SEBI Guidelines

IPO
 Entry Norms
Profitability route
• The company has net tangible assets of at least Rs. 3 crores in each of
the preceding 3 full years (of 12 months each)
• The company has a track record of distributable profits in terms of
Section 205 of the Companies Act, 1956, for at least three (3) out of
immediately preceding five (5) years
• The company has a net worth of at least Rs. 1 crore in each of the
preceding 3 full years (of 12 months each)
• In case the company has changed its name within the last one
year,atleast 50% of the revenue for the preceding 1 full year is earned
by the company from the activity suggested by the new name
• The aggregate of the proposed issue and all previous issues made in
the same financial year in terms of size (i.e., offer through offer
document + firm allotment + promoters’ contribution through the offer
document), does not exceed five (5) times its pre-issue networth as per
the audited balance sheet of the last financial year
 Entry Norms
QIB Route
• The issue is made through the book-building
process, with at least (50% of net offer to public)
being allotted to the Qualified Institutional
Buyers (QIBs), failing which the full subscription
monies shall be refunded.
• There shall be a compulsory market-making for
at least 2 years from the date of listing of the
shares.
 Entry Norms
Apprisal route
• The “project” has at least 15%
participation by Financial Institutions/
Scheduled Commercial Banks, of which at
least 10% comes from the appraiser(s).

• There shall be a compulsory market-

making for at least 2 years from the date
of listing of the shares.
 Price band
• Issuer company can mention a price band
of 20% (cap in the price band should not
be more than 20% of the floor price) in the
offer documents filed with the Board
 Promoters’ contribution
• In a public issue by an unlisted company, the
promoters shall contribute not less than 20% of
the post issue capital
• In case of any issue of capital to the public the
minimum promoters’ contribution shall be locked
in for a period of 3 years
• The lock-in shall start from the date of allotment
in the proposed public issue and the last date of
the lock-in shall be reckoned as three years from
the date of commencement of commercial
production or the date of allotment in the public
issue whichever is later
 Appointment of Intermediaries
• A Merchant Banker shall not lead manage the
issue if he is a promoter or a director or associate
of the issuer company
• The Lead Merchant Banker shall not act as a
Registrar to an issue in which it is also handling
the post issue responsibilities.
• In respect of every underwritten issue, the lead
merchant banker(s) shall undertake a minimum
underwriting obligation of 5% of the total
underwriting commitment or Rs.25 lacs whichever
is less.
 Mandatory Collection Centres
• the four metropolitan centres situated at
Mumbai, Delhi, 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
• The authorised collection agent shall not
collect application moneys in cash