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SEBI Guidelines for IPOs 1.

IPOs of small companies Public issue of less than five crores has to be through OTCEI and separate guidelines apply for floating and listing of these issues. 2. Size of the Public Issue Issue of shares to general public cannot be less than 25% of the total issue, in case of information technology, media and telecommunication sectors this stipulation is reduced subject to the conditions that:    Offer to the public is not less than 10% of the securities issued. A minimum number of 20 lakh securities is offered to the public and Size of the net offer to the public is not less than Rs. 30 crores.

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

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

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

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

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

Balance Sheet and Profit and Loss Statement are not available. Initial Public Offer 1.e.      Can issue capital to public only at par Draft prospectus to be vetted by SEBI before the issue The shares can be listed on OTCEI or any other exchange A public financial institution or a scheduled commercial bank should appraise the project The appraising agency should participate in the financing of the project to the extent of atleast 10% of the project cost 2. and is set up by entrepreneurs without a track record. First issue of new companies promoted by existing companies     If the existing companies have a five year track record of consistent profitability. Initial Public Offer 1. Disinvestment A. In the above case Prospectus and offer documents should contain justification for issue price Draft prospectus to be vetted by SEBI before the issue The shares can be listed on OTCEI or any other exchange 3. First issue by existing privately/closely held companies 4. and are ready to hold 50% of the equity of the new company.Issue Guidelines for raising equity SEBI has defined a set of detailed guidelines to be adhered to by all the parties involved in the process of a public issue with the aim of ensuring investor protection. First issue by new companies 2. it is free to price its issue and the price has to be applied to all investors uniformly. First issue by existing private/closely held companies      Should have three year track record of consistent profitability for freely pricing the issue. First issue by new companies promoted by existing companies 3. First issue by New companies: SEBI defines a new company as one which has not completed 12 months of commercial operations and whose audited operative results i. The guidelines can be classified under various heads as follows: 1. Can be listed on any stock exchange Equity offered should not be less than 20% Draft prospectus to be vetted by SEBI Pricing to be determined by the issuer and the lead manager subject to adequate disclosures as specified by SEBI such as .

o Justification for the issue price.o Disclosure of the net asset value of the company as per the last audited balance sheet. Disinvestment      Free pricing if the company has a three year track record of consistent profitability Promoters stake after disinvestment should be 25% Lock in period for Promoters contribution is five years Minimum subscription of 90% not applicable Draft prospectus to be vetted by SEBI . 4.

10 crores or a venture capital fund with a net worth of atleast Rs. 10 crores* and The capitalisation of the applicant’s equity shall not be less than Rs. clarifications. as also any circular. clarifications etc. incorporated in or outside India For this purpose. Financial Institutions. 50 crores. guidelines issued by the appropriate authority under foregoing statutes. General criteria 1) Conditions Precedent to Listing: The Issuer shall have adhered to conditions precedent to listing as emerging inter-alia from Securities Contracts (Regulations) Act 1956. 25 crores** * For this purpose. 3) The applicant desirous of listing its securities should satisfy the exchange on the following:  No Disciplinary action has been taken by other stock exchanges and regulatory authorities in the past three years: The promoting company (if any) has not been in default in payment of listing fees to any stock exchange in the last three years or has not been delisted or suspended in the past and has not been proceeded against by . Securities and Exchange Board of India Act 1992. any rules and/or regulations framed under foregoing statutes. Statutory Corporations Banking Companies and subsidiaries of scheduled commercial bank who are otherwise bound to adhere to all the relevant statutes. the applicant or the promoting company shall submit audited balance sheet of three preceding financial years of the company to the NSE. or the promoting company. 2) The Project/ Activity plan of the applicant must have been appraised by a financial institution u/s 4A of the Companies Act.50 crores or a category I Merchant Banker with a net worth of atleast Rs. post issue paid up equity capital for which listing is sought shall be taken into account.Qualifications for Listing initial public offerings (IPOs) 1) Paid up Capital:   The Paid up equity capital of the applicant shall not be less than Rs. Public Sector Undertakings. Nationalised Banks. Companies Act 1956. 1956 or a state finance corporation or a scheduled commercial bank with a paid up capital exceeding Rs. guidelines. that may be issued by various regulatory authorities from time to time and in case of an Offer for Sale. 2) Atleast three years track record of either:   the applicant seeking listing. or In the case of an existing company the applicant should have been listed on any other recognised stock exchange for atleast last three years This clause shall however not be applicable to listing of securities issued by Government Companies. circulars. capitalisation will be the product of issue price & post issue number of equity shares. ** For this purpose.

status of litigation during the preceding three years need to be clarified to the exchange. Redressal mechanism of Investor grievance: The points of consideration are: promoting company’s (if any) track record in redressal of investor grievances promoting company’s arrangements envisaged are in place for servicing its investor promoting company’s general approach and philosophy to the issue of investor service and protection Distribution of shareholding: The promoting company’s (if any) shareholding pattern on March 31 of preceding three years separately showing promoters and other groups’ shareholding pattern should be as per the regulatory requirements Details of Litigation: The promoting company’s (if any) litigation record.   SEBI or other regulatory authorities in connection with investor related issues or otherwise. . the nature of litigation.

3) The revenue from the core activity undertaken (knowledge based) as stated in the prospectus shall not be less than 75% of the total income during the two immediately preceding years. Telecommunication. . the applicant or the promoting company shall submit audited balance sheet of three preceding financial years of the company to the NSE. 1) Paid up Capital:   The Paid up equity capital of the applicant shall not be less than Rs. 5 crores* and The capitalisation of the applicant’s equity shall not be less than Rs. ** For this purpose. Internet Commerce. capitalisation will be the product of the issue price and the post issue number of equity shares. 2) Atleast three years track record of either:   the applicant seeking listing or the promoting company. 50 crores** * For this purpose. Pharmaceuticals etc. the existing paid up equity capital and the proposed issue for which listing is sought shall be taken into account. incorporated in or outside India For this purpose. The Listing Advisory Committee (LAC) of the Exchange shall approve and recommend the listing.Qualifications for Listing Initial Public offerings (IPOs) by Knowledge based Companies Knowledge based companies are companies in the field of Information technology.

Statutory Corporations and Banking Companies who are otherwise bound to adhere to all the relevant statutes. 25 crores* or The paid-up equity capital of the applicant shall not be less than Rs. the applicant or the promoting company shall submit audited balance sheet of three preceding financial years of the company to NSE and also provide a certificate to the Exchange in respect of the following:    The company has not been referred to the Board for Industrial and Financial Reconstruction (BIFR). The company has not received any winding up petition accepted by a court. ** * For this purpose the existing Paid up equity capital as well as the Paid up equity capital after the proposed issue for which listing is sought shall be taken into account. incorporated in or outside India For this purpose. 25 crores * or The market capitalisation of the applicant’s equity shall not be less than Rs. The networth of the company has not been wiped out by the accumulated losses resulting in a negative networth. 25 crores the securities of the company should be traded for at least 25% of the trading days during the last twelve months preceding the date of submission of application by the company on atleast one of the Stock Exchanges where it is traded. circulars. 25 crores market capitalisation mentioned above is not applicable to listing of securities issued by Government Companies. The requirement of Rs. Public Sector Undertakings. Nationalised Banks. guidelines. Financial Institutions. or the promoting company.Qualifications for Listing Securities of Existing Companies 1) Paid up Capital & Market Capitalisation:    The paid-up equity capital of the applicant shall not be less than Rs. that may be issued by various regulatory authorities from time to time. clarifications etc.  Unless the market capitalisation is more than Rs. 2) Atleast three years track record of either:   the applicant seeking listing. 50 crores. 10 crores * and the market capitalisation of the applicant’s equity shall not be less than Rs. . ** The average of the weekly high and low of the closing prices of the shares as quoted on the National Stock Exchange during the last twelve months preceding the date of submission of application by the company and if the shares are not traded on the National Stock Exchange such average price on any of the recognised Stock Exchanges where those shares are frequently traded should be taken into account while determining market capitalisation after making necessary adjustments for Rights / Bonus Issues.

. Banking Companies and subsidiaries of scheduled commercial bank who are otherwise bound to adhere to all the relevant statutes. Financial Institutions. circulars. Nationalised Banks. guidelines.3) The applicant has paid dividend in atleast two out of the last three financial years immediately   Preceding the year in which listing application has been made OR The networth of the applicant is atleast Rs. Statutory Corporations. clarifications etc. 50 crores*** *** Networth means: o Paid up equity capital o Reserves excluding revaluation reserve o Miscellaneous Expenses not written off o Negative balance in profit and loss account to the extent not set off The above Clauses are not applicable to listing of securities issued by Government Companies. that may be issued by various regulatory authorities from time to time and in case of an Offer for Sale. Public Sector Undertakings.

) 7. of annual listing fee.000 70.000 Companies having a paid up capital of more than Rs.500 4. In case.50 crores f) Above Rs. they will be reduced by 50% for the companies. 20 crore and upto Rs.000 28. 1 crore and upto Rs. 1400 for every increase of Rs. 5 crores or part there of in the paid-up share/debenture capital.400 14. 50 crores would pay additional listing fees of Rs. .NO PARTICULARS 1. The payment can be done through Cheques/ Demand Drafts favouring National Stock Exchange of India Limited on Mumbai.000 42. which are non–regional for the exchange.10 crores d) Above Rs. 5 crore and upto Rs.5 crores c) Above Rs.20 crores e) Above Rs. 1 crore b) Above Rs. 10 crore and upto Rs.200 8. 50 crores AMOUNT (Rs. 2 Initial Listing Fees Annual Listing Fees a) Companies with paid up Share and /or debenture capital of Rs.Listing fees for National Stock Exchange S.

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