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IPO - Regulation & Procedure

SEBI (Issue of Capital and Disclosure Requirements) GUIDELINES, 2009

• Applicability of the guidelines for all public issues by listed and


unlisted companies whose capital is listed.
• Exception of right issue with aggregate value not exceeding `50 lacs.
• No issuer shall make public issue of securities unless Draft Prospectus
has been filed with SEBI through merchant Banker at least 30 days
prior to filing of Prospectus with ROC.
• Companies prohibited from accessing capital market not to make
issue of securities.
• Company to enter into agreement with depository for
dematerialisation of securities.
• Company to give option to receive security certificate (physical form)
or dematerialized form (electronic form)
Eligibility for an IPO - (I)
(clause 26.1)
• Company has net Tangible assets of at least 3 crores in each of the
three preceding full years (of 12 months each) of which not more
than 50% held in monetary assets (if more than 50% with
commitment to deploy the excess in business/project)
• Track record of distributable profits in terms of section 205 of
Companies Act for at least three out of immediately preceding five
years.
• Net worth of at least Rs.1 Crore in each of 3 full year preceding.
• If the name change within last one year at least 50% of revenue
from the changed activity.
• Aggregate of proposed issue (offer thro’ offer for sale; firm
allotment to promoters) and all previous issues made in same
financial year not to exceed 5 times pre issue net worth.
Eligibility for an IPO - (II)
(clause 26.2)
• Companies not complying conditions specified in 26.1 may make an IPO only if both (a) (b)
are fulfilled.
(a) (i) Issue is made thro’ Book Building with at least 50% [Net offer to public] be
allotted to QIB, failing which entire subscription to be refunded;
Or
(ii) Project has at least 15% participation by FI or Scheduled Bank of which at least
10% from appraiser. In addition at least 10% of issue to be allotted to QIB failing
which refund of subscription
AND
(b) (i) Minimum post issue face value of capital shall be `10 crores
OR
(ii) 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%
- Inventory of market maker on each stock exchange as on allotment date 5%
issue.
IPO Grading / Credit Rating (Debt)

A. Credit Rating
 Not below investment grade form not less than two agencies.
 Not in the list of willful defaulters RBI.
 Not in default of payment of interest > 6 months.
 No allotment of Non Convertible Debentures through public issue if allottees are less
than fifty (50).
 Refund within 8 days any delay beyond this, interest @ 15%.
B. IPO Grading
 Grading for IPO from at least one credit rating agency.
 Disclosure of grades obtained
 Expenses for grading of IPO to be borne by the Company.
C. Others
 No outstanding warrants (financial instruments to be entitled for equity share post IPO)
 No partly paid up shares (existing)
 Means of finance to be tied up at least 75% of total financing.
Pricing of Issues
A. Pricing of Issue
• Free pricing allowed in respect of Public/Rights, Infrastructure Company, IPO by
Banks
• Differential pricing
1. Firm Allotment category v/s public Firm Allotment price must be higher than
public
2. Rights cum public offer
3. Justification of the price to be disclosed.
B. Price Band
- Price band of 20% i.e. cap price not more than 20% of the floor price
- Price fixation through Board Resolution
- In case of listed companies 48 hours notice to the Designated Stock Exchange
for passing resolution for determination of price
- Draft prospectus stage , price or price band need not be disclosed.
C. Discount/Commission
Not allowed to those who received firm allotment.
Freedom to determine denomination

(i) If issue price more than `500 /- share face value can be
below `10/- subject to minimum of `1/-
(ii) If issue price not more than `500/- share face value shall be
`10/-
Promoters’ Contribution & Lock in of shares

• Not less than 20% of post issue capital


- Public issue by unlisted company
- Offer for sale
- Public issue by listed company
• In case of composite issue option to promoters
- either 20% of public issue component or 20% post
issue whichever is higher
- rights issue component shall be excluded while
calculating post issue capital.
Securities not eligible - Computation of Promoters’ Contribution

• Securities acquired during preceding 3 years will not be eligible if:


a) acquired for consideration other than cash
b) acquired through bonus shares out of revaluation reserve
c) acquired through bonus against shares which are otherwise not
eligible

• Securities acquired during preceding 1 year at a price lower than


issue price of Public offer

• Conversion of partnership firm to company if price is not the same.


Lock in requirements
• Promoters’ contribution to be brought in at least one day prior to issue opening date and to
be kept in Escrow account.
• Lock in for period of 3 years.
• Lock in to start from the date of allotment
• Last date of lock in shall be reckoned as three years from the date of commencement of
commercial production or date of allotment which ever is later.
• Lock in of excess promoters’ contribution will be one year.
• Securities issued last to be locked in first.
• Entire pre issue capital other than locked in as minimum promoters’ contribution shall be
locked in for one year.
• Securities issued on firm allotment basis shall be locked in for a period of one year from the
date of commencement of commercial production or date of allotment whichever is later.
• Locked in shares by promoters may be pledged with bankers provided pledge of shares is one
of the conditions.
• Inter se transfer of securities amongst promoters may be transferred subject to continuation
of lock-in in the hands of transferee for remaining period.
• Inscription of Non transferability
• Non-Transferable along with duration.
PART I
Pre Issue Obligations
Pre-Issue Obligations of Merchant Banker
• Merchant banker to exercise due diligence
• Merchant banker shall satisfy himself about all aspects of offering, veracity
and adequacy of disclosures
• Liability of merchant banker shall continue even after completion of issue
process
• Payment of requisite fees.
• Memorandum of Understanding (MOU) is a must before making any issue
of security.
• MOU to spell out mutual rights, liabilities and responsibilities relating to
issue.
• Mutual rights and obligation amongst merchant bankers.
• Merchant banker responsible for drafting offer document shall ensure that
copy of MOU entered into with the issuer company is submitted along
with DRHP
Pre- Issue Obligations (Contd….)

• Inter se allocation of responsibility demarcating rights, obligation


and responsibilities of each merchant banker
• In case of under subscription at an issue lead Merchant Banker to
ensure that underwriters pay the amount of devolvement ( format
as per Schedule II)
• Lead Merchant Banker shall furnish the Board a due diligence
certificate as specified in Schedule VI-Form A along with draft
prospectus
• Furnishing due diligence certificate from time to time
 At the time of filing prospectus with ROC – Schedule VI-Form C
 Immediately before opening of the issue- Schedule VI-Form D
 After the issue has opened but before its closure – Schedule VI-
Form E.
Appointment of Intermediaries
• Merchant Banker shall not lead manage the issue if he is a promoter or
director or associate
• Appointment of co-managers
• Other intermediaries such as syndicate members, registrars, Bankers to
the issue
• Ensure registration by the Board
• Underwriting commitment by the underwriters
 Incorporate statement that underwriters assets are adequate to meet
the underwriting obligation (Certificate by CA)
 Obtain underwriters written consent to include their name in final offer
document
 Minimum obligation of lead merchant banker 5% of total underwriting
commitment or Rs.25 lacs which ever is less
 Outstanding underwriting commitment not to exceed 20 times of its
net worth at any point of time
Offer document to be made public

• Draft offer document filed with Board shall be made public for a period of atleast
21 days from the date of filing of the document.
• Hosting of draft and final offer document on the website of lead
managers/syndicate members, website of Exchange and SEBI.
• Filing of offer document with the Stock Exchange where the securities are
proposed to be listed.
• Obtain and furnish to the Board an ‘in principle’ approval of Stock Exchanges
within 15 days of filing draft document with Exchanges
• Pre-issue Advertisement.
• Issuer company soon after receiving final observation on the offer document
from the Board make an advertisement in:
-One English National Daily with wide circulation
-One Hindi National Daily with wide circulation
-One regional language newspaper with wide circulation at place of registered
office of company.
• IPO Grading
Grade obtained along with rationale description must be disclosed in the
prospectus, issue advertisement and all other places where issuer company is
advertising for IPO.
• Despatch of issue material
 Public issue offer document, other issue materials including forms for ASBA are
dispatched to various stock exchanges, bankers underwriters, Bankers to the
issue, Investors’ association and Self Certified Syndicate Banks.
 In case of rights issue merchant banker shall ensure that letter of offers are
dispatched to all shareholders at least one week before the date of opening of
the issue.
• No complaint certificate
After a period of 21 days from the date of offer document was made public Lead
Merchant Banker shall file statement with the Board.
 List of complaint
 Statement by it whether it is proposed to amend the draft offer document.
Collection Centres
• Mandatory collection centre
(Minimum number of collection centres for an issue of capital shall be)
 Four metropolitan centres situated at Mumbai, Delhi, Kolkata, Chennai

 AllRegion
such centres where the stock exchanges are located in the region in which
Exchanges
the registered office of the company is situated (Schedule VII
Northern Ludhiana, Delhi, Jaipur, UP

Southern Bangalore, Cochin, Madras

Eastern Kolkata, Guhati, Bhubaneswar

Western BSE/NSE, OTC, Pune, M. P., Vadodara, Ahmedabad

 Above requirement is mandatory. Issuer Company shall be free to appoint as


many as collection centres as it may deem fit.
Appointment of Compliance Officer

• Issuer Company shall appoint compliance officer who shall


directly liaise with the Board with regard to compliance of
various laws, rules, regulations and other directives issued by
the Board.

Agreement with depositories

• Merchant Banker to ensure that the issuer company has


entered into agreements with the depositories for
dematerialization of securities.
Content of the offer Document
Contents of the Offer Document
•In addition to the disclosures specified in Schedule II of Companies Act, 1956 the
prospectus shall contain the following
•Front Cover Page
Issue details
Name of the issuer company, its logo, its previous name, address of Registered office
Issue size (number, price, amount)
Risk in relation to the first issue
General Risk (investment in equity shares ……)
Issuers absolute responsibility
The names, logos, address of Merchant Bankers
The name, logos, address of Registrar to the issue
Issue schedule (Opening, closing and earliest closing date)
Disclosure under the heading IPO Grading and reference to page number
Name of the Stock Exchange
•Back Cover page
Table of contents
Contents of the Offer Document (contd ….)

• Definition and abbreviations


 Conventional / General terms
 Offering related terms
 Company/industry related terms
 Abbreviations
• Risk Factors
 Criminal charges under IPC and violations of Securities law (to be
highlighted in bold)
 Risk factors shall be disclosed in the descending order of materiality
and implication on financials of issuer
 All statutory clearances and approval yet to be received
 Seasonality of business
 Issue of shares in the recent past at a price lower than issue price to
part finance acquisition but targets are not identified and deployment
of fund till the objective is fulfilled with probable duration.
Risk factors (contd…..)

 Industry segment for which the issue is proposed has contributed 25% of
revenue in last 3 years
 Dependence on business upon specific segment or single customer or few
customers
 If listing of any securities of the issuer, subsidiaries or associates has been
refused at any time by any stock exchange in India/abroad to be disclosed
with reasons
 Penalties imposed by SEBI
 If issuer/subsidiary/group/associate has failed to meet listing
requirements
 Outstanding debentures/bonds with default compliance either in the form
of security creation/interest/redemption
 Default in payment of deposit or any liability. Even if liability is rolled over
the fact of rollover shall be disclosed
 If promoters / directors are involved with one or more ventures with same
line of activity, potential conflict of business to be disclosed.
Risk factors (contd ..…)

 Shortfall of performance v/s promise made in previous issues of the


issuer / group associate companies.
 Valuation in the software / IT / media / entertainment are presently high
and may not sustain in future and not reflective of future valuation
 If any part of issue funds is to be paid as consideration to
promoters/directors
 If promoters do not have adequate background and experience in the
activities for which issuer is proposed.
 Loss making ventures of promoters
 Pending litigation / disputes / over dues to banks and financial institutions
proceedings initiated for economic offence against promoters / promoters
companies, firms
 Interest of promoters / directors other than reimbursement of expenses
incurred or normal remuneration have to be disclosed as risk factor
 Contingent liabilities not provided for
Notes to Risk factors

 Net worth before issue (as per audited statement) and issue size
 cost per share to promoters and book value per share
 Interest of promoters / directors / key management personnel other than
reimbursement of expenses incurred and normal remuneration
 If issuer company transacted with group / subsidiary companies during
the year; the nature of transaction and its cumulative values.
 Related party disclosures
 Loans/advances made to any person or company in which Directors are
interested.
Introduction

• Summary of industry and business


• Offering details in brief
• Summary of consolidated financials, operating and other data
• General information
 Name / address / registration number
 Board of Directors
 Brief details of Chairman, MD, Whole Time Director of the company
 Administrative details
(Company Secretary/Legal Advisor/Banker)
 Administrative details of intermediaries
 Details of Auditors
 Statement of inter-se allocation of duties among the merchant bankers
 IPO Grading with rationale
 Name, address of monitoring agency
 Details of appraising agency
 Book building process in brief
 Details of underwriting
Capital Structure

• Present capital structure


• Paid-up capital / share premium account
(i) before the issue
(ii)after the issue
• Capital history indicating issue of shares to the promoters including
price details
• Promoters’ contribution and lock in details
• Statement as to over subscription to the extent of 10% of net offer to
public can be retained for the purpose of rounding off
• Details of major shareholders at specified dates
Top ten shareholders on the date of filing prospectus with ROC
Top ten shareholders on the date two years prior to the date of
filing prospectus
Top ten shareholders on the date 10 days prior to the date of filing.
Capital Structure (contd ……)

• For the purpose of disclosure of shareholding the promoter shall include:


(a) person or persons in overall control
(b) person or persons who are instrumental in formation of a plan pursuant to which
securities are offered to public
(c) person or persons named in prospectus as promoters
• Promoter group shall include:
(a) promoter
(b) an immediate relative of the promoter
(c ) in case promoter is company
- subsidiary or holding company
- any company in which promoter holds 10% or more of equity capital
- any company in which group of individuals or companies or combination
thereof who holds 20% or more of equity capital
(d) in case promoter is individual
- any company in which 10% or more of share capital is held by promoter
- any company in which company specified above holds 10% or more of the
share capital
- any HUF or firm in which the aggregate share of promoter and his immediate relative is
equal to or more than 10% of the capital
Object of the issue
• Disclose total fund requirement
• In case of multiple activity, break up of fund requirement from each of the activity
• Means of finance
• Undertaking shall be given in the prospectus that firm arrangements have been
made towards 75% of the stated means of financing
• Appraisal detailing scope and purpose
• Cost of project and mean of finance must be as per appraisal report
• Revision, if any, after the appraisal shall be disclosed and explained
• Weakness and threats envisaged in appraisal shall be disclosed as risk factor
• Schedule of implementation giving details of land acquisition, civil works
installation of plant , trial production and date of commercial production
• Statement of funds deployed (as certified by Chartered Accountant)
• Year wise break up of expenditure proposed
• Interim use of funds and approximate period
Basis of issue price
The basis of issue price / floor price /price band shall be disclosed and
justified on the basis of the following parameters:
(i) Pre issue earning per share for last three years (as adjusted to change of
capital)
(ii) Price earnings ratio
(iii) Average return on Net worth
(iv) Minimum return on increased Net worth required to maintain pre issue
EPS
(v) Net assets value per share
(vi) Net assets value after issue and comparison thereof with issue price
(vii) All the accounting ratios to be compared with peer group and industry
average
(viii) face value of share and its comparison with floor price / cap price
e.g. Floor price being “X” times face value
Statement of Tax Benefits
• Tax benefits available to the different class of investors to be specified

• Tax benefits to cover provisions Income tax Act, Capital gains and other
special provisions

• The statement as above to be furnished by the Statutory Auditors of the


issuer company or Chartered Accountant
About the issuer company
• Industry overview
• Business overview
• Details of business of issuer company
- location of the project
- Plant & machinery , technology, process
- Collaborations, performance guarantee
- infrastructure facilities for raw material, water, electricity and other
utilities required for the project
-products / services of issuer company ( nature, market, industry figures
for production & capacities, demand/ supply forecast, marketing set up
and export potential )
- business strategy
• Details of property purchased / acquired and proposed to be purchased or
acquired
• Key Industry regulations including sanctions , approvals and relevant data to be
disclosed
History and Corporate structure
• History and major events
• Main objects of business
• Subsidiaries and associate companies
• Strategic partners
• Financial partners / collaborators
• Management
- Board of directors
- Compensation to MD and other executive members of the board
- Compliance with corporate governance requirements
- Shareholding of directors
- Interest of directors
- Changes, if any, in composition of the board in last three years
- Organisation structure
- Key management details and changes within one year prior to date of filing
- Employee details ( permanent , temporary, workers at plant , contract labour)
History and corporate structure (contd….)

• Corporate profile
• Milestones and achievements in the past (chronological order)
• Other details like PAN, bank account, passport details
• Whether promoters are companies , similar details as above
as well as financial details and shareholding pattern
• Currency presentation ( one standard financial unit through
out the prospectus to be disclosed)
• Dividend policy of the company
Financial Statements
• Financial statements of the issuer company to be disclosed
• Report by the auditors must cover :
- Profit & loss account , Statement of assets & liabilities & cash flow for
last five full years (latest being not later than 6 months preceding the date of prospectus)
- Rate of Dividend
- in case of issuer company having subsidiaries, consolidated statement as
well as individual statements for each of the subsidiaries
- principal terms of loans and assets charged as security
- all significant accounting policies
- break up of turnover in terms of products manufactured and traded
- other income details if it exceeds 20% of Profit before taxes
- accounting and other ratios with definitions
- capitalisation statement
- unsecured loans
• Changes in accounting policies in last three years
Management Discussion and Analysis
• Overview of the business of the company
• Significant development subsequent to the last financial year
• Factors that may materially affect results of operations
• Discussion on results of operations
• Comparison of recent financial years (last 3 years) inter alia following:
- unusual and infrequent events
- significant economic changes
- extent of material increase in net sales due to increased volume,
introduction of new products
- extent to which the business is seasonal
- significant dependence on single or few suppliers / customers
- competitive conditions
Legal & other information
• Pending litigations & material Developments
• Govt approvals/ licensing arrangements
- investment approvals (FIPB/ FDI)
- technical approvals
• Other regulatory & statutory disclosures
- authority for issue and details of resolution
- prohibition by SEBI
- eligibility of the issuer company
• Disclaimer Clauses ( SEBI, Stock exchanges , RBI –if applicable , grading agency)
• Listing (Names of exchanges where securities are proposed to be listed)
• Consent of directors , auditors, solicitors, Managers to the issue, registrars, bankers to the
issue and experts)
• Expenses of the issue
• Details of the fees payable to intermediaries, underwriting commission , brokerage
• Details of previous rights / public issue
• Details of other listed companies under same management
• Stock market data
Offering information

• Terms of the issue


• Minimum subscription
Non underwritten Issue Underwritten Issue

-Company does not receive Company does not receive minimum


minimum subscription of 90% of the subscription of 90% of the net offer
amount on the date of closure or to the public including devolvement
subscription falls below 90% due to of underwriters within 60 days from
cheque returned unpaid then : the date of closure then :

- entire amount to be refunded - entire amount to be refunded

- if delay in refunding amount - if delay in refunding amount


beyond 8 days interest as per beyond 8 days interest as per
section 73 of companies Act section 73 of companies Act
Issue Procedure
• Fixed price issue or book building procedure
(bid/application form, who can bid, max/min bid amount , bidding process, bids at different price levels)
• Availability of forms , prospectus and mode of payment
• Option to subscribe in the issue
• Escrow mechanism (escrow a/c with company & syndicate member)
• Electronic registration of bids
• Build up of book and revision of bids
• Price discovery and allocation
• Signing of underwriting agreement
• Filing of prospectus with Registrar of Companies
• Announcements of pre-issue advertisement
• Issuance of Confirmation of Allocation Note ( “CAN”) , allotment in the issue
• Designated date of allotment
• General instructions: Do’s and Don’ts, instruction of completing bid form
• Payment instructions: payment into escrow account of the issuer or syndicate member, payment
instructions for ASBA
• Submission of bid form
• Basis of allotment or allocation
• Procedure & time schedule for allotment and issue of certificates
• Method of proportionate allotment
• Letter of allotment or refund orders or instructions to Self Certified Syndicate Banks in Application
supported by Block Amount process.
• Mode of making refunds ( ECS, Direct credit, RTGS, NEFT)
• Interest in case of delay in despatch of allotment letter / refund orders
Other information
• Rights of members regarding voting, dividend, lien on shares,
modification of such rights and forfeiture of shares
• Main provisions of articles of association
• List of material contracts and documents for inspection
• Material contract
• Documents
• Time and place at which the contracts , together with documents will be
available for information from the date of prospectus until the date of
closing of subscription list.
• Declaration
The draft prospectus and final prospectus shall be approved by the Board of
Directors of the issuer company and shall be signed by all (including Managing
Director) , CEO and CFO and shall also certify that all the disclosures made in the
prospectus are true and correct.
PART II
Post issue Obligations
Post Issue obligations
• Post issue monitoring reports as per the format specified shall be
submitted within 3 working days from due dates
A. Public issue of listed and unlisted companies
• Due dates for submission of 3 day report
-3 day monitoring report ( book built issue)- 3rd day from date of allocation
- 3day monitoring report (other cases) – 3rd day from the date of closure
- final post issue monitoring report – 3rd day from date of listing or 78
days from date of closure subscription whichever is earlier.
B. Rights issue
• Due dates for submission of 3 day post issue monitoring report
- 3rd day from date of closure of subscription
• Due dates for submission of 15 day post issue monitoring report
- 15th day from the date of closure of subscription of the issue
Post issue obligations (contd ..…)

• Redressal of investors grievances viz, allotment , refund and despatch to


handled by post issue merchant banker
• Co ordination with intermediaries such as registrars and others to monitor
flow of applications from collection bankers branches
• Underwriters to the issue monitor subscription and report of any devolvement
• Moneys kept under separate account (escrow account) is released only after
listing permission has been obtained by the post issue merchant banker
• Release of post issue advertisement giving details of over subscription, basis of
allotment, number, value, % of application including ASBA, and number, value,
% of successful allottees, dates of despatch of refund orders or instructions to
Self Certified Syndicate Banks by the Registrar / certificates and date of filing
of listing application, is released within 10 days from the date of completion of
activities, in English, Hindi & regional language daily newspaper.
Post issue obligations (contd ..…)
• Basis of allotment
Managing Director of designated stock exchange , post issue lead manger and
Registrar shall be responsible to ensure the basis of allotment. Drawal of lots shall
be done in presence of public representative director (where required)
• Proportionate Allotment procedure
Allotment shall be proportionate basis within the specified categories and rounded
off to the nearest integer subject to minimum allotment being equal to minimum
application size.
• Reservation for Retail individual investor
In case of oversubscription a minimum of 50% of the net offer to the public shall
be initially available for allotment to retail individual investors
• Other Responsibilities
Merchant banker to ensure that despatch of share certificate /refund, demat credit
and listing documents submitted within two days of finalisation of basis of
allotment.
• Trading to commence within 7 working days of finalisation of basis of allotment
New Concepts
• Anchor Investor
Anchor investor is a QIB. Minimum application size by the Anchor Investor shall be
10 crores . Out of the portion available for allocation to QIB, upto 30% may be
allocated to Anchor Investors. 1/3 rd of the Anchor Investor portion shall be
reserved for domestic mutual funds.

• Application Supported by Blocked Amount” (ASBA)


ASBA means “Application Supported by Blocked Amount”. ASBA is an application
containing an authorization to block the application money in the bank account,
for subscribing to an issue. If an investor is applying through ASBA, his application
money shall be debited from the bank account only if his/her application is
selected for allotment after the basis of allotment is finalized, or the issue is
withdrawn/failed.
Major differences between the rescinded SEBI (DIP)
Sr. Guidelines
Subject Matter  and the
Provision under new
the SEBI SEBI (ICDR)
ProvisionRegulations
under the SEBI (ICDR) Regulations
No. (DIP)Guidelines
1. Exemption from Exemption available to banking Exemption removed. Eligibility norms made
eligibility norms for company, corresponding new bank applicable uniformly to all types of issuers.
making an IPO and infrastructure company.
2. Debarment Company prohibited from making an Issuer not to make public issue or rights issue of
issue of securities if it had been specified securities if: (a) the issuer, any of its
prohibited from accessing the capital promoters, promoter group or directors or
market under any order or direction persons in control of the issuer are debarred
passed by the Board. from accessing the capital market by the Board;
(b) if any of the promoters, directors or persons
in control of the issuer was or also is a
promoter, director or person in control of any
other company which is debarred from
accessing the capital market under any order or
directions made by the Board.

3. Offer for sale by listed No provision. Provided for and defined as follows: Further
companies public offer means an offer of specified
securities by a listed issuer to the
public for subscription and includes an offer for
sale of specified securities to the public by any
existing holders of such securities in a listed
issuer

4. OTCEI Issues and E-IPO Contained in Chapter XIV and Omitted.


Chapter XI A. 
5. Firm allotment in public Permitted. Omitted.
issues
Major differences between the rescinded SEBI (DIP)
Guidelines and the new SEBI (ICDR) Regulations
Sr. Subject Matter  Provision under the SEBI Provision under the SEBI (ICDR)
No. (DIP)Guidelines Regulations
6. Reservation on (a) For Indian and multilateral (a) Omitted. (b) For shareholders (other
competitive basis in development financial institutions, than promoters) in respect of listed
public issues Indian mutual funds, foreign promoting companies, in case of a new
institutional investors and scheduled issuer and listed group companies, in case
banks. (b) For shareholders of the of an existing issuer.
promoting companies in the case of a
new company and shareholders of
group companies in the case of an
existing company. 
7. Book building process Book building process through 75% or 75% book building route omitted.
100% of issue size.
8. Allotment/ refund period 30 days for fixed price issues and 15 15 days for both fixed price and book built
in public issues days for book built issues. issues.
9. Disclosure of price or Required in draft prospectus in case of Not required to be disclosed in draft
price band fixed price public issues. prospectus.
10. Transfer of surplus Surplus money to be transferred to Surplus money to be transferred to
money in Green Shoe Investor Protection Fund of Stock Investor Protection and Education Fund
Option (GSO) Bank Exchanges. (IPEF) established by the Board.
Account 
Major differences between the rescinded SEBI (DIP)
Guidelines and the new SEBI (ICDR) Regulations
Sr. Subject Matter  Provision under the SEBI Provision under the SEBI (ICDR)
No. (DIP)Guidelines Regulations
11. Issue period for 21 days, as against 10 days for other Uniform period of 10 days for all types of
Infrastructure companies issues. issuers.
in public issues
12. Currency of financial Particulars as per audited financial Government and non-government issuers
statements disclosed in statements not to be more than 6 treated at par.
the offer document months old from the issue opening date
for all issuers, except Government
companies.
13. Definition of “Key Not defined. Defined as follows: KMP means the officers
Management Personnel” vested with executive powers and the
(“KMP”) officers at the level immediately below the
board of directors of the issuer and
includes any other person whom the issuer
may declare as a key management
personnel
14. Disclosure on pledge of Not provided. Provided for.
shares by promoters
15. Extent of underwriting Not explicit. Where 100% of the offer through offer
obligation document is underwritten, underwriting
obligations shall be for the entire amount
underwritten. 
Major differences between the rescinded SEBI (DIP)
Guidelines and the new SEBI (ICDR) Regulations
Sr. Subject Matter  Provision under the SEBI Provision under the SEBI (ICDR)
No. (DIP)Guidelines Regulations
16. Financial institution as a The term “Financial Institution” open toThe term “financial Institution” replaced by
monitoring agency interpretation.  “public financial institution or a scheduled
commercial bank”.
17. Definition of “employee” Includes permanent employee/ director Excludes permanent employee/ director of
of subsidiary or holding company of the subsidiary or holding company of the issuer
issuer. and promoters and immediate relatives of
promoters.
18. Restrictions on If issue opening and closing If advertisement contains information
advertisements  advertisement contained highlights, other than the details specified in the
then the advertisement required to format for issue advertisement, the
contain risk factors.  advertisement shall contain risk factors.
19. Forfeiture of money on Open to interpretation. Where the warrant holder exercises his
unexercised warrants in option to convert only some of the
preferential issues warrants held by him, upfront payment
made against only such warrants can be
adjusted. The balance upfront payment
made against the remaining unexercised
warrants shall be forfeited.
20. Outstanding convertible Compulsory conversion of outstanding Compulsory conversion of all outstanding
instruments in case of convertible instruments and other convertible instruments held by any
initial public offer (IPO) rights held by promoters or person.
shareholders.
Major differences between the rescinded SEBI (DIP)
Guidelines and the new SEBI (ICDR) Regulations
Sr. Subject Matter  Provision under the SEBI Provision under the SEBI (ICDR)
No. (DIP)Guidelines Regulations
21. Minimum promoters’ Could be brought in by promoters/ Shall be brought in only by promoters
contribution persons belonging to promoter whose identity, photograph, etc are
group/friends, relatives and associates disclosed in the offer document.
of promoters.
22. Issue period in case of Issue period not clear in case of revision Total issue period not to exceed 10 days,
public issues in price band in book built public issues. including any revision in price band.
23. Timing of pre-issue Pre-issue advertisement to be made Pre-issue advertisement to be made after
advertisement  for public immediately after receipt of registering of prospectus/ red herring
issues observations from the Board. prospectus with Registrar of Companies
before opening of the issue.
24. Documents to be Documents such as memorandum of Only checklist to be attached.
attached with due association and articles of association
diligence certificate of the company, audited balance sheet,
checklist for compliance with the
rescinded Guidelines etc.
25. Group companies The term “group companies” not The term “group companies” explained.
explained.

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