Professional Documents
Culture Documents
(IPOs)
--Provisions on
Minimum Subscription,
Allotment, Return of
Allotment
Track record of distributable profits for 3 out of the 50% of the net offer to At least 15% of the project cost
immediately preceding 5 years public being allotted to is contributed by scheduled
Pre-issue net worth of not less than Rs. 1 Crore in QIBs commercial banks and at least
each of the preceding 3 full years 10% of the net offer to public is
Net tangible assets of atleast Rs. 3 Crores for each allotted to QIBs
of the preceding 3 full years
Not more than 50% of these to be held in the
form of monetary assets
+ +
Minimum post-issue face Minimum post-issue face value
(Proposed IPO + Previous Issues in the same
value capital must be Rs. capital must be Rs. 10 Crores
financial year) < 5 times the pre-issue net worth
10 Crores OR
In case the company has changed its name within
the last one year, atleast 50% of the revenue for OR Compulsory market making for
the preceding 1 full year is earned by the company Compulsory market at least 2 years from the date of
from the activity suggested by the new name making for at least 2 listing of shares
Prospective allottees in the IPO should not be less years from the date of
than 1000 in number listing of shares
Choice of Route: Fixed Price or Choice of Route: Book Choice of Route: Fixed Price or
Book Building Building Book Building
Book built route mandatory with 50% QIB participation if all issues during the same financial year (including proposed IPO) >
5X pre-issue net worth
ICDR ……Regulation 30-31
Reg30-31 deals with pricing and price band:
Promoter’s • Following shares are ineligible for the computation of Promoter’s contribution
Contribution – Issued in last one year at a price lower than issue price, unless topped up
– Issued in last three years out of bonus issue or revaluation reserve for consideration other
than cash
• For Promoters:
– Lock-in for a period of 3 years from the date of allotment or from the date of commencement
of commercial production, whichever is later
Lock-in period • Balance pre-issue capital, other than held by Indian and Foreign Venture Funds (registered with
SEBI) and shares held for at least one year and being offered for sale in the issue
– Must be locked-in for a period of 1 year from the date of allotment
• In case of public issue of securities by a company which has been listed on a stock exchange
for at least 3 years and has a track record of dividend payment for at least 3 immediately
preceding years.
Exemption
• In case of companies where no identifiable promoter or promoter group exists.
• In case of rights issues.
Corporate Governance Requirements (As per SEBI the requirements of
clause 49 is applicable to all the companies seeking listing first time)
• Optimum number of executive and non executive directors with at least 50% being non-
Composition executive. If the chairman, has executive powers then 50% of Board comprises of
of the Board Independent directors. While if chairman has non-executive powers then 1/3 of the Board
comprises of Independent directors.
• Mandatory constitution of Audit Committee with minimum three directors and headed by an
Audit Independent director.
Committee • All members shall be financially literate (should be able to understand financial statements)
and at least one member should have accounting and financial management expertise.
• Shareholder/Investor Grievances Committee to be formed under the chairmanship of a non
Investor
executive director to look into the redressing of shareholder and investor complaints like
Committee
transfer of shares, non-receipt of balance sheet, non-receipt of declared dividends
• At least one director on the Board of the holding company shall be a director on the Board of
a material non listed Indian subsidiary Company
Subsidiary - Material non-listed subsidiary means a subsidiary whose turnover or net worth exceeds
Company 20% of the consolidated turnover or net worth in the preceding accounting year
• Audit committee of the listed holding company shall also review the financial statements, in
particular, the investments by the unlisted subsidiary Company
Report on • A separate section on Corporate Governance to be included in the Annual Reports with
Corp. disclosures on compliance of mandatory and non-mandatory requirements
Governance • Submission of quarterly compliance report to the stock exchanges
• Overall Co-ordination
• Conduct due diligence and finalize disclosure in Offer Document
Lead Managers Upfront
• Assist the legal counsel in drafting of Offer Document
• Interface / ensure compliance protocol with SEBI / NSE / BSE
• Tripartite Agreement
After
• Dematerialization of Company’s shares
Depository Appointment of
(NSDL, CDSL) • Demat transfer of Shares Registrar
• Credit of Shares to Allottees
• Bulk printing of the Red Herring Prospectus Bid Forms, final Prospectus,
CAN, Refund orders etc. Before Filing
Printers DRHP with SEBI
• Ensure timely dispatch and distribution of stationery to all centers
• To receive bids and block bid amount in the investor’s bank account
based on applications submitted;
Self Certified Approved by
• To provide FC on account transfer/ unblock funds post finalization of basis
Syndicate Bank SEBI
of allotment,
(SCSB) • To address investor grievances on account of ASBA bids
Various Legal Agreements
undertaken by the Issuer Company
Agreements Parties to the Agreement Purpose of Agreements
Engagement Company and individually with Engaging the intermediaries for the
Letter Investment Bankers, Counsels to the Services
Company, Auditors, Registrar and
other intermediaries
Lays down the roles, responsibilities,
BRLM MoU Company and BRLMs reps of BRLM and Company
Registrar MoU Company and Registrar Lays down the roles, responsibilities of
the Registrar
Escrow Company, BRLMs, Syndicate Members, Lays down the process for receipt of
Agreement Registrar and Escrow Bankers to the Issue proceeds and release of funds
Issue to the Company
Various Legal Agreements (Cont..)
Agreements Parties to the Agreement Purpose of Agreements
Syndicate Company, BRLMs and Syndicate Lays down the process of marketing
Agreement Members and handling the forms
Underwriting Company and the Underwriters (BRLM Lays down the terms of Underwriting
Agreement and Syndicate members) and the extent of underwriting
Tripartite Company, NSDL and CDSL Lays down the provisions of NSDL /
Agreement CDSL acting as the Depositories of
with the Company
Depository
Listing Company and Stock Exchanges Binds the Company to the requirements
Agreement of the Listing rules of the Stock
Exchanges
Disclosures in the Offer Document
• Shareholding Pattern (pre-issue and post-issue)
• Securities Premium Account (pre-issue and post-issue)
Capital Structure • Holding of the promoter and promoter group
• Disclosure about ESOPs if any
Finalize the Price Band at least two working days prior to Issue
opening
The Issuer must first contact one of the grading agencies and mandate it
for the grading exercise. The agency would then follow the process
outlined below :
• Seek information required for the grading from the Issuer
• On receipt of required information, have discussions with the company’s
management and visit the company’s operating locations, if required
• Meetings with the promoters and independent directors separately
• Prepare an analytical assessment report
IPO Grading Process
Present the analysis to a committee comprising senior executives of the
concerned grading agency. This committee would discuss all relevant
issues and assign a grade
Review SEBI observations and update their report if required.
Communicate the grade to the company along with an assessment
report outlining the rationale for the grade assigned
Though this process will ideally require 2 – 3 weeks for completion, our
initial interaction with Credit Rating Agencies indicates that it may be a
good idea for Issuers to initiate the grading process about 6 – 8 weeks
before the targeted IPO date to provide sufficient time for any
contingencies
IPO Grading is required prior to marketing of the IPO and needs to be
disclosed in the RHP and Prospectus
The Credit Rating Agencies have to forward the names and details of
IPOs graded by them on a monthly basis to SEBI / Stock Exchanges for
uploading on their website for public information
Fixed Price Issues
Offer Price: Price at which the securities are offered
and would be allotted is made known in advance to
the investors
Allotment of Securities
In case of Book Building issue, Allotment shall be made not later than 15
days from the closure of the issue failing which interest at the rate of 15%
shall be paid to the investors.
LISTING WITH BSE
Trading Permission
Appointment of
BRLM and legal Listing
counsel
Issuer
Drafting of Draft
Pricing & Allocation
Red Herring