, uh, invited to subscribe because only a few people can understand, and usually the sense of urgency, the preferential issue therefore, they will not go to. 100 people there go to 5 6 people take money in go ahead in life. Thank you so much, sir. Yeah. Next place next slide. Okay, uh, now we have to understand it in words. Let me just give me 1 minute please. How do you place your private issue? What do you offer of what you tell the people? How do you tell the people. You will create what is called the placement document. You will make a quick call to the placement document. Placement document contains the details of offer. Okay. So, private placement is a a private placement. Private issues done placement document, there's offered up given. Placement document will have various facts about the issue. That's called placement document in the case of rights issue, letter of offer issue to the shareholders. Based on, which they will subscribe and they get the public issue, they will have to produce what is called. Prospectus, the prospect has got 2, 3 stages. 1 is called as a draft, a red heading prospectus. Black prospectus and prospectors that these cases are there. Nah, I will not be confused. The only 2 stages draft reading rendering prospectus. And prospectus, there's no difference between prospectors and draft rendering prospectus. But prospectors will not have 2 important details in that. A number of shares to be should be. Pricing, which is going to be showed this to are not set, but all information is given in what is called as a or draft a red herring prospect is that red herring is a name of a person. Who has thought of this concept other than that nothing great about this draft prospect is we'll have all the information to the prospect it should contain as for the companies act and CBS regulations. But only thing is since the price is not determined. This is a very precarious situation. That is the same that is coming to public. They want to take 2000 calls from people. And we also said that the price of the share will be decided by what is called, like, the book building process. Book building process and bidding process building process. Bidding process that is for the same element. Each 1 will say I want to pay so much money. So LLC Garcia Kelly. Mr. A big piece, which is the right price in this. We don't know that it has room for a while. 25 is accepted the right price. And your day 2000 course what happens is 2000 growth divided by 25. we'll remember. Is going to be 45 days. It will be 2000. plus 45, November is number of shares to be issued. Is it it will then close with 50 will be the number of shares to be sure. So, in the prospect is add right only a fraction group. Can I know right Kenny now, since the price of the share is not decided. I cannot trade the price of the share. I cannot rise the number. She has to be issued because both of them are not there yet. So, in a prospect, as if you look at the 1st sheet, you will say. The public are invited to subscribe to. Star number of shares at stock price. You'll find 2 stars there and then that all that information will be in accordance with the companies that. That's called rendering prospectus after building is done. After bidding is done price is fixed. Then 1, more prospect is, is return it's called the draft, the prospectus where. There right the price and number of shares somebody to city. Somebody says, okay, then it becomes prospected that you file with. I have a list of companies that is called as a document for public issue. Now, in the case of a private place, in case, the offer type. Private placement, or or preferential issue or equity. The document to be used this place, the placement document, only. They can have rights issue. There's only 1 rights issue. There's not a variety there for nothing about it. Offer tag public issue can be either or if you have a discussion about already. Investors in a private issue can be a bank, a mutual fund promoter. In together, right tissue only exists in Harold is gonna be the investors. And you can get a public issue public at classroom with investors. And then in the private issue, the processes. Security that offered subclavian listing. They have the rights issue sexually offered. In the case of the public tissue processes. You have to have a draft of a document. And you have a book building process. Then he had to accept the offer a lot, the shares and list. That is all the snapshot of the various processes. Next please, next slide is. Yeah, this is an important slide from leaders who are in point of view. You should understand this very clearly. Any issue whether in front of the type of wishes have talked about. They're all legal processes there's something going to offer and acceptance. Okay. There's an offer and acceptance we have got to go by that. That dragged the provisions of the companies at the terms of issue, binding on both. Sure, and the investor, once they have agreed to that. And terms that we can be amended only with the consent of security holders. Assuming for a while I made a private placement or a, I made some offer. In terms, and conditions that accepted in their subscribed. If they're subscribed it, and they want to change it in terms, for example, I should fire born. Now, I want to make the bond to make it 5 to 8 to have to go to the. Folders to the bonds and take the consent therefore, without that we can't change it. That's important point to understand and then. If you want to issued the public sip terms of issue, or supervised by stock exchanges, and or both, that should understand very well. And then the capital structure you are talking about, will be guided by. Uh, securities laws, and it's a capital sector. What I mean, is. How many mutual fund what is the amount that can be allotted to mutual funds? How much can reservation to be employees how much can be given to foreign investors? How much has to be given to the promoter? How much has to be go to the qualified institutional investors how much can be given to public. How much should promoter hold all? These things have to be are guided by securities laws. And I see the are regulations. We are referred to them when you're sitting to write a draft document in a legal form, you have to read all this, or understand all this. And then when you're talking about the showing shares to foreigners, you have to understand about. From our end of day notifications, you should understand the FEMA and you also understand the notifications. Based on, which you can think of the private placement to foreign investors. And finally, whatever you are doing, the regulator will always look at fairness to investors. I will discuss all the facts and are you fed to the investors will be the question that. Regularly comes to keep coming to the regulator's mind and anybody is going to scrutinize your. Activities the various legal aspects for to understand. Is this clear is any question on this next line please. Okay, now a company, maybe by registration. Public company and the public company, maybe unlisted public company, or listed public company. Even and unlisted public company also requires money. They go by what is called the private issue. It's not, it's not private placement. It is not privileges placements. It's a private issue it is like a private placement, only from the technical point of view. Private issue private issue is the issue shares only to some. Set of people, a celebration of people. They can't go to the public. They can only issue 2. Some, I invite shut up people when you try to issue shares to private. People it's called private equity. You must have private equity most of you, most of our private equity. So, private equity, or those equal shareholders, or those investors. Who invest in a company wait for some time until the company searches. Well. And once the company central swell, they may want to exit the company and they take profits along with them. Valuation of the company's improved through private equity parts vision. 1, the evaluation, this is the maturity stage, then the private equity place will withdraw their money and they make good amount of money in that. For example, we must have seen 1 issue. Caller can issue. Ca MS. camps and external regions they have come into public issue recently. In that national stock investor about 40 close rupees. Now, cancels not listed all these years. They wanted so many national stock issued some 40. And for the line with them for last 10 years, now, cancer's gone into public. And there we should allotted shares now to public. After the part of that also offered it shares to the public. It has to do it, because for some regulator reasons now, 40 dollars worth their shares. Had been sold, like, 2000 of chips. 40 close 22, 2000 course what the profit made with the National stock exchange. National made 19 under the profit in the process. It happens is almost every private issue kind of thing. Private equity issue, for example, I will talk about investing in. What is the call a pay team is a private equity player. Invited in part is called the ATM that I investment for 200. Now, Pentiums valuation is about 1515000 gross. So there are 200 cross they had about 40% share, let us assume for a while. So, out of 10000 clothes, they get 40% share, but 4000 close. 200 cause becomes 4000 cost. That is the advantage that the beauty of private equity players. Priority players or those people who'd like to spare. Their capital to the upcoming interpreter, with an expectation that the entrepreneur will work well, and make money. And they want to share the profits I share the value. After waiting for sufficient amount of time, there's a private equity kind of activity. What will they do? They generally do what is called is called the investment gap. And they, they take the risk, therefore, does capital. And they sometimes bringing expertise also, not necessarily. Sometimes, uh. Uh, risk only, they will also bring symptom technology or some expertize. They also tried to go to the Internet. Fill them giving all these things. They generally ask privileges. All last students should understand what I'm speaking on this slide. This is very, very, very important in when you when the private equity player invested into a company, they expected in privileges. Visit religious identity explained with this following terms. Long term is called less and bring to the articles. Do anybody of any of, you know, what is this? Anybody knows about the articles. Is everybody listening to me at all? I'm. Okay, entrenched articles is a situation where in articles of association will have a clause. Which says that without the permission of the private equity investor. Even a proposal cannot be taken Lucia. Harold is both. Gerald is meeting for approval, assuming for a while that. A company, which is now doing very well. They wanted to expand their market to outside the country. They want to sell these goods in let us say, also. It requires some kind of a shareholder approval when you have to article where it says. Like, without the permission of private equity owner. Company cannot expand this market. That's a rule. Let's say the article of provision. So before you put the proposal before shareholders to go to Bangladesh market. You should take permission of the private equity play Oliver by the priority Oliver versus name. You can't go to Bangladesh is company cannot go to Bangladesh. Or, let us assume for a while the company now has to. Uh, expand its business by adding. 1, more factory, or some other place. Which requires shareholders approval, it says without private equity players, you can't set up a 2nd plant. The company can't go set up a 2nd plan. That's so entrance articles happened. Entrenched articles will be very restrictive. They will not allow the. Original promoter to play anything without the permission of. Clarity prepared that's 1 type of clause them. Insist upon. 2nd type of a 2nd, type of privilege them ask for. It's not that if you have given 1, 1 more, you cannot give and then ask for all else. Okay. Is called as a raw row for row 4. Right of 1st offer let us assume for a while. This company is now doing very well and a. They want some more money they want some more money. So, private equity play may say that whenever you want some more money, you should 1st ask me. Rights issues there. I'm not talking about right issue. I'm saying. The 1st time, or should be given to me only or assuming for a while. The company is not doing very well. They have identified somebody else too. Take over this company I was really I set up the company for covert vaccination packs and. Uh, discovery, I have come up to 90%, but I'm not able to do any for that. Therefore, I said, I'm getting bored. I'm going to get outweigh I want to give it to my friend now. Now, the, the priority, I will say, as long as the assembly is working in this project, it's okay if someone wants to go out. They should ask us 1st, whether they want to give it to everybody else. That is my friend cannot automatically come to get my friend to the business. I need to take go to the my private equity investor and say. I offer you, you want to come if he says, no, then I can go to somebody else has got to stop it. Right of 1st rejection is again that right? Right. Uh, is like, waste of. But slightly different that is. They will, they will say they will say that. I don't know who to explain to you right of 1st rejection. Right, right the 1st offer only but. The rise of software you have been given offer to take it. In this case, right? A 1st rejection, you have to say whether you would like to. Whether you don't want to take it, then only I'll go somebody else. So, the same lines. Then comes offer, Matthew writes there is a set of a rights, which says that. In any board meetings will always have. 1, private equity director, any resolution that you would like to move it for the board of directors. To Robin, 1st approved by the private equity player before you turn the board of directors. That is how affirmative rights are built in, which are very restrictive. And then comes a tag along and drag along rights. These are rights when the promoter want to take away his body from the company. At that time, private equity player may put certain conditions called as tag along or a drag along. Tag along these that and assume for a while. The company has got, I'm the I'm the owner promoter of the company. I have 40 close to the company and private equity has got 60 plus with the company. And are the 40 growers I want to sell 15 towards the base at a price 15 growth being sold at price. Whenever I tag along, right? The private equity says. If you are selling full or part of your money, you also should place my shares along with your shares so that I also get the same price. Okay, this call is tag along rates. Drag on light is a different. What happens is that is say. We are offering this company support the gross my money. 600 private equity money and now, 3rd party wants to buy my company off. At that time, promoter may request the private equity play to sell his shares. Also the 3rd party will say. I will buy your company only if everybody sells to me, not only, you. That is particular, so promote 6 of the private equity also has to be sold to him only the email by. So primary the case, the argument when we right, we let it drag along lighting that. If I sell, you also have to come tag along this. Private equity request that he wants to be sold on with the promoter. Drag along is a combination that both of them have to be sold directly to the 3rd party. That is thing and then privately, but they also may say that you will promise that you list the shares and stock exchange at the end of 3 years. 5 years. 7 years. Whatever some agreed time the various rights that they will. The, the links, I think they're going out of the time. What do I do now? Can I continue? What do I do. Consolidate 0T o'clock now so so we have a 510 minutes. We can go ahead. Then we can have. Okay, then after the I'll give you the, I will share then. Sure, sure. Yeah. Next 1 next 1 please next. Next slide, I think, uh, I already I'll speak only about the. Uh, 2 words are the differential voting rights is something which is given to. Promoted of the existing companies wearing the each usually speaking into the companies that 1 word. 100 condition will get 1 vote, but under DVR. Principles under DVR rules 1, Southern shares can be having. Higher or lower number of votes for a public. In a public general meeting that's called differential already. That is. 1, 1, 1, share equal to 1 vote is a normal rule. But you forgot DVR, shares, differential voting rights. 1 word 1 share may have more than 1 share, or it may have to torch. It may have 3 words and so on and so forth. This will be helpful for a promoters going to say I have only 10% shares in the company, but our technology, everything with me. 90% is there a private equity the private equity anyway zap me in case 1 equal to 1. Instead that they will say that 1, 1 share of promoter equity will get about. 20 awards, so my 10 cross will get 10 to 2200 words, whereas 90 will get a rental word. Therefore, I can win over them. So, whenever you want to create this kind of facility and advantage for yourself. It's called the differential voting right? Shares. It has not been very popular allowed in this complaint. Offer for sale versus public issue, public issue a situation where companies issuing shares to the public. That so money of the subscription money to the public shares will come to the company itself. Offer for sale is some of the insistent shareholders. Along with the company will offer their shades also to the public. Along with the company, let us say in the guys, have a camps example I've given you. In together, camp scans is going to public saying that I want the 60 clause from public. And national stock case is selling is 40 gross also. So, when you sell shares the public, what happens is. Some money will go to the company somebody will go to national stock exchange, use a share it as a company. That is the existing shareholders. We also offer their shares along with the company, the public at large when public are subscribing. Order symptoms are taken together, David, the money distributed between existing shareholders toward their shares and public. The company will issue new chairs. And company company will transfer chairs of the existing channel is also the public that so they make the total public issue done. That is to make clear. If I'm going to issue shares to the public in charge. Of which 100 shares can come from company. Sorry? If can come come company. And 20 shares will come from the existing shareholders. So, 100 shares are issue the public, but only 8 new shares, and 20 are already issued old shares their current offer for sale. That's also very important term. You should know next 1 please next slide. Uh, in this, I think, you know, most of it, I don't know. What next slide please um. You know, all this, what do you know all these words? Just coupon rate. But potentially Ventures, et cetera. Okay. We'll do. We'll go to the last area. I don't know. I don't have time to go to the last night. So, could you please just explain the discount bonds. Okay, okay. I'll do that. Discount bond days. What happens is that it's supposed to provide. Yeah, 1000 to pay bond. I. Issue a 1000 people at 700 at. 7, and what it says is in 2020. You gave me 700 repeat towards the bond in 20 30. I will give you. 1000 rupees that is you are getting 1000 rupees after 10 years. You are paying 7 rupees only in 2020 after 10 years 30000 rupees. That is you are not getting any interest rate you're not getting anything. 1000 rupees bond has been issued to a discounted. External replace, the discount is done and 1000 is 1 is issued at a lower price. This called deep discounting. 1000 rupees is your face that's why we get the. A difference in the get 0T coupon bonds is that. It's other way around they don't promise any interest. It's the opposite of live this compound, they will say, substrate 1000 rupees. Now you'll get 14 the rupees after 5 years. There's no interest rates or anything. There's 0T coupon. They're not given any coupon rate, but they'll, they'll give you higher price higher redeemable amount at the end of. 3 or 4 years without 7 what is the interest rate? That's called? 0T coupon 1. Yeah, thank you. So next. Eligibility criteria general condition that's okay. It's from. Talking she's right next next call, so you can go. Next is play. Okay, this is important. Qualified. Institutional by is important. Now, I told you book building is done for the purpose in the public issues to determine the price. Now, I assume for a while happy minds is a company with a software company. Our life which is called patient, but they will come for it. Public issue what should be the price at, which you should buy. Now. Can anybody guess that's a bit for it? But yeah. What are the base on. It's very difficult for us to bid. No, assuming that you are getting on an. Railway station in your place, you have to go home their own. There are only 2 are there. And 5, people are waiting. Now, each 1 will be able to say miracle. Janna had. So, you, I'll give you another page based whatever, whatever. Because, you know, the distance, you know, how much time will it take. You know how I'm going to be competing therefore you can make a price for it. But Elizabeth gambling? Yeah. What is that? How was the based on, which are going to do. Value it, if you want to value and let's see, you should understand their balance sheet. You should know where are they invested? You should know what the liabilities are. What you should know what happens if suddenly so many people are covered. And insurance policies become a pay claim and payable. All you have is, can you assess it as a human team as a general public. Difficult, but what they said is qualified institutional buyers. The rule is qualified. Institutional buyers should bid for the shares. 1 day before retail. Okay, now qualified institutional bid for buyers buildings. When we made it transparently known to the people now, all the have valued. Unless she shares at 900 rupees per share, this comes to the public already. No, public will say oh, man, and group is what all qualified institutional buyers are saying. I don't mind buying rupees. I don't mind buying your daytime therapies. I don't mind buying at 910. whatever. That's a public will get a guidance as to how much money they can actually pay per share. This call is the role of qualified, institutional buyers qualified instituted buyers are supposed to bid 1st and their bids are made known to the public by the end of the day. Based on which public can make bidding for the next. Today this is the role of qualified institutional bias. Very important provision. The public issue process. Next slide please this I have already spent. Next anchor and Mr. This again very important and the investor is, uh. By the very name, it indicates that every public issue requires. At least 2 to anchor investors who are willing to put not as then then crossover with the public issue. When they are put in 10 calls, or what does it mean? It means that they understand the business. They are the business and they are agreeing to put 10 crows and this. I think anchor Mrs. cannot sell the shares on the listing date that wait until. At least 30 days of the listing, so they can't run away from the issue immediately. So, if anybody comes to the public issue. And they tell that I've got 2 anchor investors, not less than 2 anchor investors. It gives a lot of confidence. Look at the way the conference is being built 1. They're saying we will give you the bits that are qualified. Institutional business will give you the. I said, which are debate, and they're also saying that to anchor misses are missing public issue out of Congress. The public saying, oh, there are people who are going to be invested. They know the business. They are saying that they're going to invest. If they are investing, you cannot send miss. I'll give a very good example. There is an hotel in Bombay where they owner the. Are the cash counter or big letters? He has put a board saying that owner also eats in his hotel. Then people have a lot of confidence. Oh. For what is supposed to be safe portal owner me you don't feel like going to that hotel at all. So, anchor investors and Cuba are the 2 dimensions, which that I showed the people that is good. It should be a subscribe to. Next slide please. I think I need to talk about the promoters a bit. I think I spent 5 minutes. Can I spent some more time here. Yes, sir. Yes, sir. You have? We have enough time. Okay perfect. So. What they say is promote as contribution. There are locking in these public issues because. Promoters are the people on whose faith people would like to invest in to the company. Not an, or somebody else. As opening a shop and they will. If they will run away from the company after the company is listed. Then our investment basing on their presence will be a complete disaster. Before they say that in case of a blink listed company. The promoter has to stay put for some time he has to be logged in for 1 year. 2. here are some rules. To make keep changing, therefore, don't worry about how much time you don't have to market. Now you have to know that this promote is locked in. Whenever a company's coming for public issue immediately to strike in the minds of our law student, saying that it's going to lock in. There's a rule that has brought in how much a lock in, depending upon what the type of issue what are the variations of that? Now, the other question that comes up is, okay, promoter is invested 200 person company. He has got chase for that company. Out of that and is logged in for 3 years. That is shoulder cross have to be logged in in the company for 3 years. And what we do, and the company may not require it all for that matter. But I've already put company requires only 40 gross 1 system laying there. Anyway, you can't use it it has to be with a company, but promote has got shares of his own. Can he do anything with the shares now? Can you can send me no. But can you pledge them? Yes, they can be pledged. They can be pledged now there are reasons why a promoter may plus the shares. I put told it was the company company was doing all right, but suddenly we require some more money to expand my capacity. And where does the company money come from company now? Offering a preferential offer? And revision of the my conference, apparently 80 closer. Which I can put if I'm able to pledge measures by putting ID growers. Possibly my value will go further because business will do much better. Business will do much better by having 80 gross more capital. It can buy new machines, et cetera. Therefore, profits will grow and the profits will grow value. The shares will grow. Therefore, I don't know the lose opportunity. And Cheryl is going to help her permission to invest. It's look revisional issue. Do I have a visit me? No, I have told her course. Welcome shares, but ever Eddie cross casualty. Then. What do I do. I go and pledge my shares with somebody and take any clothes and try to put that money into the company. That's 1 scenario. The senior is companies dying company it requires some more money to be able to divide it. And nobody is giving them money and promote that has his life only into this company. He has to put money somehow. Where does it get the money from? You like the shares, so pledging can happen through different methods. I've given you 3 broad method. That could be. Other methods also, let's throw deposit you plug the shares the Depository account. The deposit system, there is 1 pledge facility, wherein by software they put a pledge to so. Once they are pledged only the person to whom is a pledge the G. The G will be able to take the shares plus jar cannot take the shares. Shares will be, uh, under the control of the person who was given the money lender or the clergy. That's 1 way of doing it. It said known to the public also, because it reveal no deposit department will know they can give a report to Sandy and everybody. That's the 1 way. Another way of doing thing is that I will keep the shares. But what is called less I will sign what is called as a non disposal agreement. I will lay something called a non disposal agreement. I take the 80. From a bank or a private, a lender. Who will say, Acquia company Marianne I have you are not supposed to sell your shares. So, I say, okay, I will not disclose my shares. Okay. I will give a scene. I signed a letter to my lender. And take any clothes and give it to the company it's called non disposable agreement. There is. I promise not to dispose the shares I have in the company that's called non disclosure agreement. And the way of doing things is called, like, a part of com. Nowadays, all the shades are held in a Depository demat format in and account. The account rights to operate the account is given to the lender. Shares has still my name, but try to operate. The shares are in the name given to my lender that's called as power of attorney on account. The 3 ways in which they're tied to, or is called a plus the shares agenda, 20 out of the available shift. Because she has, cannot be sold is a lock in. Still, not to create liquidity or to the existing shares. They can do this kind of pledging the important thing that you should know as liars. Next slide please, I have a question. Yeah, please, do the promoters have to retain some percent of the total shareholding throughout the life of the company. As not required, not required, but whenever they get out of the company, completely information has to disclose to the public saying that. I am no more shareholder so there are some undertake over code whenever you sell your shares. We aren't certain threshold limits are to make some disclosure to the public saying that. I'm not there the company let's say I had 70% shares. I reduce it to 45% and to make some disclosure to the public saying that manage is based. Yeah. I had 25% shares now. I'm at 80%. I'm bringing don't do 4% dataset. So I must say that I reduced my shareholding. That is how I keep on, uh, disclosing it, but there's no bar on my getting out. There's no. So, but, uh, as we have seen in the case of the s bank. So has a completely. So, it has a part of shares. So, don't you think the company will fall. And no company, the company will fall or not fall is not regulatory concerned. Regularly companies that whether people know about it, assuming that it's not going away and I am a shareholder who has invested in this company only because I believe in this particular. Promoter the moment he says promote is going away or gone immediately so that I can sell the shares when there is still value. But if I here does not disclose people, some people will know they will sell the chase and go and you and me will not know. We hold on the chairs. Suddenly 20 variables become 4 base. I lose. But the moment he says, I'm going to sell the shares and all his old measures. The 25 becomes 242420 at the time. I will be able to, at least read is by loss so. The department is the disclosure of, uh, promoters exit not necessarily. Prevention exit promoters have to stay but promote is to the lock in on promoters. Until a period of time, when they raise the money. There is the money 2 years 3 years 1 year, depending upon the event. There to hold the shares for that period of time. That's mandatory. We own that they can go away. Okay, yeah. We'll go last right now you want to okay. Hold on this. Anything you want to know about this, uh, other other people. So, I had supporting entities. Yeah. Question so I am not related to the other support entity, but to private equity. So, we can, because a few times when we, uh, uh, uh. Say, private equity, like Series a VC funding. So, what are these fundings and so. A, another. Tom, we come across this venture capital when we talk about series ABC funding to what is the difference between venture capital and private equity. Okay, okay. Uh, I see your 1st question series of. Serious 1 series too seriously. That is a company may take money from the private equity players in branches. In installments installment is called Series 1 funding. Installment to his policies to funding, et cetera. Each Series A funding may come with its own conditions. Okay. Let's say I've started the business now at this stage. The terms and conditions at which the money is given to me, may be different from. When companies companies will settled, it requires some money for expansion in the same locality. It comes with series to funding serious. 3 funding is even bigger. It goes through national level. Then it becomes even bigger money so each series of funding may have it sold terms and conditions, but. It's a matter of only matter of installments that they are having. There series 1 may be given by priority replace 1, 2, 3. Fear is to hunting, may urine by ABC seriously may come from if that's also possible. So, depending upon understanding and the acceptability of where is private equity investors. In your company, the same set of equity players, others is the priority may invest in. You are. Company, depending upon company's arrangement and understanding between the 2 so series 1, 2, 3, only tranches. Subject is country conditions for the trench. Okay. Now, venture capital and private equity more or less they are the same thing. Venture capital is a word that that was used earlier. That is now mostly private equity substituted this. Venture Capital, the very name shows venture that is you take an adventure, you take a risky investment. And you don't mind taking the risk. So the capital enlisted toward taking risk in the business is called venture capital. Venture capital is regulated by venture capital regulations. And, uh, we have got major calculations in our country also. So, venture capital has to be in certain specific ways. That is described in the venture capital so any capital brought. Under capital regulations is called venture capital regulation. On simplistic point of view. Okay. Okay, yes, sir. Thank you. Now, the last slide is that, uh. The, the, the. Semi an stock exchanges will, what is the 1 where the. Document that is offer document and gathering prospectus. They don't approve, they only vetted saying that. All the disclosure required having made, they're satisfied with the disclosures. And they allow the English sure to go. Issue the prospectors, the public that is before the prospect issue, the public. The is going to be verify whether all the stores have been. Actually made or not currently made or not they don't approve or disapprove anything. Okay, and this is a valid for observations. That is in case they have made an observation saying that we are to rectify this disclosure. Your disclosure. Within 3 months, they are supposed to improve the document and giving back to 31 savvy says yes, it's. Now right fit for sure. The public it can be issued within about 1 year. Be on, which it cannot be, uh, issue. And semi disclaimer very clearly says that so we will say that. We are not after we invite is approving, they are only saying that all the disclosures are made. That's the important point you should understand from the you are becoming a lawyer. That's it, thank you from this. Fine from my point of view this is what I wanted to stay. For you open for questions now. So 1 question. And the reason we have seen that. A credit rating agencies have manipulated the ratings of the companies and as a result of which the companies were able to raise point and then defaulted and repayment of the same. So, uh, how savvy has taken care of the same also can the criteria of reading the company's be made uniform. Your user in words called the rates, what are the based on? Just saying this. Why it is in the problem is different problem is. Problem is credit rating generally. Depends on the information provided by the sure himself. On the company itself, and the information going with the company are presented before a committee of rating and these experts will also take a view on the company based on the information available. And then come to some conclusions and the, I'll tell you the case of, for example. What we see in the paper sees that, they said they have issued loans to 2 people. Okay, 200000 or what but. In reality, it appeared that the 200000 or 2 people are all. Calls there have been created to software. And there are 2, like people at all in that just like what happened. But what is information available to the agency? Trading agency only knew that 200000 people have taken a loan from day. And I've been so many so many projects in so many places. All of them are happening. And there are some reports from the ground saying that. Buildings under construction building have been constructed the position has to be given etc etc. So, based on which they're given some rating, but it turned out to be that the information go with the company itself is faults. So, unless you are saying that the crediting agencies. Have been something more to be able to explode the. Instead of billing, only company's ratings companies information. There's different argument altogether. It's a far fix the argument altogether. You give me. 1 student produces 1 Mark sheet and the says is 80% student. Why will I doubt it? Unless. I know that unless he completely facing the interview. Interview me. Okay. Good question. Let me answer an idea. Then I may have a question saying that okay. Where did you get this certificate from? I may want to work a little more deeper. That's reason why most of the colleges are asking for testimonials Thursday. Uh, some kind of certification from some of the professors, etc. So that the professor is a real human being, and they will have to take it. View on the student, etc. So in the is also. Based on the company information, they have given a rating. But things happen assuming and. I left his case what happened suddenly. Either because of government failure, or whatever reasons. Most of the cases where they must have completed color started collection of tools. They could not start control collection. You do it? The revenues fell. Therefore, what were the typically, suddenly became SC and then the. So, business models failed so drastically. That, and this is, you could not even. Understand the speed with which the changes are happening. That's the reason why the collapse happen. Now, the question is inefficiency of is. In order that sincere is inefficient. Cindy has taken action, I guess, and then margin director or some same keys came piece of. Some of the Sierra agencies, the agencies. That's the action they have taken and there, 1 more condition there is no put. Saying that all mutual funds which invest into debt to basically. They need to have their own internal rating capabilities in addition to the credit rating, given by the outside agencies. That so the additional for the strengthening has been done. So, anybody have, if have any question, he may ask, uh, after unmuting himself. Or you may write on chat box. I'm sorry, I have. Okay. Yeah, you can take the people. They have no problem. Take the. No issue you have it already. Just share the same. Yeah, you could share. Any question. I have a question, sir, when you stated that qualified institutional buyers would be helping and deciding while the building would take place would help and designing the. Uh, and in the example, you told 900, then the public word decided on whether they would want to invest in. 910 more below that. So, sir, the thereafter when the 2, I would, we would decide. Skip answer what would happen. I mean, it's price per share is actually a very good question. What happens in a bidding process after we have given their bits. And public starts bidding themselves public has got 2 options there. They can say that they had to cut off price. Or they make you actual number, say, 900. And different people have to call. A big their own price somebody said 9 and 10 somebody's 8 and December is that. 200 so on and so forth. Okay. So. Company will also have it's own assessment about what price they want to offer. If they think of things that they should not be selling their shares below a 75. They think that started selling it at 25. they will say the price. All the public who says, cut our price will get defined. And everybody else also get 75, only because companies agreed to 875. Company will see what is the maximum number of shares to be sold at a given. Bidding price say at 910, there are some 25 people. At 920, there are some 40 people at 960. there are some 1000 people. So, 9 sixty's, the maximum demanded press. Our 920, the maximum 1 enterprise company, which is the price. They'll go by the chart at the chart. They will see what the maximum they are getting what the maximum they can get. And when the draw a line, all those people. Who bid the prices up to that will get the shared that is. 920 is what has been. Hello okay. Yeah. Yeah. Sorry. I got disconnected. Good. For the issue, could I be upset? And there are several bidders. This is 920 the price at which say companies is cut off. For all those people who bid 980 and above. 920 and never will get SHARES people who bit below 9 and 20 will not get. She has to come out and 920 maybe has to come to 920. Then you say, oh, everybody says a midnight 895. Everybody have to get it identified, but you have, we will get contraindicated 900. That's all they did to balance. Did I answer your question? Yes, yes, thank you. Yeah. Yeah. Any more question. No question so, as of now, I can't see anything in the checkbox. Okay, so I'm done. Yes, so I think this unfortunately. A time doctor we are and express my attitude on behalf of for accepting I invitation to address the session. Your valuable insights as surely of paramount importance to us. Thank you for letting us understand the detailed aspect of the topic and this will surely give us. And edge to our knowledge, we strongly look forward to strengthen future types and a firm relationship. Without failing to mention, I would also like to thank all the participants who joined this session and on behalf of I assured that we will continue to strive for knowledge. And in the furtherance of the same, we shall continue to bring up such experts session to enhance everyone's knowledge and understanding. I, thank you, sir. I think I need some feedback also. It does. Okay or not and thanks for giving the opportunity. I'm gonna tell you, I'm on mute. So, you still mute? Yeah, no. So, I hope that you will come again and we will have a long term collaboration, uh, with your organization. So, it's a pleasure that we got in contact with you and we got an opportunity to listen to your views. And this topic was very technical, but all the ideas that you have were very, very easily if, uh, we were able to task. And I hope that all the students have taken maximum benefit. Out of, uh, this lecture and we will share that with you, uh, with the students as those who missed. So, thank you, if you can send me a link to the media to be useful. I can use it somewhere. Yeah, absolutely, sir. Absolutely. Thank you. Thank you very much. Thank you. Thank you very much. Bye. Bye have a nice day. Bye. Thanks. Bye.