Project on

HOW TO LIST COMPANY ON STOCK EXCHANGE

PROCESS OF ISSUING IPO

Project Team:
Kunal Bhojane

Prakash Rajput

Samir Nimkar

INDEX

SR.No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17

Topic Why Companies Go For IPO Introduction Preliminary Flow of IPO Procedure Category Of Investors in IPO Life Cycle Of IPO Eligibilty Norms For Companies Issuing Securities IPO Pricing Promoters¶ Contribution and Lock-In Requirements Pre-Issue Obligations Contents of Offer Document Post-Issue Obligations Green Shoe Option Guideline on Advertisement IPO Methods Types Of Bookbuilding Guideline On Initial Public Offers Theough The Stock Exchange On Line System(e-IPO)

Page No. 3 4 6 10 11 13 15 21 26 28 34 36 40 41 43 45 49

1. Why Companies Go For IPO?

Usually it is not possible to buy shares in a private company. A potential investor can approach the owners, but they¶re not obliged to sell any shares. However, public companies sell at least a portion of themselves to the public and they also trade on stock exchanges. Public companies have thousands of shareholders and are subject to strict rules and regulations. They must have a board of director and they must report financial information every quarter. Public companies are regulated by governing bodies. The stock is traded in the open market and any investor, who has got money, can invest in them. The CEO and the owner can not prevent an investor from buying stock. Going public provides an opportunity to raise cash for the companies, while opening many financial doors as well. Public companies can get better rates when they issue debts because of the increased scrutiny involved. A public company can always issue more stock, as long as there is market demand. Consequently, mergers and acquisitions become easier to execute as stock can be issued as part of the deal. Trading in the open markets also provides liquidity. This makes it possible to implement things like employee stock ownership plans, which help to attract top talent. Besides, being on a major stock exchange carries a considerable amount of prestige. However, there have many instances worldwide of companies coming with IPOs just to make the founders rich. This trend was particularly witnessed during the internet boom. In market talks, this is referred to as an exit strategy, implying there is no desire involved to stick around and create value for shareholders. In these cases, the IPO becomes the end of the road rather than the beginning. After all, an IPO is entirely a sales job and if one can convince people to buy stock in the company, a lot of money can be raised.

2. Introduction
The decision to go public, or make an initial public offering (IPO) of equity, represents an important landmark in a firm¶s life cycle. A well-functioning IPO market provides exit options for stakeholders in young firms, access to low cost capital for growing firms, and greater access to capital for future expansion of large firms. Flow of capital to firms can stimulate growth in an economy. Thus, regulators are interested in mechanisms that facilitate better functioning IPO markets.

Public issue: When an issue / offer of securities is made to new investors for becoming a part of shareholders¶ family of the issuer it is called a public issue. Public issue can be further classified into Initial public offer (IPO) and Further public offer (FPO).

1. Initial public offer (IPO):

IPO" stands for an ³Initial Public Offering" of securities. The term is usually used when a business has decided to "go public" to raise substantial amounts of capital by offering ownership interests in the company to the public at large.When an unlisted company makes either a fresh issue of securities or offers its existing securities for sale or both for the first time to the public, it is called an IPO. This paves way for listing and trading of the issuer¶s securities in the Stock Exchanges.

Advantages:
y Facilitates future funding y Enables valuation of the company y Provides liquidity to existing shares. y Increases visibility of the company y Commands better pricing than placement with few investors.

Disadvantages:
y Dilution of ownership stake y Involves substantial expenses y Need to make continuous disclosures y Increased regulatory monitoring y Takes substantial amount of management time and efforts.

2. Further public offer (FPO) or Follow on offer:
When an already listed company makes either a fresh issue of securities to the public or an offer for sale to the public, it is called a FPO.

Preliminary These Guidelines have been issued by the Securities and Exchange Board of India under Section 11 of the Securities and Exchange Board of India Act. insertions in newspaper. ³Board´ means the Securities and Exchange Board of India established under provisions of Section 3 of the Act. These Guidelines may be called the Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines. posters. show cards. ³Abridged Letter of Offer´ in relation to a rights issue means the abridged form of a letter of offer which satisfies the minimum requirements laid down in Section IV of Chapter VI of the Guidelines). 1956. hoardings. Definitions: In these Guidelines. unless the context otherwise requires. films. ³Advertisement´ includes notices. radio. 1992. circulars. ³Abridged Prospectus´ means the memorandum as prescribed in Form 2A under Sub-section (3) of Section 56 of the Companies Act. 1992 (15 of 1992). ³Act´ means the Securities and Exchange Board of India Act. pamphlets. brochures. television programmes through any electronic medium. pictures. 2000. These Guidelines shall come into force from the date specified by the Board. cover pages of offer documents or any other print medium. . catalogues. placards.3. ³Application Supported by Blocked Amount (ASBA)´ means an application for subscribing to an issue containing an authorisation to block the application money in a bank account.

³Designated Financial Institution´ means the public financial institution included in or notified under Section 4A of the Companies Act. 1996. ³Composite Issues´ means an issue of securities by a listed company on a public cum rights basis offered through a single offer document wherein the allotment for both public and rights components of the issue is proposed to be made simultaneously. 1999. ³Convertible Debt Instrument´ means an instrument or security which creates or acknowledges indebtedness and is convertible into equity shares at a later date. document or information memoranda or offer document. ³Depository´ means a body corporate registered under Securities and Exchange Board of India (Depositories and Participants) Regulations. .³Book Building´ means a process undertaken by which a demand for the securities proposed to be issued by a body corporate is elicited and built up and the price for such securities is assessed for the determination of the quantum of such securities to be issued by means of a notice. whether constituting a charge on the assets of the body corporate or not. ³Collection Centre´ means a place where the application for subscribing to the public or rights issue is collected by the Banker to an Issue on behalf of the issuer company. at or without the option of the holder of the instrument or the security of a body corporate. circular. ³Designated Stock Exchange´ means a stock exchange in which securities of the company are listed or proposed to be listed and which is chosen by the company for purposes of a particular issue under these guidelines. 1961. ³Credit Rating Agency´ means a body corporate registered under Securities and Exchange Board of India (Credit Rating Agencies) Regulations. advertisement. Industrial Development Corporation established by State Governments and financial institutions approved under Section 36(1)(viii) of Income Tax Act.

1. subject to the above clause. ³Merchant Banker´ means an entity registered under Securities and Exchange Board of India (Merchant Bankers) Regulations. 1999 and includes instructions issued by the Board. ³Guidelines´ means Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines.2A. ³Issuer Company´ means a company which has filed offer documents with the Board for making issue of securities in terms of these guidelines. which is granted to a company to be exercised through a Stabilising Agent. maintaining and operating infrastructure facility. the company shall choose one of them as the designated stock exchange. ³Infrastructure Company´ means. ³Green Shoe Option´ means an option of allocating shares in excess of the shares included in the public issue and operating a post-listing price stabilizing mechanism in accordance with the provisions of Chapter VIII-A of these Guidelines. ³Fast Track Issue´ means a public issue or rights issue made by a listed company which satisfies all the requirements of clause 2. ³Mutual fund´ means a mutual fund registered with the Board under the SEBI (Mutual Funds) Regulations. 1992. 1996. . a company wholly engaged in the business of developing. ³Listed Company´ means a company which has any of its securities offered through an offer document listed on a recognised stock exchange and also includes Public Sector Undertakings whose securities are listed on a recognised stock exchange.Provided that where any of such stock exchanges have nationwide trading terminals. Provided further that the company may choose a different exchange as a designated stock exchange for any subsequent issue.

³Offer for Sale´ means offer of securities by existing shareholder(s) of a company to the public for subscription. . ³Unlisted Company´ means a company which is not a listed company. ³Preferential Allotment´ means an issue of capital made by a body corporate in pursuance of a resolution passed under Sub-section (1A) of Section 81 of the Companies Act. ³Public Issue´ means an invitation by a company to public to subscribe to the securities offered through a prospectus.³Networth´ means aggregate of value of the paid up equity capital and free reserves (excluding reserves created out of revaluation) reduced by the aggregate value of accumulated losses and deferred expenditure not written off (including miscellaneous expenses not written off) as per the audited balance sheet. through an offer document. ³Offer Document´ means Prospectus in case of a public issue or offer for sale and Letter of Offer in case of a rights issue. 1956. ³Underwriting´ means an agreement with or without conditions to subscribe to the securities of a body corporate when the existing shareholders of such body corporate or the public do not subscribe to the securities offered to them.

Collection of Forms 16. Growth in Sectors and Risk factor 7.Specialized financial Consultancy who looks after Initial Public Offering 3. current Business. Issue of share certificate a. no of Shares. Printing Of Forms 9. Listing Of shares in NSE or BSE. . Prospectus. Allotments Of shares a.4. Appointing of Registrar and transfer agent done by Merchant Bankers 4. regret Leter 19. Financial Condition of the company. Road Shows or meetings 13. Brokers meeting in a Company 12. Refund cheque 20. IPO closed Post IPO 15. Banks.Issued to stock Market and registrars 8.Appointed by Merchant Bankers 5. Marketing & Advertising 11. Appointing of Merchant Bankers. Meeting of Board of Directors 2. Management. Flow Of IPO Procedure Appointment Procedure 1. IPO starts 3-7 days opened 14. lottery system 18. Letter of allotement b. Oversubscription or Undersubscription 17. Book issued by Merchant bankers and submit it to SEBI which includes Reason of Issuing. Appointing of Lawyer Real Procedure 6. Pro data allotments b. Appointment of Brokers 10.

Category of Investors in IPO Qualified Institutional Bidder¶s (QIB¶s): Financial Institutions.5. Banks. FII's and Mutual Funds who are registered with SEBI are called QIB's. y QIB's are prohibited by SEBI guidelines to withdraw their bids after the close of the IPOs. They usually apply in very high quantities. y QIB's have an allocation of 50% of shares of the total issue size in Book Build IPO's. y QIBs are mostly representatives of small investors who invest through mutual funds. y . ULIP schemes of insurance companies and pension schemes.

NRI's.000/.000) in an IPO.00. . y NRI's who apply with less then Rs 1. investors can not apply for more then Rs one lakh (Rs 1. y y They need not to register with SEBI like RII's. Non-institutional bidders have an allocation of 15% of shares of the total issue size in Book Build IPO's. companies. trusts etc who bid for more then Rs 1 lakhs are known as Non-Institutional Bidders. HNI (High Net worth Individual): y If retail investor applies more then Rs 1. y Retail Individual investors have an allocation of 35% of shares of the total issue size in Book Build IPO's.Retail Individual Investor (RII) & High Networth Individual (HNI): RII (Retail Individual Investor): y In retail individual investor category.Institutional Bidders): y Individual investors.of shares in an IPO.00.000/ are also considered as RII category.00. they are considered as HNI NIB¶s (Non. y Retail bidders are permitted to withdraw their bids until the day of allotment.

y File draft offer prospectus with SEBI.IPO Process Initialization: y Appoint lead manager as book runner. y Revert it back to Lead Manager if need clarification or changes (Step 2).Part 1 y Prepare draft offer prospectus document for IPO.6. Life Cycle Of IPO Issuer Company . through which they are distributed to investors. y Appoint registrar of the issue & syndicate members. Document is now called Red Herring Prospectus.Part 2: y Submit the Offer Prospectus to Stock Exchanges. y SEBI approve the draft offer prospectus. the draft offer prospectus is now become Offer Prospectus. y Modify Offer Prospectus with date and price band. . Investor ± Bidding for the public issue: y Public Issue Open for investors bidding. registrar of the issue and get it approved. y Red Herring Prospectus & IPO Application Forms are printed and posted to syndicate members. SEBI ± Prospectus Review: y SEBI review draft offer prospectus.Pre Issue Role . y Road shows for the IPO. Lead Manager's .Pre Issue Role . y Decide the issue date & issue price band with the help of Issuer Company. Lead Manager .

Processing IPO Applications: y Registrar receives all application forms & cheques from Syndicate members. lead managers evaluate the final issue price. y Syndicate members keep updating stock exchange with the latest data. y Investor can revise the bidding by filling a form and submitting it to Syndicate member. y They feed applicant data & additional bidding information on computer systems. y Public Issue Closes for investors bidding. y Prepare 'Basis of Allotment'. y Send the cheques for clearance. . Lead Manager ± Price Fixing: y Based on the bids received. y Lead managers update the 'Red Herring Prospectus' with the final issue price and send it to SEBI and Stock Exchanges. Lead Manager with the help of Stock Exchange decides Issue Listing Date. y Finally share of the issuer company gets listed in Stock Market. y Syndicate members provide the bidding information to BSE/NSE electronically and bidding status gets updated on BSE/NSE websites. y Lead manager ± Stock Listing y Once all allocated shares are transferred in investors dp accounts. y Refund the remaining money through ECS or Cheques.y Investors fill the application forms and place orders to the syndicate members (syndicate member list is published on the application form). y Syndicate members send all the physically filled forms and cheques to the registrar of the issue. y Find all bogus application. y Finalize the pattern for share allotment based on all valid bid received. y Transfer shares in the demat account of investors. Registrar .

if any. on the draft Prospectus shall be 15 days from the date of receipt of satisfactory reply from the Lead Manager/s to the Issue. if any. .7. on the draft Prospectus shall be 30 days from the date of receipt of the draft Prospectus by the Board. Provided that if the Board specifies changes or issues observations on the draft Prospectus (without being under any obligation to do so). unless a draft Prospectus has been filed with the Board through a Merchant Banker. the period within which the Board may specify changes or issue observations. Eligibility Norms For Companies Issueing Securities Conditions for issue of securities The companies issuing securities offered through an offer document shall satisfy the following at the time of filing the draft offer document with SEBI and also at the time of filing the final offer document with the Registrar of Companies/Designated Stock Exchange. the issuer company or the Lead Manager to the Issue shall carry out such changes in the draft Prospectus or comply with the observations issued by the Board before filing the Prospectus with ROC. at least 30 days prior to the filing of the Prospectus with the Registrar of Companies (ROC). Provided further that the period within which the Board may specify changes or issue observations. Filing of offer document No issuer company shall make any public issue of securities. Provided further that where the Board has sought any clarification or additional information from the Lead Manager/s to the Issue.

at least 30 days prior to the filing of the letter of offer with the Designated Stock Exchange (DSE). on the draft Letter of Offer shall be 30 days from the date of receipt of the draft Letter of Offer by the Board. if any. No listed issuer company shall make any rights issue of securities. the period within which the Board may specify changes or issue observations. if any. if any. Provided further that the Board may specify changes or issue observations. through a Merchant Banker. on the draft Prospectus only after receipt of copy of in-principle approval from all the stock exchanges on which the issuer company intends to list the securities proposed to be offered through the Prospectus. exceeds Rs. including premium. 50 lacs. on the draft Letter of Offer shall be 15 days from the date of receipt of satisfactory reply from the Lead Manager/s to the Issue. . Provided further that the period within which the Board may specify changes or issue observations. on the draft Letter of Offer after receipt of comments or reply from such regulator or other agencies. if any. the Board may specify changes or issue observations. the issuer company or the Lead Manager to the Issue shall carry out such changes in the draft Letter of Offer or comply with the observations issued by the Board before filing the Letter of Offer with DSE. on the draft Prospectus after receipt of comments or reply from such regulator or other agencies. if any. Provided further that where the Board has sought any clarification or additional information from the Lead Manager/s to the Issue. the Board may specify changes or issue observations. Provided further that where the Board has made any reference to or sought any clarification or additional information from any regulator or such other agencies. unless a draft letter of offer has been filed with the Board. Provided that if the Board specifies changes or issues observations on the draft Letter of Offer (without being under any obligation to do so).Provided further that where the Board has made any reference to or sought any clarification or additional information from any regulator or such other agencies. if any. where the aggregate value of such securities.

and . 1956. 1956. (b) The company has a track record of distributable profits in terms of Section 205 of the Companies Act. (c) The company has a net worth of at least Rs. atleast 50% of the revenue for the preceding 1 full year is earned by the company from the activity suggested by the new name.Provided further that the Board may specify changes or issue observations. only if it meets all the following conditions: (a) The company has net tangible assets of at least Rs. Provided further that extraordinary items shall not be considered for calculating distributable profits in terms of Section 205 of Companies Act. the company has made firm commitments to deploy such excess monetary assets in its business/project. 1 crore in each of the preceding 3 full years (of 12 months each). of which not more than 50% is held in monetary assets: Provided that if more than 50% of the net tangible assets are held in monetary assets. if any. on the draft Letter of Offer only after receipt of copy of in-principle approval from all the stock exchanges on which the issuer company intends to list the securities proposed to be offered through the Letter of Offer. (d) In case the company has changed its name within the last one year. 3 crores in each of the preceding 3 full years (of 12 months each). for at least three (3) out of immediately preceding five (5) years. Initial Public Offerings by Unlisted Companies: There are three entry norms for unlisted companies: Entry Norm I (commonly known as ³Profitability Route´): An unlisted company may make an initial public offering (IPO) of equity shares or any other security which may be converted into or exchanged with equity shares at a later date.

. Entry Norm II (Commonly known as ³QIB Route´) : An unlisted company not complying with any of the conditions specified in Clause 2..e. only if it meets both the conditions (a) and (b) given below: (a) (i) The issue is made through the book-building process. offer through offer document + firm allotment + promoters¶ contribution through the offer document). failing which the full subscription monies shall be refunded. shall be at least 5% of the proposed issue of the company.(e) The aggregate of the proposed issue and all previous issues made in the same financial year in terms of size (i. 10 crores.2. Market makers undertake to ensure that the bid-ask spread (difference between quotations for sale and purchase) for their quotes shall not at any time exceed 10%: The inventory of the market makers on each of such stock exchanges. (b) OR (i) The minimum post-issue face value capital of the company shall be Rs. subject to the following: Market makers undertake to offer buy and sell quotes for a minimum depth of 300 shares. (ii) There shall be a compulsory market-making for at least 2 years from the date of listing of the shares.1 may make an initial public offering (IPO) of equity shares or any other security which may be converted into or exchanged with equity shares at a later date. with at least (50% of net offer to public) being allotted to the Qualified Institutional Buyers (QIBs). as on the date of allotment of securities. does not exceed five times its pre-issue networth as per the audited balance sheet of the last financial year.

Exemption from Eligibility Norms The provisions of clauses 2. And Compulsory market making for at least 2 years from the date of listing Offer buy/sell quotes minimum depth 300 shares.Bid/ask spread not to exceed 10%. 1959 (hereinafter referred to as ³public sector banks´). 1970 Banking Companies (Acquisition and Transfer of Undertaking) Act.Inventory of market maker on each stock exchange as on allotment date 5% issue. failing which the full subscription monies shall be refunded. 1949 and which has received license from the Reserve Bank of India. 1980. of which at least 10% comes from the appraiser(s). State Bank of India Act 1955 and State Bank of India (Subsidiary Banks) Act. or ii) a corresponding new bank set up under the Banking Companies (Acquisition and Transfer of Undertaking) Act.Entry Norm III (commonly known as ³Appraisal Route´): (a) The ³project´ has at least 15% participation by Financial Institutions/ Scheduled Commercial Banks. iii) an infrastructure company: a) whose project has been appraised by a Public Financial Institution (PFI) or Infrastructure Development Finance Corporation (IDFC) or . In addition to this.2 and 2. at least 10% of the issue size shall be allotted to QIBs.3 shall not be applicable in case of: i) a banking company including a Local Area Bank (hereinafter referred to as Private Sector Banks) set up under sub-section (c) of Section 5 of the Banking Regulation Act.

by way of loan or subscription to equity or a combination of both. jointly or severally. irrespective of whether they appraise the project or not. and b) not less than 5% of the project cost is financed by any of the institutions referred to in sub-clause (a).Infrastructure Leasing and Financing Services Ltd. . (IL&FS) or a bank which was earlier a PFI.

profitability to name a few. growth rate of the company. if or not it is profitable. like market condition. Process of Fixing the Price: Initial Public Offering Price is determined through several phases. That is. The underwriters keep several factors in their mind while setting the public offering price. Firstly. that is. company's growth rates. Finally the phase of observation. It is the price at which the underwriter offers the new issues to public. the company and its underwriters determine a price range within which they are going to set their stock's price. to create a hype about their issues. That prospectus is submitted to the Securities and Exchange Commission (SEC).8. IPO Pricing The determination of initial public offering price depends on several things. current market conditions. These are discussed below. Then the underwriter puts together a prospectus which comprises the price range. These are financial statements of the company. to the initial public offering (IPO) of equity shares or other convertible securities. the company will observe its value assessment by the market after the issue starts trading.The determination of Initial Public Offering price depends heavily upon the company and market conditions. investor confidence to name a few. The determination of initial public offering price also depends on the success of those road shows. IPO Grading: IPO grading is the grade assigned by a Credit Rating Agency registered with SEBI. Sometimes the underwriters go for a road shows. The next phase of pricing starts just before the day of offering. public trends. . widely recognized as the "dog and pony show". In this phase the company and its underwriter fix the final price at which the public can buy the issue.

Some of the factors considered for grading by the rating agencies. as the case may be. Industry Prospects ii. Grade assigned by a Credit Rating Agency registered with SEBI. the Prospectus/Red Herring Prospectus. . while arriving at an IPO grade: Business Prospects and Competitive Position i. so obtained is mandatory for companies coming out with an IPO. Company Prospects      Financial Position Management Quality Corporate Governance Practices Compliance and Litigation History New Projects²Risks and Prospects IPO Grades Grade 1: Poor fundamentals Grade 2: Below-average fundamentals Grade 3: Average fundamentals Grade 4: Above-average fundamentals Grade 5: Strong fundamentals Requirement to obtain the grade for the IPO:IPO grading can be done either before filing the draft offer documents with SEBI or thereafter.represents a relative assessment of the fundamentals of the IPO in relation to the other listed equity securities. must contain the grade/s given to the IPO by all CRAs approached by the company for grading such IPO. Disclosure of ³IPO Grades´. However.

while arriving at an IPO grade: . In case . Since issuance of observation by SEBI and the grading process. While the actual factors considered for grading may not be identical or limited to the following. function independently.Cost of the IPO grading process:The company desirous of making the IPO is required to bear the expenses incurred for grading an IPO. It is mandatory. the grade has to be disclosed as required under the DIP Guidelines. However the issuer has the option of opting for another grading by a different agency. the areas listed below are generally looked into by the rating agencies. delay in IPO grading process:IPO grading is intended to run parallel to the filing of offer document with SEBI and the consequent issuance of observations. In such an event all grades obtained for the IPO will have to be disclosed in the offer documents. is required to obtain a grade for the IPO from at least one Credit Rating Agency. Rejection option for the issuer:IPO grade/s cannot be rejected. Irrespective of whether the issuer finds the grade given by the rating agency acceptable or not. as well as the company¶s financial position. The factors of evaluation of IPO grade:The IPO grading process is expected to take into account the prospects of the industry in which the company operates. advertisements etc. the competitive strengths of the company that would allow it to address the risks inherent in the business and capitalize on the opportunities available. IPO grading is not expected to delay the issue process. Any issuer who decides to offer shares through an IPO. Grading not optional:IPO grading is not optional.

a. Financial Position c. Industry Prospects ii. Management Quality d. . Details of the grading process:All grades obtained for the IPO along with a description of the grades can be found in the Prospectus. Corporate Governance Practices e. Compliance and Litigation History f. Business Prospects and Competitive Position i. the lowest being Grade 1 and highest Grade 5. the investor needs to make an independent judgment regarding the price at which to bid for/subscribe to the shares offered through the IPO. Consideration of price at which securities are offered :IPO grading is done without taking into account the price at which the security is offered in the IPO. Since IPO grading does not consider the issue price. Interpretation of the IPO Grades:The grades are allocated on a 5-point scale. The meaning of these grades has been explained under Question 1 in this FAQ. Company Prospects b. issue advertisement or any other place where the issuer company is making advertisement for its issue. New Projects²Risks and Prospects It may be noted that the above is only indicative of some of the factors considered in the IPO grading process and may vary on a case to case basis. Abridged Prospectus. Further the Grading letter of the Credit Rating Agency which contains the detailed rationale for assigning the particular grade will be included among the Material Documents available for Inspection at the Registered office of the Company.

Care (credit analysis & research limited) 5. Icra limited 4. irrespective of the grade obtained by the issuer.IPO Grading help in deciding about investing in an IPO:IPO Grading is intended to provide the investor with an informed and objective opinion expressed by a professional rating agency after analyzing factors like business and financial prospects. management quality and corporate governance practices etc. the following five credit rating agencies are registered with SEBI. Credit rating agencies registered with SEBI:As on date. Fitch ratings India private limited 3. However. Brickwork ratings India private limited . Role of SEBI in IPO grading exercise:SEBI does not play any role in the assessment made by the grading agency. Crisil limited 2. SEBI does not pass any judgment on the quality of the issuer company. The grading is intended to be an independent and unbiased opinion of that agency. 1. IPO Grading given by CRAs is a parameter for SEBI to issue its Observations:The grading is intended to be an independent and unbiased opinion of a rating agency. the investor needs to make his/her own independent decision regarding investing in any issue after studying the contents of the prospectus including risk factors carefully. SEBI¶s observations on the IPO document are entirely independent of the IPO grading process or the grades received by the company.

such excess contribution shall also be locked in for a period of (one year). y Securities issued last to be locked in first.LOCK-IN REQUIREMENTS Lock in of Minimum Specified Promoters¶ Contribution in Public Issues y Promoters¶ contribution to be brought in at least one day prior to issue opening date and to be kept in Escrow account. PART II . Lock-in of Excess Promoters¶ Contribution In case of a public issue by unlisted company. Promoters¶ Contribution And Lock-in Requirements PART I ± PROMOTERS¶ CONTRIBUTION Promoters¶ Contribution in a Public Issue by Unlisted Companies In a public issue by an unlisted company. y Lock in of excess promoters¶ contribution will be one year. if the promoters¶ contribution in the proposed issue exceeds the required minimum contribution. the promoters shall contribute not less than 20% of the post issue capital. y Lock in for period of 3 years & to start from the date of allotment or date of commencement of commercial production which ever is later. y Locked in shares by promoters may be pledged with bankers provided pledge of shares is one of the conditions. . y This provision ensures that promoters of the company have some minimum stake in the company for a minimum period after the issue or after the project for which funds have been raised from the public is commenced. y Entire pre issue capital other than locked in as minimum promoters¶ contribution shall be locked in for one year. y Inter se transfer of securities amongst promoters may be transferred subject to continuation of lock-in in the hands of transferee for remaining period.9.

a. Pre-issue Obligations Appointment of Merchant Bankers A Merchant Banker shall not lead manage the issue if he is a promoter or a director or associate of the issuer company. Lead managers examine company documents including financial documents. b. documents relating to litigation like commercial disputes. Appointment of other Intermediaries 1. . patent disputes. Provided that a merchant banker holding the securities of the issuer company may lead manage the issue if. in connection with the finalization of the draft red herring prospectus for the IPO. the Market Makers have either been appointed or are proposed to be appointed as per the offer document.10. The names of the Book Running Lead Managers are mentioned in the offer document of the Issuer Company. the securities of the issuer company are listed or proposed to be listed on the Over the Counter Exchange of India (OTCEI) and. Provided further that a merchant banker who is an associate of the issuer company may be appointed as a merchant banker for the issue. BRLM (Book Running Lead Manager): The lead merchant bankers appointed by the Issuer Company are referred to as the Book Running Lead Managers. and other materials. Lead managers are independent financial institutions appointed by the company going public to manage the IPO. Companies planning for IPO (also known as Issuer Company) first approaches or appoint lead managers. They are the main body responsible for most of the IPO processing. disputes with collaborators. if it is involved only in the marketing of the issue. etc.

help company in selling the IPO Shares and road shows. credit of allotted shares in the respective beneficiary accounts. Lead managers certifies to SEBI that all the disclosers made in Draft Red Herring Prospectus are true.e. add or review certain sections of the document. allocate shares to applicants based on SEBI guidelines. listing date etc. Issuer Company with the help of lead manger. Reliance Power IPO came in Jan 2008 had 10 Book Running Lead Managers. adequate and comply with SEBI guidelines to help investors in making a well-informed decision. appoints underwriters or syndicate members for the IPO. help company in finalize the issue price. issue opening & closing dates. SEBI contact lead managers for any irregularities or lapses in RHP and ask them to clarify. Lead managers are responsible for examining the worth of underwriters and there capabilities to buy the shares and assure the same to SEBI. . refund orders etc.Lead manages are responsible to write the Red Herring Prospectus (RHP) and get it approve by SEBI. process refunds and transfer allocated shares to investors demat accounts. write draft herring prospectus and get it approve by SEBI. Registrar to Issue: IPO Registrars are independent financial institutions registered with stock exchanges and appointed by the company going public for mainly to keep record of the issue and ownership of company shares. Investors can contact the Registrar to the Issue in case of any pre-Issue or post-Issue related problems such as non-receipt of letters of allotment. 2. Lead Manager¶s are also known as Book Running Lead Manager and CoBook Running Lead Managers. correct. processing of IPO applications. Responsibility of a registrar at the time of IPO involves. In brief Lead Manager¶s responsibilities include. initiate the IPO processing. Issuer Company can appoint more then one lead manager to manage big IPO's i.

y Date of bid form. date of bid form. y They work as intermediaries for Issuer Company and the buyers of the IPO stocks. Bidders Depository Account Details. Issue prospectus etc. . name and address of the member of the Syndicate where the Bid was submitted and cheque or draft number and issuing bank thereof. Syndicate Member: y Syndicate members are commercial or investment banks responsible for underwriting IPO's. y Name and contact information of IPO registrar is published in the IPO forms. Name and contact information of IPO registrar is published in the IPO forms.Investor should provide following detail to the registrar for quick resolution of queries: The full name of the sole or First Bidder. y Investors can contact the Registrar to the Issue in case of any pre-Issue or post-Issue related problems . y Bidders Depository Account Details. Investor should provide following detail to the registrar for quick resolution of queries: y The full name of the sole or First Bidder. 3. y Process refunds and transfer allocated shares to investors demat accounts. name and address of the member of the Syndicate y Cheque or draft number and issuing bank thereof. Issue prospectus etc. y Bid cum Application Form number. Functions: y Processing of IPO applications. y Number of Equity Shares applied for. y Allocate shares to applicants based on SEBI guidelines. number of Equity Shares applied for. Bid cum Application Form number.

y No company gives to an under-writer more than 5% of their public issue. y Depository Participant Identification Number and Client Identification Number of the beneficiary account of the Bidder. 4. y Entering the bidding detail into the electronic bidding system y Generating a Transaction Registration Slip ("TRS") for each price and demand option and give the same to the bidder. y Registered Lead Merchant Banker always select the under-writers to issue and their name is mentioned in the offer document y The Lead Merchant Banker has to satisfy himself that the assets of the underwriter are sufficient to meet the under-writing commitment. FII. payments and application forms for the public issue.e. the members of the Syndicate enters the following details of the investor in the on-line system: y y y y y y Name of the investor. y They are allowed to do underwriting in the public up to 20 times of their networth. or Mutual Fund etc. the underwriters are paid underwriting commission which is 5% in case of shares and 2. y For under-writing. Bid Amount. y Accepting the bids.Responsibility Of Syndicate Members: y Circulate copies of the RHP to potential investors. Numbers of Equity Shares bid for. Investor Category ± Individual. y The Bidder can make the revision to the bid any number of times during the Bidding Period. Whether Margin Amount has been paid upon submission of Bid cum Application Form. having good paid up share capital and free reserve. y The under-writers are the people having good net-worth i.5% in case of issue of debentures. At the time of registering each Bid. Underwriters: y Under-writing is a insurance against the risk of under subscription. NRI. Bid cum Application Form number. . Corporate.

where applicable. Calcutta and Chennai all such centres where the stock exchanges are located in the region in which the registered office of the company is situated. No Complaints Certificate After a period of 21 days from the date the draft offer document was made public. highlight those amendments. all designated branches of Self Certified Syndicate Banks shall be deemed as mandatory collection centres. Authorised Collection Agents The issuer company can also appoint authorised collection agents in consultation with the Lead Merchant Banker subject to necessary disclosures including the names and addresses of such agents made in the offer document. and. . Delhi.y Underwriting obligations would not be restricted to the minimum subscription level but to the whole issue. Mandatory Collection Centres The minimum number of collection centres for an issue of capital shall be: the four metropolitan centres situated at Mumbai. in respect of issues where Application Supported by Blocked Amount is applicable. the Lead Merchant Banker shall file a statement with the Board: By giving a list of complaints received by it. The issuer company shall be free to appoint as many collection centres as it may deem fit in addition to the above minimum requirement. In addition to the provisions of clause. The modalities of selection and appointment of collection agents can be made at the discretion of the Lead Merchant Banker. a statement by it whether it is proposed to amend the draft offer document or not.

The lead merchant banker shall ensure that the collection agents so selected are properly equipped for the purpose. The investors from the places other than from the places where the mandatory collection centres and authorised collection agents are located. The authorised collection agent shall not collect application moneys in cash. The collection agents may collect such applications as are accompanied by payment of application moneys paid by cheques. . The application forms along with duly reconciled schedules shall be forwarded by the collection agent to the Registrars to the Issue after realisation of cheques and after weeding out the applications in respect of cheques return cases. can forward their applications along with stockinvests to the Registrars to the Issue directly by Registered Post with Acknowledgement Due. The offer documents and application forms shall specifically indicate that the acknowledgement of receipt of application moneys given by the collection agents shall be valid and binding on the issuer company and other persons connected with the issue. drafts and stock invests. within a period of 2 weeks from the date of closure of the public issue. The applications received through the registered post shall be dealt with by the Registrars to the Issue in the normal course. The applications collected by the collection agents shall be deposited in the special share application account with designated scheduled bank either on the same date or latest by the next working day. both in terms of infrastructure and manpower requirements.

. Alternatively. ii) The application form (including Application Supported by Blocked Amount forms) may be stapled to form part of the Abridged Prospectus. etc. rules. iv)The Abridged prospectus shall be printed in a font size as specified in clause.Appointment of Compliance Officer An issuer company shall appoint a compliance officer who shall directly liaise with the Board with regard to compliance with various laws. regulations and other directives issued by the Board and investors complaints related matter. it may be a perforated part of the Abridged Prospectus. The name of the compliance officer so appointed shall be intimated to the Board. Abridged Prospectus The Lead Merchant Banker shall ensure the following: i) Every application form (including Application Supported by Blocked Amount forms) distributed by the issuer Company or anyone else is accompanied by a copy of the Abridged Prospectus. v) Enough space shall be provided in the application form to enable the investors to file in various details like name. address. iii) The Abridged Prospectus shall not contain matters which are extraneous to the contents of the prospectus.

The prospectus shall also contain the information and statements specified in this chapter and shall as far as possible follow the order in which the requirements are listed in this chapter and summarised in Schedule.11. Front Cover Pages 3. About the Issuer Company 9. Risk Factors 7. Table of Contents 5. Definitions and Abbreviations 6. Other Regulatory and Statutory Disclosures 12. Description of Equity Shares and Terms of the Articles of 14. 1. Back Cover Pages 4.CONTENTS OF THE PROSPECTUS The prospectus shall contain all material information which shall be true and adequate so as to enable the investors to make informed decision on the investments in the issue. Cover Pages 2. Legal and Other Information 11. Offering Information 13. Other Information . Association 15. Financial Statements 10. Offer Document¶s Contents The Offer document shall contain the following: SECTION I . Introduction 8.

Management and Project 7. SECTION III .SECTION II . Company. Outstanding Litigations and Defaults (in a summarised tabular form) 9. Company. Terms of the present issue 5. Capital structure of the company 4. management and project 7. Particulars of the issue 6. Capital Structure of the issuer company 4. Expert opinion obtained. Basis for Issue Price 8. 11. if any. General Information 3. Particulars of the Issue 6. General Instructions 2. Undertaking by Directors . Statutory and other information 9. Cover Pages 2. Signatories to the Offer Document.CONTENTS OF ABRIDGED PROSPECTUS 1.CONTENTS OF THE LETTER OF OFFER 1. Terms of the Present Issue 5. Financial performance of the company for the last five years 8. General information 3. Material Development 10.

allotment. the post-issue Lead Merchant Banker shall ensure the submission of the post-issue monitoring reports as per formats specified in Schedule. refund. b) 3 day monitoring report in other cases. including fixed price portion of book built issue: The due date for the report shall be the 3rd day from the date of closure of the issue. These reports shall be submitted within 3 working days from the due dates.12. Redressal of Investor Grievances The Post . c) Final post issue monitoring report for all issues: The due date for this report shall be the 3rd day from the date of listing or 78 days from the date of closure of the subscription of the issue.) . whichever is earlier. POST.ISSUE OBLIGATIONS Post . The due date for submitting Post Issue Monitoring report in case of public issues by listed and unlisted companies: a) 3 day monitoring report in case of issue through book building route. despatch and giving instructions to Self Certified Syndicate Banks and shall regularly monitor redressal of investor grievances arising there from. for book built portion: The due date of the report shall be 3rd day from the date of allocation in the book built portion or one day prior to the opening of the fixed price portion whichever is earlier.Issue Lead Merchant Banker shall actively associate himself with postissue activities namely.Issue Monitoring Reports Irrespective of the level of subscription.

despatch security certificates and refund orders completed and securities listed. Underwriters a) i) If the issue is proposed to be closed at the earliest closing date. the lead merchant banker shall furnish information in respect of underwriters who have failed to meet their underwriting devolvements to the Board in the format specified at Schedule. the lead Merchant Banker shall ensure that the underwriters honour their commitments within 60 days from the date of closure of the issue. there is no definite information about subscription figures. the lead Merchant Banker shall satisfy himself that the issue is fully subscribed before announcing closure of the issue. by the underwriters in respect of their liability. the issue shall be kept open for the required number of days to take care of the underwriters' interests and to avoid any dispute. b) In case there is a devolvement on underwriters. at a later date. ii) In case. (ii) Any act of omission or commission on the part of any of the intermediaries noticed during such visits shall be duly reported to the Board. c) In case of undersubscribed issues. .Co-ordination with Intermediaries (i) The Post-issue lead merchant banker shall maintain close coordination with the Registrars to the Issue and arrange to depute its officers to the offices of various intermediaries at regular intervals after the closure of the issue to monitor the flow of applications from collecting bank branches (and /or Self Certified Syndicate Banks.) processing of the applications including(Application form for Applications Supported by Blocked Amount) and other matters till the basis of allotment is finalised.

Bankers to an Issue). value and percentage of all applications including Applications Supported by Blocked Amount .e. . as per the provisions of section 73(3) of the Companies Act 1956. one Hindi National Paper and a Regional language daily circulated at the place where registered office of the issuer company is situated. number. number. date of completion of despatch of refund orders /instructions to Self Certified Syndicate Banks by the Registrar. Advertisement stating that "the subscription to the issue has been closed" may be issued after the actual closure of the issue. value and percentage of successful allottees for all applications including Applications Supported by Blocked Amount . basis of allotment.Bankers to an issue The post-issue Lead Merchant Banker shall ensure that moneys received pursuant to the issue and kept in a separate bank (i. date of despatch of certificates and date of filing of listing application is released within 10 days from the date of completion of the various activities at least in an English National Daily with wide circulation. Post-issue Lead Merchant Banker shall ensure that issuer company/ advisors/ brokers or any other agencies connected with the issue do not publish any advertisement stating that issue has been oversubscribed or indicating investors¶ response to the issue. advertisement giving details relating to oversubscription. during the period when the public issue is still open for subscription by the public. is released by the said bank only after the listing permission under the said Section has been obtained from all the stock Post-issue Advertisements Post-issue Lead Merchant Banker shall ensure that in all issues.

.Basis of Allotment In a public issue of securities. the Executive Director/Managing Director of the Designated Stock Exchange along with the post issue Lead Merchant Banker and the Registrars to the Issue shall be responsible to ensure that the basis of allotment is finalised in a fair and proper manner.

seek authorization also for the possibility of allotment of further shares to the µstabilizing agent¶ (SA) at the end of the stabilization period in terms of clause. referred to as an over-allotment option. The SA shall enter into an agreement with the issuer company. This would normally be done if the demand for a security issue proves higher than expected. who will be responsible for the price stabilization process.) . The SA shall also enter into an agreement with the promoter(s) or pre-issue shareholders who will lend their shares under the provisions of this Chapter. as the case may be. shall in the resolution of the general meeting authorizing the public issue. a provision contained in an underwriting agreement which gives the underwriter the right to sell investors more shares than originally planned by the issuer. specifying the maximum number of shares that may be borrowed from the promoters or the shareholders. as the ³stabilizing agent´ (SA). Green Shoe Option Legally. from amongst) the issue management team.13. The company shall appoint one of the (merchant bankers or Book Runners. clearly stating all the terms and conditions relating to this option including fees charged / expenses to be incurred by SA for this purpose. prior to filing of offer document with SEBI. An issuer company making a public offer of equity shares can avail of the Green Shoe Option (GSO) for stabilizing the post listing price of its shares. A company desirous of availing the option granted by this Chapter. since the underwriter has the ability to increase supply and smooth out price fluctuations if demand surges too high. A green shoe option can provide additional price stability to a security issue. which shall not be in excess of 15% of the total issue size. if required.

concise and understandable language. landmarks or caricatures or the likes shall be displayed on or form part of the offer documents or issue advertisements. fair and clear and shall not contain any statement which is untrue or misleading. An inaccurate portrayal of past performance or its portrayal in a manner which implies that past gains or income will be repeated in the future. celebrities. and the advertisement shall advise the viewers to refer to the red herring prospectus or other offer document for details. Guidelines On Advertisement The Lead Merchant Banker shall ensure compliance with the guidelines on Advertisement by the issuer company. Issue advertisements shall not appear in the form of crawlers (the advertisements which run simultaneously with the programme in a narrow strip at the bottom of the television screen) on television. Extensive use of technical. An issue advertisement shall not contain any information that is not contained in the offer document. shall be avoided. . legal terminology or complex language and the inclusion of excessive details which may distract the investor. fictional characters. No models.) No advertisement shall include any issue slogans or brand names for the issue except the normal commercial name of the company or commercial brand names of its products already in use. No slogans. which may give an exaggerated picture of the performance or activities. An advertisement shall be set forth in a clear. An issue advertisement shall not contain statements which promise or guarantee rapid increase in profits. if it contains Statements made about the performance or activities of the company in the absence of necessary explanatory or qualifying statements. Guidelines on Advertisements An issue advertisement shall be truthful. An issue advertisement shall be considered to be misleading. than what it really is. In case of issue advertisement on television screen: The risk factors shall not be scrolled on the screen. Any advertisement reproducing or purporting to reproduce any information contained in a offer document shall reproduce such information in full and disclose all relevant facts and not be restricted to select extracts relating to that item.14. expletives or non-factual and unsubstantiated titles shall appear in the issue advertisements or offer documents.

share capital. the issue advertisement shall specify the same and indicate the place in India from where the individual NRI applicant can procure application forms.If any advertisement carries any financial data. No incentives. except to the effect that the issue is open or closed. net profit. Magazines. . In case there is a reservation for the NRIs. apart from the permissible underwriting commission and brokerage. gross profit. Announcement regarding closure of issue shall be made only after the Lead Merchant Banker is satisfied that at least 90% of the issue has been subscribed and a certificate has been obtained to that effect from the Registrar to the Issue. No announcement regarding closure of the issue shall be made except on the last closing date. it shall also contain data for the past three years and shall include particulars relating to sales. No issue advertisement shall be released without giving ³Risk Factors´ in respect of the concerned issue. All issue advertisements in newspapers. No advertisement shall be issued stating that the issue has been fully subscribed or oversubscribed during the period the issue is open for subscription. pamphlets containing highlights relating to any issue shall also contain risk factors given equal importance in all respects including the print size. reserves. shall be offered through any advertisements to anyone associated with marketing the issue. dividends and the book values. earnings per share. If the issue is fully subscribed before the last closing date as stated in the offer document. the announcement should be made only after the issue is fully subscribed and such announcement is made on the date on which the issued is to be closed. brochures.

Here. 3. Investors shied away from the market after burning their fingers in those premium issues now being quoted only below their issue price but even below their par value. Bookbuilding Method Bookbuilding is essentially a process used by companies raising capital through Public Offerings-both Initial Public Offers (IPOs) or Follow-on Public Offers ( FPOs) to aid price and demand discovery. which are within the price band specified by the issuer.15. This era was characterized by unrealistic & abrupt pricing structure. Fixed price offerings were made to uniformed investors. Fixed Pricing Method: The mechanics of determining the offer price during the CCI regime was to offer share at a fixed price. The issue price is determined after the bid closure based on the demand generated in the process. during the period for which the book for the offer is open. the firm & the merchant banker decided an offer price without taking into account the investor¶s feedback. The process is directed towards both the institutional as well as the retail investors. It is a mechanism where. 2. Fair Price Method: The pricing pattern changed in the free pricing era. there was a long time lag from the date of pricing to the date the issue opened and to the date trading commenced. This raises the possibility of price fluctuation in the intervening period. . which stripped the radiance of the capital market. Moreover. Empirical evidence supports the view that fixed price-offering results in high cost of capital for firms due to under pricing of shares for attracting subscription. IPO Methods 1. the bids are collected from investors at various prices.

y The syndicate members input the orders into an 'electronic book'. This process is called 'bidding' and is similar to open auction. . On the close of the book building period. y Allocation of securities is made to the successful bidders. Bids have to be entered within the specified price band. the numbers of shares are fixed. the issue size gets frozen based on the final price per share. the book runners evaluate the bids on the basis of the demand at various price levels. y y y y The book normally remains open for a period of 5 days. y The Issuer specifies the number of securities to be issued and the price band for the bids. y Generally.Stages: y The Issuer who is planning an offer nominates lead merchant banker(s) as 'book runners'. Bids can be revised by the bidders before the book closes. y The book runners and the Issuer decide the final price at which the securities shall be issued. y The Issuer also appoints syndicate members with whom orders are to be placed by the investors. The rest get refund orders.

merchant bankers. all investors are free to have a share in the public portion but they can do so through the syndicate members. broker & high net worth individuals. The placement portion The public portion ± the net offer to the public. i.e. The syndicate is made of entities like underwriters. the issue securities can be categorized in to I. .16. The public portion refers to the offer to the public. By and large. The price arrived at in the Book building method is applicable to the public offer. The placement portion is the portion of the issue offered to the public through the syndicate by way of Book building process. y y 75% Book building 100% Book building In 75 % Book building. TYPES OF BOOKBUILDING The issue of securities through Book building can be done in either of the following two ways. II. it is responded to by retail offerings. financial institutions.

1 75% Book building process] The 75% Book building route is available to all corporate which are otherwise eligible to make an issue to the public. The prospectus should indicate the price band within which the securities are being offered to the subscription. The SEBI has granted issuers the permission to go for 100% Book building without offloading any portion of the issue in the market. without having to make a mandatory fix price offering. & 15 % to non institutional segment. The issue size shall not be less than 100 crore & underwriting shall be mandatory to the extent of the net offer to the public. 35% retail segment.[9. The Book building portion shall be allotted in demat form only. Book building shall be for portion other than the promoter¶s contribution. The size of the issue has to be at least Rs 25 crore & issue has to be fully underwritten. In 100% Book building the . The 100% Book building comes from the stipulation of proportionate allotment to various categories of investors ± 50% to qualified institutional investors. The SEBI allows partial Book building with only 75% of the total issue allotted for the Book building portion the remaining 25% has to be compulsorily offloaded in general market at a fixed price discovered during the Book building process. A 100 % Book building issue implies that the entire issue completed in a single stage.

II. IV. Appoint lead manager as book runner.lead manager has to focus on nationwide centers to collect bids due to retail participation in the bid. SEBI approve the draft offer prospectus. Document is now called Red Herring Prospectus. Lead Manager . 3. SEBI ± Prospectus Review 1.Part 2 1. 3. the draft offer prospectus is now become Offer Prospectus. Appoint registrar of the issue. I. 2. Below is the detail process flow of a 100% Book Building Initial Public Offer IPO.IPO Process Initialization 1. File draft offer prospectus with SEBI. Real processing steps are more complicated and may be different.Part 1 1. registrar of the issue and get it approved. 4. Submit the Offer Prospectus to Stock Exchanges. 2. Lead Manager's . through which they are distributed to investors. 2. Modify Offer Prospectus with date and price band. This process flow is just for easy understanding. Issuer Company . Prepare draft offer prospectus document for IPO. Red Herring Prospectus & IPO Application Forms are printed and posted to syndicate members. SEBI review draft offer prospectus. where as in partial Book building lead manager focuses on only three or four centers to collect bids.Pre Issue Role . III. 3. Decide the issue date & issue price band with the help of Issuer Company. Revert it back to Lead Manager if need clarification or changes (Step 2). . The steps provided below are most general steps involve in the life cycle of an IPO. Appoint syndicate members. 2. Road shows for the IPO. 3.Pre Issue Role .

Transfer shares in the demat account of investors. Lead managers update the 'Red Herring Prospectus' with the final issue price and send it to SEBI and Stock Exchanges. VI. Finally share of the issuer company gets listed in Stock Market. They feed applicant data & additional bidding information on computer systems 3. Prepare 'Basis of Allotment'. Lead Manager ± Price Fixing 1. Investors fill the application forms and place orders to the syndicate members (syndicate member list is published on the application form).Processing IPO Applications 1. VIII. Once all allocated shares are transferred in investors dp accounts. Syndicate members send all the physically filled forms and cheques to the registrar of the issue. 4. 7. Public Issue Closes for investors bidding. Registrar receives all application forms & cheques from Syndicate members. VII Registrar . Find all bogus application. Lead Manager with the help of Stock Exchange decides Issue Listing Date. lead managers evaluate the final issue price. 5. Public Issue Open for investors bidding. 8. Finalize the pattern for share allotment based on all valid bid received. Investor can revise the bidding by filling a form and submitting it to Syndicate member. 6.V. Syndicate members provide the bidding information to BSE/NSE electronically and bidding status gets updated on BSE/NSE websites. Refund the remaining money though ECS or Cheques. 2. 2. . 2. 4. 7. Lead manager ± Stock Listing 1. Based on the bids received. Send the cheques for clearance. 2. Investor ± Bidding for the public issue 1. 6. 5. Syndicate members keep updating stock exchange with the latest data. 3.

17. Listing The company may apply for listing of its securities on an . Appointment of Registrar to the Issue company shall appoint a Registrar to the Issue having electronic connectivity with the Stock Exchange/s through which the securities are offered under the system. the broker shall pay such amount. if any. the brokers. for the purpose of accepting applications and placing orders with the company. Agreement with the Stock exchange: The company shall enter into an agreement with the Stock Exchange(s) which have the requisite system of on-line offer of securities. The exchange shall ensure that the broker does not levy a service fee on his clients in lieu of his services. The agreement mentioned in the above clause shall specify inter-alia. so appointed accepting applications and application monies. shall collect the money from his/their client for every order placed by him/them and in case the client fails to pay for shares allocated as per the Guidelines. the rights. shall be considered as µcollection centres¶. wherever applicable. duties. shall appoint brokers of the exchange. who are registered with SEBI. The company/lead manager shall ensure that the brokers having terminals are appointed in compliance with the requirement of mandatory collection centres. responsibilities and obligations of the company and stock exchange (s) inter se. Appointment of Brokers: The stock exchange. The broker/s so appointed. The company shall pay to the broker/s a commission/fee for the services rendered by him/them. as specified in clause The company/lead manager shall ensure that the brokers so appointed are financially capable of honouring their commitments arising out of defaults of their clients. The agreement may also provide for a dispute resolution mechanism between the company and the stock exchange. For the purposes of this Chapter. Guideline On Initial Public Offers Through The Stock Exchange On Line System(e-IPO) A company proposing to issue capital to public through the on-line system of the stock exchange for offer of securities shall comply with the requirements as contained in this Chapter in addition to other requirements for public issues as given in these Guidelines.

exchange other than the exchange through which it offers its securities to public through the on-line system. namely. The names of brokers appointed for the issue along with the names of the other intermediaries. . Lead managers to the issue and Registrars to the Issue shall be disclosed in the prospectus and application form. Responsibility of the Lead Manager The Lead Manger shall be responsible for co-ordination of all the activities amongst various intermediaries connected in the issue / system.