SECURITIES AND EXCHANGE BOARD OF INDIA
(DISCLOSURE AND INVESTOR PROTECTION)
GUIDELINES FOR CAPITAL ISSUES 2000
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CHAPTER I |
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CHAPTER II |
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CHAPTER III |
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CHAPTER IV |
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CHAPTER V |
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CHAPTER VI |
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CHAPTER VII |
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CHAPTER VIII |
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CHAPTER IX |
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CHAPTER X |
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CHAPTER XI |
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CHAPTER XII |
GUIDELINES FOR ISSUE OF CAPITAL BY DESIGNATED FINANCIAL INSTITUTIONS |
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CHAPTER XIII |
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CHAPTER XIV |
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CHAPTER XV |
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CHAPTER XVI |
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CHAPTER XVII |
SCHEDULES
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SCHEDULE I |
MEMORANDUM OF UNDERSTANDING BETWEEN THE LEAD MERCHANT BANKERS TO THE ISSUE AND THE ISSUER COMPANY |
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SCHEDULE II |
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SCHEDULE III |
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SCHEDULE IV |
FORMAT FOR DUE DILIGENCECERTIFICATE AT THE TIME OF FILING THE OFFER DOCUMENT WITH ROC |
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SCHEDULE V |
FORMAT FOR DUE DILIGENCE CERTIFICATE AT THE TIME OF OPENING OF THE ISSUE |
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SCHEDULE VI |
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SCHEDULE VII |
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SCHEDULE VIII |
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SCHEDULE IX |
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SCHEDULE X |
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SCHEDULE XI |
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SCHEDULE XII |
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SCHEDULE XIII |
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SCHEDULE XIV |
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SCHEDULE XV |
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SCHEDULE XVI |
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SCHEDULE XVII |
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SCHEDULE XVIII |
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SCHEDULE XIX |
FORMAT OF THE REPORT TO BE SUBMITTED BY THE MONITORINGAGENCY |
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SCHEDULE XX |
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SCHEDULE XXI |
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SCHEDULE XXII |
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SCHEDULE XXIII |
FORMAT FOR SUBMITTING DRAFT OFFER DOCUMENT ON A COMPUTER FLOPPY |
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SCHEDULE XXIV |
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SCHEDULE XXV |
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SCHEDULE XXVI |
ADDITIONAL INFORMATION FOR RENEWAL OF REGISTRATION AS MERCHANT BANKER |
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SCHEDULE XXVII |
FORMAT FOR HALF YEARLY REPORTS TO BE SUBMITTED BY MERCHANT BANKERS |
[AS ON 16/02/2000]
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PRELIMINARY
1. Short title, commencement, etc.
(a) 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, 1992.
(b) These Guidelines may be called the Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines, 2000.
(c) These Guidelines shall come into force from the date specified by the Board.
1.2 Definitions
1.2.1 In these Guidelines, unless the context otherwise requires;-
i) "Abridged Prospectus" means the memorandum as prescribed in Form 2A under sub-section (3) of section 56 of the Companies Act, 1956.
ii) "Act" means the Securities and Exchange Board of India Act, 1992 (15 of 1992).
iii) "Advertisement" includes notices, brochures, pamphlets circulars, showcards, catalogues, hoardings, placards, posters, insertions in newspaper, pictures, films, cover pages of offer documents or any other print medium, radio, television programmes through any electronic medium.
iv) "Board" means the Securities and Exchange Board of India established under provisions of Section 3 of the Act.
v) "Book 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, circular, advertisement, document or information memoranda or offer document.
vi) "Collection 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.
vii) "Company" means the
Company defined in Section 3 of the Companies Act, 1956.
viii) "Composite 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.
ix) "Credit Rating Agency" means a body corporate registered under Securities and Exchange Board of India (Credit Rating Agencies) Regulations,1999;
x) "Designated Financial Institution" means the public financial institution included in or notified under section 4A of the Companies Act, Industrial Development Corporation established by State Governments and financial institutions approved under section 36(1)(viii) of Income Tax Act, 1961;
xi) "Debt-Instrument" means an instrument which creates or acknowledges indebtedness, and includes debenture, stock, bonds and such other securities of a body corporate, whether constituting a charge on the assets of the body corporate or not;
xii) "Depository" means a body corporate registered under Securities and Exchange Board of India (Depositories and Participants) Regulations, 1996;
xiii) "Firm Allotment" means allotment on a firm basis in public issues by an issuing company made to Indian and Multilateral Development Financial Institutions, Indian Mutual Funds, Foreign Institutional Investors including non-resident Indians and overseas corporate bodies and permanent/regular employees of the issuer company.
xiv) "Guidelines" means Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines, 1999 and includes instructions issued by the Board.
xv) "Infrastructure Company" means, a company wholly engaged in the business of developing, maintaining and operating infrastructure facility.
xvi) "Infrastructure facility" means the "infrastructure facility" within the meaning of section 10(23G)© of Income Tax Act, 1961.
xvii) "Issuer Company" means a company which has filed offer documents with the Board for making issue of securities in terms of these guidelines.
xviii) "Listed 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.
xix) "Merchant Banker" means an entity registered under Securities and Exchange Board of India (Merchant Bankers) Regulations, 1999;
xx) "Offer document" means Prospectus in case of a public issue or offer for sale and Letter of Offer in case of a rights issue.
xxi) "Offer for sale" means offer of securities by existing shareholder(s) of a company to the public for subscription, through an offer document.
xxii) "Preferential 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,1956.
xxiii) "Public issue" means an invitation by a company to public to subscribe to the securities offered through a prospectus;
xxiv) "Public Financial Institutions" means institutions included in or notified for the purposes of Section 4A of the Companies Act, 1956.
xxv) "Rights issue" means an issue of capital under sub-section (1) of Section 81 of the Companies Act, 1956, to be offered to the existing shareholders of the company through a Letter of Offer.
xxvi) "Schedule" means schedule annexed to these Guidelines.
xxvii) "Stock Exchange" means a stock exchange which is for the time being recognised under section 4 of the Securities Contracts ( Regulation ) Act,1956.
xxviii) "Underwriting" 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.
xxix) "Unlisted Company" means a company which is not a Listed company.
1.3. All other words and expressions used but not defined in these Guidelines, but defined in the Act or in the Companies Act or in Securities Contracts (Regulation) Act and or the Rules and the Regulations made thereunder shall have the meanings respectively assigned to them in such Acts or the Rules or the Regulations made thereunder or any statutory modification or re-enactment thereto, as the case may be.
1.4 Applicability of the Guidelines
i) These Guidelines shall be applicable to all public issues by listed and unlisted companies, all offers for sale and rights issues by listed companies whose equity share capital is listed, except in case of rights issues where the aggregate value of securities offered does not exceed Rs.50 lacs.
ii) Unless otherwise stated, all provisions in these guidelines applicable to public issues by unlisted companies shall also apply to offers for sale to the public by unlisted companies.
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ELIGIBILITY NORMS FOR COMPANIES ISSUING SECURITIES
2.0 Conditions for issue of securities
The companies issuing securities offered through an offer document, shall, satisfy the following:
2.1 Filing of offer document
2.1.1 No company shall make any issue of a public issue
of securities, unless a draft prospectus has been filed with the Board, through
an eligible Merchant Banker, at least 21 days prior to the filing of Prospectus
with the Registrar of Companies (ROCs).
Provided that if, within 21 days from the date of
submission of draft Prospectus, the Board specifies changes, if any, in the
draft Prospectus, (without being under any obligation to do so) issuer or the
Lead Merchant banker shall carry out such changes in the draft prospectus before
filing the prospectus with ROCs.
2.1.2 No listed company shall make any issue of security through a rights issue where the aggregate value of securities, including premium, if any, exceeds Rs.50 lacs, unless the letter of offer is filed with the Board, through an eligible Merchant Banker, at least 21 days prior to the filing of the Letter of Offer with Regional Stock Exchange (RSE).
Provided that if, within 21 days from the date of filing of
draft letter of offer, the Board specifies changes, if any, in the draft letter
of offer, (without being under any obligation to do so), the issuer or the Lead
Merchant banker shall carry out such changes before filing the draft letter of
offer with RSE.
2.1.3 Companies
barred not to issue security
No company shall make
an issue of securities if the company has been prohibited from accessing the
capital market under any order or direction passed by the Board.
2.1.4 Application for listing
No company shall make any public issue of securities unless it has made an application for listing of those securities in the stock exchange (s).
2.1.5 Issue of securities in dematerialised form
2.1.5.1 No company shall make public or rights issue or an offer for sale of securities, unless -
Explanation:
A 'depository' shall mean a depository registered with the Board under the Securities and Exchange Board of India (Depositories and Participants) Regulations, 1996.
2.2 Public Issue by Unlisted Companies
2.2.1 No unlisted company shall make a public issue of any equity share or any security convertible at a later date into equity share unless the company has;-
2.2.2 An unlisted company which does not satisfy the requirement specified in Clause 2.2.1 above, can make a public issue of equity share capital or any security convertible at later date into equity share capital, provided a public financial institution or a scheduled commercial bank:-
a) has appraised the project to be financed through the proposed offer to the public; and ;
Explanation:
For the purpose of the term 'track record':
B In case of companies in the information technology sector, the track record of distributable profits shall be considered for the purpose of eligibility requirements only if the profits are emanating from the information technology business or activities.
C In case of partnership firms which have since been converted into companies, the track record of distributable profits of the firm shall be considered for the purpose of eligibility requirements if, the financial statements for the respective years pertaining to partnership business conform to and are revised in a format identical to that required for companies and also comply with the following:
(i) Adequate disclosures are made in the financial statements similar to that of companies as specified in Schedule VI of the Companies Act, 1956, and the financial statements shall be duly certified by a Chartered Accountant stating unequivocally that:
ii)the lead merchant banker shall also conform that the financial statements furnished on behalf of the Partnership firms are in accordance with accounting standards prescribed by the ICAI.
(D) In case of an unlisted company formed out of a division of an exiting company, the track record of distributable profits of the division spun off shall be considered for the purpose of eligibility criteria if the requirements regarding financial statements as specified for partnership firms in clause (C) above are complied with."
2.2.3 Offer for sale
A company, whose equity share or any security convertible at later date into equity shares are offered through an offer for sale, has to comply with the provisions of Clause 2.2.1 or Clause 2.2.2.
2.2.4 Offer for sale can also be made if provisions of Clause 2.2.2 are complied at the time of submission of offer document with Board.
2.3 Public Issue by Listed Companies
2.3.1 A listed company shall be eligible to make a public issue of equity shares or any security convertible at later date into equity share.
Provided that, if as a result of the proposed issue, networth of the company becomes more than five times the networth prior to the issue, the company shall satisfy either the provisions of Clause 2.2.1 or Clause 2.2.2, before it can make the proposed public issue.
2.3.2 Public issue by listed companies which has changed its name to indicate as if it was engaged in the business / activities in information technology sector during a period of three years prior to filing of offer document with the Board, shall be eligible to make a public issue of equity share or securities convertible at a later date into equity share, if;
(b) if the company does not satisfy the requirements specified in clause (a) above, it can make a public issue provided that it satisfies the requirements laid down in sub-clauses (a), (b) and (c ) of clause 2.2.2.
2.4 Exemption from Eligibility Norms
2.4.1 The provisions of clauses 2.2.1, 2.2.2 and 2.3.1 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, 1949 and which has received license from the Reserve Bank of India, or
ii) a corresponding new bank set up under the Banking Companies (Acquisition and Transfer of Undertaking) Act, 1970 Banking Companies (Acquisition and Transfer of Undertaking) Act, 1980, State Bank of India Act 1955 and State Bank of India (Subsidiary Banks) Act, 1959 (hereinafter referred to as "public sector banks").
iii) an infrastructure company
b not less than 5% of
the project cost is financed by any of the institutions referred to in
sub-clause (a), jointly or severally, irrespective of whether they appraise the
project or not, by way of loan or subscription to equity or a combination of
both.
iv) rights issue by a listed company
Explanation -
i) For the purposes of Clauses 2.2.1 and 2.3.1, "networth" shall mean 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).
2.5 Credit Rating for Debt Instruments
2.5.1 No public or rights issue of debt instrument (including convertible instruments) irrespective of their maturity or conversion period shall be made unless credit rating from a credit rating agency is obtained and disclosed in the offer document.
2.5.2 Where credit rating is obtained from more than one credit rating agencies, all the credit rating/s, including the unaccepted credit ratings, shall be disclosed.
2.5.3 For a public and rights issue of debt-securities of issue size greater than or equal to Rs.100 crores, two ratings from two different credit rating agencies shall be obtained.
2.5.4 All the credit ratings obtained during the three (3) years preceding the pubic or rights issue of debt instrument (including convertible instruments) for any listed security of the issuer company shall be disclosed in the offer document.
2.6 Outstanding Warrants or Financial Instruments
2.6.1 No unlisted company shall make a public issue of equity share or any security convertible at later date into equity share, if there are any outstanding financial instruments or any other right which would entitle the existing promoters or shareholders any option to receive equity share capital after the initial public offering.
2.7 Partly Paid-up Shares
2.7.1 No company shall make a public or rights issue of equity share or any security convertible at later date into equity share, unless all the existing partly paid-up shares have been fully paid or forfeited in a manner specified in clause 8.6.2.
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PRICING BY COMPANIES ISSUING SECURITIES
3.0 The companies eligible to make public issue can freely price their equity shares or any security convertible at later date into equity shares in the following cases:
3.1 Public / Rights Issue by Listed Companies
3.1.1 A listed company whose equity shares are listed on a stock exchange, may freely price its equity shares and any security convertible into equity at a later date, offered through a public or rights issue.
3.2 Public Issue by Unlisted Companies
3.2.1 An unlisted company eligible to make a public issue and desirous of getting its securities listed on a recognised stock exchange pursuant to a public issue, may freely price its equity shares or any securities convertible at a later date into equity shares.
Infrastructure company
3.2.2 An eligible infrastructure company shall be free to price its equity shares subject to the compliance with the disclosure norms as specified by SEBI from time to time.
3.3 Initial public Issue by Banks
3.3.1 The banks (whether public sector or private sector) may freely price their issue of equity shares or any securities convertible at a later date into equity share subject to approval by the Reserve Bank of India.
3.4 Differential Pricing
3.4.1 Any unlisted company or a listed company making a public issue of equity shares or securities convertible at a later date into equity shares, may issue such securities to applicants in the firm allotment category at a price different from the price at which the net offer to the public is made provided that the price at which the security is being offered to the applicants in firm allotment category is higher than the price at which securities are offered to public.
Explanation:
The net offer to the public means the offer made to the Indian public and does not include firm allotments or reservations or promoters’ contributions.
3.4.1 A listed company making a composite issue of capital may issue securities at differential prices in its public and rights issue.
3.4.2 In the public issue which is a part of a composite issue differential pricing as per sub-clause 3.4.1 above is also permissible.
3.4.3 Justification for the price difference shall be given in the offer document for sub-clauses 3.4.1 and 3.4.2.
3.5 Price Band
3.5.1 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 and actual price can be determined at a later date before filing of the offer document with ROCs.
3.5.2 If the Board of Directors has been authorised to determine the offer price within a specified price band such price shall be determined by a Resolution to be passed by the Board of Directors.
3.5.3 The Lead Merchant Bankers shall ensure that in case of the listed companies, a 48 hours notice of the meeting of the Board of Directors for passing resolution for determination of price is given to the regional Stock Exchange.
3.5.4 The final offer document, shall contain only one price and one set of financial projections, if applicable.
3.6 Payment of Discounts / Commissions, etc;
3.6.1 No payment, direct or indirect in the nature of a discount, commission, allowance or otherwise shall be made either by the issuer company or the promoters in any public issue, to the persons who have received firm allotment in such public issue.
3.7 Freedom to determine the denomination
of shares for public / rights issues and to change the standard denomination
3.7.1An eligible company shall be free to make public or rights issue of equity shares in any denomination determined by it in accordance with sub-section (4) of section 13 of the Companies Act, 1956 and in compliance with the norms as specified by SEBI in circular no.SMDRP/POLICY/CIR-16/99 dated June 14, 1999 and other norms as may be specified by SEBI from time to time.
3.7.2 The companies which have already issued shares in the denomination of Rs.10/- or Rs.100/- may change the standard denomination of the shares by splitting or consolidating the existing shares.
3.7.3 The companies proposing to issue shares in any denomination or changing the standard denomination in terms of clause 3.7.1 or 3.7.2 above shall comply with the following:
a the shares shall not be issued in the denomination of decimal of a rupee;
b the denomination of the existing shares shall not be altered to a denomination of decimal of a rupee;
c at any given time there shall be only one denomination for the shares of the company;
d the companies seeking to change the standard denomination may do so after amending the Memorandum and Articles of Association, if required;
e the company shall adhere to the disclosure and accounting norms specified by SEBI from time to time.
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PROMOTERS CONTRIBUTION AND LOCK-IN REQUIREMENTS
PART I - PROMOTERS CONTRIBUTION
4.0 Promoters contribution in any public issue shall be in accordance with the following provisions :
4.1 Promoters Contribution in a Public Issue by Unlisted Companies
4.1.1 In a public issue by an unlisted company, the promoters shall contribute not less than 20% of the post issue capital.
4.1.21 [Deleted]
4.2 Promoters Shareholding in Case of Offers for Sale
4.2.1 The promoters shareholding after offer for sale shall not be less than 20% of the post issue capital.
4.3 Promoters Contribution in Case of Public Issues by Listed Companies
4.3.1 In case of public issues by listed companies, the promoters shall participate either to the extent of 20% of the proposed issue or ensure post-issue share holding to the extent of 20% of the post-issue capital.
4.4 Promoters Contribution in Case of Composite Issues
4.4.1 In case of composite issues of a listed company, the promoters contribution shall at the option of the promoter(s) be either 20% of the proposed public issue or 20% of the post-issue capital.
4.4.2 Rights issue component of the composite issue shall be excluded while calculating the post-issue capital.
4.52 [Deleted]
4.6 Securities Ineligible for Computation of Promoters Contribution
4.6.1 Where the promoters of any company making an issue of securities have acquired equity during the preceding three years, before filing the offer documents with the Board, such equity shall not be considered for computation of promoters contribution if it is;
i) acquired for consideration other than cash and revaluation of assets or capitalisation of intangible assets is involved in such transaction(s); or
ii) resulting from a bonus issue, out of revaluation reserves or reserves without accrual of cash resources;
4.6.2 In case of public issue by unlisted companies, securities which have been issued to the promoters during the preceding one year, at a price lower than the price at which equity is being offered to public shall not be eligible for computation of promoters contribution.
Provided that the shares for which the difference between the offer price and the issue price for these shares is brought in by the promoters shall be considered eligible subject to issuer company complying with the applicable provisions of the Companies Act, 1956 (such as passing of revised resolution by shareholders or issuer’s Board, filing of revised return of allotment with ROC, etc.)
4.6.3 In respect of companies formed by conversion of partnership firms, where the partners of the erstwhile partnership firm and the promoters of the converted company are the same and there is no change in management, the shares allotted to the promoters during previous one year out of the funds brought in during that period shall not be considered eligible for computation of promoters contribution unless such shares have been issued at the same price at which the public offer is made.
Provided that if the partners capital existed in the firm for a period of more than one year on a continuous basis, the shares allotted to promoters against such capital shall be considered eligible.
4.6.4 In respect of Clauses 4.6.1, 4.6.2 and 4.6.3, such ineligible shares acquired in pursuance to a scheme of merger or amalgamation approved by a High Court shall be eligible for computation of promoters contribution.
4.6.5 For the purposes of computing the promoters contribution referred to in Clauses 4.1.1, 4.1.2, 4.2.1, 4.3.1, 4.4.1 & 4.5.1 above, minimum contribution of Rs.25000 per application from each individual and minimum contribution of Rs.1 lac from firms and companies (not being business associates like dealers and distributors), shall be eligible to be considered towards promoters’ contribution.
4.6.6 No securities forming part of promoters contribution shall consist of any private placement made by solicitation of subscription from unrelated persons either directly or through any intermediary.
4.6.7 The securities for which a specific written consent has not been obtained from the respective shareholders for inclusion of their subscription in the minimum promoters contribution subject to lock-in shall not be eligible for promoters contribution.
4.7 Computation of Promoters Contribution in Case of Issue of Convertible Security
4.7.1In case of any issue of convertible security by a company, the promoters shall have an option to bring in their subscription by way of equity or by way of subscription to the convertible security being offered through the proposed issue so that the total promoters contribution shall not be less than the required minimum contribution referred to in Clauses 4.1.1, 4.1.2 , 4.2.1, 4.3.1, 4.4.1 & 4.5.1 above.
Provided that, if the conversion price of emerging equity is not pre-determined and the same has not been specified in the offer document (instead a formula for conversion price is indicated), the promoters shall not have the said option and shall contribute by subscribing to the same instrument.
4.7.2 In case of any issue of security convertible in stages either at par or premium (conversion price being predetermined), the promoters contribution in terms of equity share capital shall not be at a price lower than the weighted average price of the share capital arising out of conversion.
Explanation: For the purposes of clause 4.7.2,
(a) `weights' means the number of equity shares arising out of conversion of security into equity at various stages.
(b) 'price' means the price of equity shares on conversion arrived at after taking into account predetermined conversion price at various stages.
4.7.3 The promoters contribution shall be computed on the basis of post-issue capital assuming full proposed conversion of such convertible security into equity.
Provided that where the promoter is contributing through the same optional convertible security as is being offered to the public, such contribution shall be eligible as promoters contribution only if the promoter(s) undertakes in writing to accept full conversion.
4.8 Promoters Participation in Excess of the Required Minimum Contribution to be Treated as Preferential Allotment
4.8.1 In case of a listed company, participation by promoters in the proposed public issue in excess of the required minimum percentage referred in Clauses 4.3.1 and 4.4.1 shall attract the pricing provisions of Guidelines on preferential allotment, if the issue price is lower than the price as determined on the basis of said preferential allotment guidelines.
4.9 Promoters Contribution to be brought in before Public Issue Opens
4.9.1 Promoters shall bring in the full amount of the promoters contribution including premium at least one day prior to the issue opening date.
Provided that where the promoters minimum contribution exceeds Rs.100 crores, the promoters shall bring in Rs.100 crores before the opening of the issue and the remaining contribution shall be brought in by the promoters in advance on pro-rata before the calls are made on public.
4.9.2 The company’s board shall pass a resolution allotting the shares or convertible instruments to promoters against the moneys received.
4.9.3 A copy of the resolution alongwith a Chartered Accountants’ Certificate certifying that the promoters contribution has been brought in shall be filed with the Board before opening of the issue.
4.9.4 The certificate of the Chartered Accountants shall also be accompanied by a list of names and addresses of friends, relatives and associates who have contributed to the promoters’ quota along with the amount of subscription made by each of them.
4.10 Exemption from Requirement of Promoters Contribution
4.10.1 The requirement of promoters contribution shall not be applicable -
a) in case of public issue of securities by a company which has been listed on a stock exchange for at least 3 years and has a track record of dividend payment for at least 3 immediately preceding years.
Provided that if the promoters participate in the proposed issue to the extent greater than higher of the two options available as per Clause 4.3.1 and 4.4.1 above, the subscription in excess of such percentage shall attract pricing guidelines on preferential issue, if the issue price is lower than the price as determined on the basis of said guidelines on preferential issue.
b) in case of companies where no identifiable promoter or promoter group exists.
c) in case of rights issues.
Provided, in case of (a) and (c) above, the promoters shall disclose their existing shareholding and the extent to which they are participating in the proposed issue, in the offer document.
PART II - LOCK-IN REQUIREMENTS
4.11 Lock in of Minimum Specified Promoters Contribution in Public Issues
4.12.1 In case of any issue of capital to the public the minimum promoters contribution (as per clause 4.1, 4.2,4.3, 4.4 & 4.5) shall be locked in for a period of 3 years.
4.11.2 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.
Explanation:
The expression "Date of commencement of commercial production" means the last date of the month in which commercial production in a manufacturing company is expected to commence as stated in the offer document.
4.12 Lock-in of Excess Promoters’ Contribution
4.12.1 In case of a public issue by unlisted company, if the promoters contribution in the proposed issue exceeds the required minimum contribution, such excess contribution shall also be locked in for a period of 3 years.
4.12.2 In case of a public issue by a listed company, participation by promoters in the proposed public issue in excess of the required minimum percentage shall also be locked-in for a period of three years as per the lock-in provisions as specified in Guidelines on Preferential issue.
Provided that excess promoters contribution as per Clause 4.10.1(a) of Part I of this Chapter shall not be subject to lock-in.
4.12.3 In case shortfall in the firm allotment category is met by the promoter as specified in clause 8.5(e), such subscription shall be locked in for a period of three years.
4.13 Securities Issued Last to be Locked-in First
4.13.1 The securities forming part of promoters contribution as specified in Clauses 4.1.1, 4.1.2, 4.2.1, 4.3.1 , 4.4.1 & 4.5.1 of Part I of this Chapter and issued last to the promoters shall be locked in first for the specified period.
Provided that the securities issued to the financial institutions appearing as promoters, if issued last, shall not be locked-in before the shares allotted to the other promoters.
4.14 Lock-in of Shares Ineligible for Promoters Contribution
4.14.1 Any security issued to promoters or other shareholders, out of revaluation of assets or capitalisation of intangible assets, within a period of 3 preceding years from the date of filing of offer documents with the Board, shall be locked-in for a period of 3 years from the date of allotment of the proposed issue of capital.
4.14.2 Any security to promoters or other shareholders, issued by way of bonus out of revaluation reserves, within a period of 3 preceding years, shall be locked-in for a period of 3 years from the date of allotment of the proposed issue of capital.
4.14.3 In case of unlisted companies, any security issued to promoter or to any other shareholder, during the preceding one year, at a price lower than the price at which equity is being offered to public shall be locked-in for a period of 3 years from the date of allotment of the proposed issue of capital.
34.14 (A) Lock-in of pre issue share capital of an unlisted company
Where an unlisted company eligible to make a public issue and desirous of getting its securities listed on a recognised stock exchange pursuant to a public issue has issued shares to any person within six (6) months prior to the date of opening of the public issue at a price lower than the price at which equity is being offered/issued to public, the entire share capital (except shares issued to venture capitalists and employees of the company) existing prior to public issue shall be locked in for a period of six (6) months from the date of trading of the shares on the regional stock exchange.
Provided, the lock-in would not apply to the shares
(other than shares issued to promoters, friends, relatives and associates) if
the same were issued more than 6 months prior to the date of opening of the
public issue and are offered under offer for sale."
PART III - OTHER REQUIREMENTS IN RESPECT OF LOCK-IN
4.15 Pledge of Securities Forming Part of Promoters Contribution
4.15.1 Locked-in Securities held by promoters may be pledged only with banks or financial institutions as collateral security for loans granted by such banks or financial institutions, provided the pledge of shares is one of the terms of sanction of loan.
4.16 Inter-se Transfer of Securities Amongst Promoters
4.16.1 Transfer of locked-in securities amongst promoters as named in the offer
document, can be made subject to the lock-in being applicable to the transferees for the remaining period of lock in.
4.17 Inscription of Non-Transferability
4.17.1 The securities which are subject to lock-in shall carry inscription `non transferable’ along with duration of specified non-transferable period mentioned in the face of the security certificate.
1 Deleted vide RMB (Compendium) Series Circular No.2
dated February 16, 2000
2 Deleted vide RMB (Compendium) Series Circular No.2
dated February 16, 2000
3 Inserted vide RMB (Compendium) Series Circular No.2
dated February 16, 2000
[BACK]
PRE- ISSUE OBLIGATIONS
5.0 The pre-issue obligations are detailed below :
5.1 The lead merchant banker shall exercise due diligence.
5.1.1 The standard of due diligence shall be such that the merchant banker shall satisfy himself about all the aspects of offering, veracity and adequacy of disclosure in the offer documents.
5.1.2 The liability of the merchant banker as referred to clause 5.1.1 shall continue even after the completion of issue process.
5.2 The lead merchant banker, shall pay requisite fee in accordance with regulation 24A of Securities and Exchange Board of India (Merchant Bankers) Rules and Regulations, 1992 along with draft offer document filed with the Board.
5.3 Documents to be Submitted alongwith the Offer Document by the Lead Manager
5.3.1 Memorandum of Understanding (MOU)
5.3.1.1 No company shall make an issue of security through a public or rights issue unless a Memorandum of Understanding has been entered into between a lead merchant banker and the issuer company specifying their mutual rights, liabilities and obligations relating to the issue.
5.3.1.2 The MOU shall contain such clauses as are specified at Schedule I and such other clauses as considered necessary by the lead merchant banker and the issuer company.
Provided that the MOU shall not contain any clause whereby the liabilities and obligations of the lead merchant banker and issuer company under the Companies Act, 1956 and Securities and Exchange Board of India (Merchant Bankers) Rules and Regulations, 1992 are diminished in any way. .
5.3.1.3 The Lead Merchant Banker responsible for drafting of the offer documents shall ensure that a copy of the MOU entered into with the issuer company is submitted to the Board along with the draft offer document.
5. 3.2 Inter-se Allocation of Responsibilities
5.3.2.1 In case a public or rights issue is managed by more than one merchant bankers the rights, obligations and responsibilities of each merchant banker shall be demarcated as specified in Schedule II.
5.3.2.2 In case of under subscription at an issue, the Lead Merchant Banker responsible for underwriting arrangements shall invoke underwriting obligations and ensure that the underwriters pay the amount of devolvement and the same shall be incorporated in the inter-se allocation of responsibilities (Schedule II) accompanying the due diligence certificate submitted by the Lead Merchant Banker to the Board .
5.3.3 Due Diligence Certificate
5.3.3.1 The Lead Merchant Banker, shall furnish to the Board a due diligence certificate as specified in Schedule III along with the draft prospectus.
5.3.3.2 In addition to the due diligence certificate furnished alongwith the draft offer document, the Lead Merchant Banker shall also:
i) certify that all amendments suggestion or observations made by Board have been incorporated in the offer document;
ii) furnish a fresh "due diligence" certificate at the time of filing the prospectus with the Registrar of Companies as per the format specified at Schedule IV.
iii) furnish a fresh certificate immediately before the opening of the issue that no corrective action on its part is needed as per the format specified at Schedule V.
iv) furnish a fresh certificate after the issue has opened but before it closes for subscription as per the format specified at Schedule VI.
5.3.4 Certificates Signed by the Company Secretary or Chartered Accountant, in Case of Listed Companies Making Further Issue of Capital
5.3.4.1 The Lead Merchant Banker shall furnish the following certificates duly signed by Company Secretaries or Chartered Accountants along with the draft offer documents:
b all security certificates were despatched to the
allottees within the prescribed time and in
the prescribed manner;
c the securities were listed on the Stock Exchanges as specified in the offer documents.
5.3.5 Undertaking
5.3.5.1 The issuer shall submit an undertaking to the Board to the effect that transactions in securities by the `promoter' the 'promoter group' and the immediate relatives of the `promoters during the period between the date of filing the offer documents with the Registrar of Companies or Stock Exchange as the case may be and the date of closure of the issue shall be reported to the Stock exchanges concerned within 24 hours of the transaction(s).
5.3.6 List of Promoters’ Group
5.3.6.1 The issuer shall submit to the Board a list of persons who constitute the Promoters’ Group and their individual shareholdings.
5.4 Appointment of Intermediaries
5.4.1 Appointment of Merchant Bankers
5.4.1.1 Merchant Banker who is associated with the issuer company as a promoter or a director shall not to lead manage the issue of the company.
Provide that the lead merchant banker holding the securities of the issuer company may lead manage the issue;
b the Market
Makers have either been appointed or are proposed to be appointed as per the
offer document.
5.4.2 Appointment of Co-managers
5.4.2.1 Lead Merchant Bankers shall ensure that the number of co-managers to an issue does not exceed the number of Lead Merchant Bankers to the said issue and there is only one advisor to the issue.
5.4.3 Appointment of Other Intermediaries
5.4.3.1 Lead Merchant Banker shall ensure that the other intermediaries being appointed are duly registered with the Board, wherever applicable.
5.4.3.1.1 Before advising the issuer on the appointment of other intermediaries, the Lead Merchant Banker shall independently assess the capability and the capacity of the various intermediaries to carry out assignment.
5.4.3.1.2 The Lead Merchant Banker shall ensure that issuer companies enters into a Memorandum of Understanding with the intermediary(ies) concerned whenever required.
5.4.3.2 The Lead Merchant Banker shall ensure that Bankers to the Issue are appointed in all the mandatory collection centres as specified in clause 5.9.
5.4.3.3 The Lead Merchant Banker shall not act as a Registrar to an issue in which it is also handling the post issue responsibilities.
5.43.4 The Lead Merchant Bankers shall ensure that;
a the Registrars to Issue registered
with the Board are appointed in all public issues and rights issues;
b in case where the issuer company is a
registered Registrar to an Issue, the issuer shall appoint an independent
outside Registrar to process its issue.
The lead merchant banker shall ensure that Registrar to an issue which is associated with the issuer company as a promoter or a director shall not act as Registrar for the issuer company.
Where the number of applications in a public issue is expected to be large, the issuer company in consultation with the lead merchant banker may associate one or more Registrars registered with the Board for the limited purpose of collecting the application forms at different centres and forward the same to the designated Registrar to the Issue as mentioned the offer document.
The designated Registrar to the Issue shall, be primarily and solely responsible for all the activities as assigned to them for the issue management.
5.5 Underwriting
5.5.1 The Lead merchant banker shall satisfy themselves about the ability of the underwriters to discharge their underwriting obligations.
5.5.2 The lead merchant banker shall;
a incorporate a statement in the offer document to the effect that in the opinion of the lead merchant banker, the underwriters' assets are adequate to meet their underwriting obligations;
b obtain Underwriters’ written consent before including their names as underwriters in the final offer document.
5.5.3 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.
5.5.4 The outstanding underwriting commitments of a merchant banker shall not exceed 20 times its networth at any point of time.
5.5.5 In respect of an underwritten issue, the lead merchant banker shall ensure that the relevant details of underwriters are included in the offer document.
5.6 Offer Document to be Made Public
5.6.1 The draft offer document filed with the Board shall be made public for a period of 21 days from the date of filing the offer document with the Board.
5.6.2 The Lead Merchant Banker shall;
b make copies of offer document available to the public.
5.6.3 Lead merchant banker or stock exchanges may charge an appropriate sum to the person requesting for the copy of offer document.
5.7 Despatch of Issue Material
5.7.1 The lead merchant banker shall ensure that for public issues offer documents and other issue materials are dispatched to the various stock exchanges, brokers, underwriters, bankers to the issue, investors associations, etc. in advance as agreed upon.
5.7.2 In the case of rights issues, lead merchant banker shall ensure that the letters of offer are dispatched to all shareholders at least one week before the date of opening of the issue.
5.7.34 [Deleted]
5.8 No Complaints
Certificate
5.8.1 After a period of 21 days from the date the draft offer document was made public, the Lead Merchant Banker shall file a statement with the Board :
i) giving a list of complaints
received by it,
ii) a statement by it
whether it is proposed to amend the draft offer document or not, and;
iii) highlight those amendments.
5.9 Mandatory Collection Centres
5.9.1 The minimum number of collection centres for an issue of capital shall be-
a) the four metropolitan centres situated at Mumbai, Delhi, Calcutta and Chennai
b) all such centres where the stock exchanges are located in the region in which the registered office of the company is situated.
c) the regional division of collection centres is indicated in Schedule VII.
5.9.2 The issuer company shall be free to appoint
as many collection centres as it may deem fit in addition to the above minimum
requirement.
5.10 Authorised Collection Agents
5.10.1 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.
5.10.2 The modalities of selection and appointment of collection agents can be made at the discretion of the Lead Merchant Banker.
5.10.3 The lead merchant banker shall ensure that the collection agents so selected are properly equipped for the purpose, both in terms of infrastructure and manpower requirements.
5.10.4 The collection agents may collect such applications as are accompanied by payment of application moneys paid by cheques, drafts and stock invests.
5.10.5 The authorised collection agent shall not collect application moneys in cash.
5.10.6 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.
5.10.7 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, within a period of 2 weeks from the date of closure of the public issue.
5.10.8 The applications accompanied by stockinvests shall be sent directly by the collection agent to the Registrars to the Issue along with the schedules within one week from the date of closure of the issue.
5.10.9 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.
5.10.10 The investors from the places other than from the places where the mandatory collection centres and authorised collection agents are located, can forward their applications along with stockinvests to the Registrars to the Issue directly by Registered Post with Acknowledgement Due.
5.10.11 The applications received through the registered post shall be dealt with by the Registrars to the Issue in the normal course.
5.11 Advertisement for Rights Post Issues
5.11.1 The Lead Merchant Banker shall ensure that in case of a rights issue, an advertisement giving the date of completion of despatch of letters of offer, shall be released in at least in an English National Daily with wide circulation, one Hindi National Paper and a Regional language daily circulated at the place where registered office of the issuer company is situated at least 7 days before the date of opening of the issue.
5.11.2 The advertisement referred to in clause 5.11.1 shall indicate the centres other than registered office of the company where the shareholders or the persons entitled to rights may obtain duplicate copies of composite application forms in case they do not receive the original application form within a reasonable time even after opening of the rights issue.
5.11.3 Where the shareholders have neither received the original composite application forms nor are they in a position to obtain the duplicate forms, they may make applications to subscribe to the rights on a plain paper.
5.11.4 The advertisement shall also contain a format to enable the shareholders to make the application on a plain paper containing necessary particulars like name, address, ratio of right issue, issue price, number of shares held, ledger folio numbers, number of shares entitled and applied for, additional shares if any, amount to be paid along with application, particulars of cheque, etc. to be drawn in favour of the company Account - Rights issues.
5.11.5 The advertisement shall further mention that applications can be directly sent by the shareholder through Registered Post together with the application moneys to the company's designated official at the address given in the advertisement.
5.11.6 The advertisement may also invite attention of the shareholders to the fact that the shareholders making the applications otherwise than on the standard form shall not be entitled to renounce their rights and shall not utilise the standard form for any purpose including renunciation even if it is received subsequently.
5.11.7 If the shareholder makes an application on plain paper and also in standard form, he may face the risk of rejection of both the applications.
5.12 Appointment of Compliance Officer
5.12.1 An issuer company shall appoint a compliance officer who shall directly liaise with the Board with regard to compliance with various laws, rules, regulations and other directives issued by the Board and investors complaints related matter.
5.12.2 The name of the compliance officer so appointed shall be intimated to the Board.
5.13 Abridged Prospectus
5.13.1 The Lead Merchant Banker shall ensure the following:
i) Every application form distributed by the issuer Company or anyone else is accompanied by a copy of the Abridged Prospectus.
ii) The application form may be stapled to form part of the Abridged Prospectus. Alternatively, it may be a perforated part of the Abridged Prospectus.
iii) The Abridged Prospectus shall not contain matters which are extraneous to the contents of the prospectus.
iv) The Abridged Prospectus shall be printed at least in point 7 size with proper spacing.
v) Enough space shall be provided in the application form to enable the investors to file in various details like name, address, etc.
55.14 Agreements with depositories
5.14.1 The lead manager shall ensure that the issuer company has entered into agreements with all the depositories for dematerialisation of securities. He shall also ensure that an option be given to the investors to receive allotment of securities in dematerialised form through any of the depositories."
4 Deleted vide RMB (Compendium) Series Circular No.2
dated February 16, 2000
5 Inserted vide RMB (Compendium) Series Circular No.2
dated February 16, 2000
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CONTENTS OF OFFER DOCUMENT
6.0 The Offer document shall contain the following:
SECTION I - CONTENTS OF THE PROSPECTUS
6.1 The offer document 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.
6.1.1 The offer document shall also contain the information and statements specified in this chapter.
6.2 Cover Pages
6.2.1 Front Outer Cover Page
6.2.1.1 a) The front cover page of
the prospectus shall be white and no patterns or
pictures shall be printed on this page.
b)The cover page paper shall be of adequate thickness (preferably minimum 100 gcm. quality).
6.2.1.2 The front outer cover page of the prospectus shall contain the following details only:
iv) a) The ‘Risks in relation to the first issue’ (wherever applicable) shall be incorporated in a box format in case of a initial public issue:
"This being the first issue of the company, there has been no formal market for the securities of the company. The issue price (has been determined and justified by the Lead Merchant Banker and the issuer company as stated under Justification of Premium paragraph - in case of premium issue) should not be taken to be indicative of the market price of the equity shares after the shares are listed. No assurance can be given regarding an active or sustained trading in the shares of the company nor regarding the price at which the equity shares will be traded after listing."
b) In case of issue proposed to be listed on the Over the Counter Exchange of India and / or where market maker has been appointed, the concluding sentence of the above risk factor shall read as under:
"No assurance can be given regarding the price at which the equity shares of the company will be traded after listing."
v) The following general risk shall be incorporated:
"Investment in equity and equity related securities involve a degree of risk and investors should not invest any funds in this offer unless they can afford to take the risk of losing their investment. Investors are advised to read the risk factors carefully before taking an investment decision in this offering. For taking an investment decision, investors must rely on their own examination of the issuer and the offer including the risks involved. The securities have not been recommended or approved by Securities and Exchange Board of India (SEBI) nor does SEBI guarantee the accuracy or adequacy of this document."
Specific attention of investors shall be invited to the summarised and detailed statement of Risk Factors by indicating their page number(s) in the ‘General Risks’.
vi) ‘Issuer’s Absolute Responsibility’ clause shall be incorporated as under :
"The issuer, having made all reasonable inquiries, accepts responsibility for and confirms that this offer document contains all information with regard to the issuer and the issue, which is material in the context of the issue, that the information contained in the offer document is true and correct in all material aspects and is not misleading in any material respect, that the opinions and intentions expressed herein are honestly held and that there are no other facts, the omission of which make this document as a whole or any of such information or the expression of any such opinions or intentions misleading in any material respect."
b) The names of the other Lead Merchant Bankers, Co-Managers, etc. may be mentioned on the back cover page.
6.2.2 Front Inside Cover Page
6.2.2.1 Index shall appear on the Front Inside Cover Page.
6.2.3 Inner Cover Pages
6.2.3.1The other risk factors shall be printed in clear readable font (preferably of minimum point 10 size) starting on the first inner cover page to be numbered page i (and, if need be, shall continue on subsequent pages ii, iii, etc. as distinct from the page number of the offer document proper which would run as 1, 2, 3, etc.) in addition to appearing in the Part I of the Prospectus.
6.2.3.2 The risk factors shall be classified as those which are specific to the project and internal to the issuer company and those which are external and beyond the control of the issuer company. Management perception of the internal and external risk factors shall be given immediately after each of the risk factors and not as a separate heading under management perception.
6.2.4 Back Cover Pages
6.2.4.2 Any ‘notes’ required to be given
prominence shall appear immediately after the Risk Factors wherever they appear.
PART I
6.3 General Information
6.3.1 Name and address of registered office of the issuer company.
6.3.2 Letter of intent / industrial license and declaration of the Central Govt./RBI about non-responsibility for financial soundness or correctness of statements.
6.3.3 Disclaimer Clause
6.3.3.1 A prospectus shall contain the following disclaimer clause in bold capital letters:
"It is to be distinctly understood that submission of
offer document to SEBI should not in any way be deemed or construed that the
same has been cleared or approved by SEBI. SEBI does not take any responsibility
either for the financial soundness of any scheme or the project for which the
issue is proposed to be made or for the correctness of the statements made or
opinions expressed in the offer document. Lead Merchant Banker, ______________ has certified that the disclosures made
in the offer document are generally adequate and are in conformity with SEBI
(Disclosures and Investor Protection) Guidelines in force for the time being.
This requirement is to facilitate investors to take an informed decision for
making investment in the proposed issue.
It should also be clearly understood that while the Issuer Company is primarily responsible for the correctness, adequacy and disclosure of all relevant information in the offer document, the Lead Merchant Banker is expected to exercise Due Diligence to ensure that the Company discharges its responsibility adequately in this behalf and towards this purpose, the Lead Merchant Banker _______________________ has furnished to SEBI a Due Diligence Certificate dated ________________ in accordance with SEBI (Merchant Bankers) Regulations 1992 which reads as follows :
WE CONFIRM that :
(a) the offer document forwarded to SEBI is in conformity with the documents, materials and paper relevant to the issue;
(b) all the legal requirements connected with the said issue, as also the guidelines, instructions, etc. issued by SEBI, the Government and any other competent authority in this behalf have been duly complied with; and
(c) the disclosures made in the offer document are true, fair and adequate to enable the investors to make a well informed decision as to the investment in the proposed issue.
iii. We confirm that beside ourselves, all the intermediaries named in the prospectus are registered with SEBI and till date such registration is valid.
iv. We have satisfied ourselves about the worth of the underwriters to fulfill their underwriting commitments.
The filing of offer document does not, however, absolve the company from any liabilities under section 63 or 68 of the Companies Act, 1956 or from the requirement of obtaining such statutory or other clearances as may be required for the purpose of the proposed issue. SEBI, further reserves the right to take up, at any point of time, with the lead merchant banker(s) any irregularities or lapses in offer document."
6.3.4 Disclaimer Statement from the Issuer
6.3.4.1 A statement to the effect that the issuer accepts no responsibility for statements made otherwise than in the prospectus or in the advertisement or any other material issued by or at the instance of the issuer and that anyone placing reliance on any other source of information would be doing so at his own risk should be incorporated .
6.3.5 Filing of offer document with the Board and RoC
a) Under this head, the office of the Board where the offer document has been filed shall be mentioned.
application made for listing of present issue, shall be mentioned.
6.3.7 Provisions of sub-section (1) of section 68A of the Companies Act, relating to punishment for fictitious applications, shall be mentioned.
6.3.8 Minimum Subscription Clause
Following statements shall appear:
6.3.8.1 For Non-underwritten Public Issues
" If the company does not receive the minimum subscription of 90% of the issued amount on the date of closure of the issue, or if the subscription level falls below 90% after the closure of issue on account of cheques having being returned unpaid or withdrawal of applications, the company shall forthwith refund the entire subscription amount received. If there is a delay beyond 8 days after the company becomes liable to pay the amount, the company shall pay interest as per Section 73 of the Companies Act 1956."
6.3.8.2 For Underwritten Public Issues
"If the company does not receive the minimum subscription of 90% of the net offer to public including devolvement of Underwriters within 60 days from the date of closure of the issue, the company shall forthwith refund the entire subscription amount received. If there is a delay beyond 8 days after the company becomes liable to pay the amount, the company shall pay interest prescribed under Section 73 of the Companies Act 1956."
6.3.8.3 For Composite Issues
6.3.8.4 Offer for sale
6.3.8.4.1The requirement of minimum subscription shall not be applicable to offer for sale.
6.3.9 Declaration about the issue of allotment letters or refunds within a period of 10 weeks and interest in case of any delay in refund at the prescribed rate under section 73(2) / 73(2A) of the Companies Act, shall be mentioned.
6.3.10 Issue Schedule
6.3.11 Intermediaries and auditors
6.3.12 Credit Rating
6.3.13 Underwriting of the issue
6.3.14 Compliance Officer
6.4 Capital Structure of the company
6.4.1 The lead merchant banker shall present the capital structure in the following manner:
d) Share Premium Account (before and after the issue)
6.4.2 Notes to Capital Structure
incorporated:-
b) An illustrative format of promoters contribution and lock-in is specified in Schedule VIII.
(i) percentage of contribution by the promoters whose name figured in the prospectus as promoters in the paragraph on "Promoters and their background" and the date up to which the securities are locked-in.
(ii) An illustrative format of promoters contribution whose name figures in prospectus is specified in Schedule IX.
c) statement that promoters contribution has been brought in not less than the specified minimum lot and from persons defined as promoters under the Guidelines.
d) Statement that the promoters undertake to accept full conversion, if the promoters contribution is in terms of the same optionally convertible security as is being offered to the public.
e) Details of all "buy-back" and `stand by’ and similar arrangements for purchase of securities by promoters, directors and lead merchant bankers shall be disclosed.
j) Following details regarding major shareholders:-
k) The details of:-
l) In the event of it not being possible to obtain information regarding sales and purchase of securities by any relative of the promoters, a statement to that effect shall be made in the prospectus on the basis of the transfers recorded in the books of the company.
Explanation I
For the purpose of sub-clauses (i) to (iii) of clause k above, the term 'promoter' shall include -
a) the person or persons who are in over-all control of the company.
b) the person or persons who are instrumental in the formulation of a plan or programme pursuant to which the securities are offered to the public;
c) the persons or persons named in the prospectus as promoters(s) :
Provided that a director /
officer of the issuer company or person, if they are acting as such merely in
their professional capacity shall not be included in the Explanation.
Explanation II
'Promoter Group' shall include-
a) the promoter,
b) an immediate relative of the promoter (i.e. any spouse of that person, or any parent, brother, sister or child of the person or of the spouse);and
d) in case the promoter is an individual,-
i) any company in which 10% or more of the share capital is held by the promoter or an immediate relative of the promoter' or a firm or HUF in which the 'Promoter' or any one or more of his immediate relative is a member;
ii) any company in which a company specified in (i) above, holds 10% or more, of the share capital;
iii) any HUF or firm in which the aggregate share of the promoter and his immediate relatives is equal to or more than 10% of the total, and
e) all persons whose shareholding is aggregated for the
purpose of disclosing in the prospectus "shareholding of the promoter group".
Explanation III - The Financial Institution, Scheduled Banks, Foreign Institutional Investors (FIIs) and Mutual Funds shall not be deemed to be a promoter or promoter group merely by virtue of the fact that 10% or more of the equity of the issuer company is held by such institution.
Provided that the Financial Institutions, Scheduled banks, Foreign Institutional Investors, shall be treated as promoters or promoter group for the subsidiaries or companies promoted by them or for the mutual fund sponsored by them.
6.5 Terms of the present issue
6.5.1 Terms of payments
6.5.1.1 The caption "Interest in Case of Delay in Despatch of Allotment Letters/ Refund Orders in Case of Public Issues" shall appear and shall contain the following statement:
"The company agrees that as far as possible allotment of
securities offered to the public shall be made within 30 days of the closure of
public issue. The company further agrees that it shall pay interest @15% per
annum if the allotment letters / refund orders have not been despatched to the
applicants within 30 days from the date of the closure of the issue. However
applications received after the closure of issue in fulfillment of underwriting
obligations to meet the minimum subscription requirement, shall not be entitled
for the said interest."
6.5.2 Arrangements for Disposal of Odd Lots
b) The company is free to make arrangements for providing liquidity in respect of odd lot shares through any investment or finance company, broking firms or through any other agency and the particulars of such arrangement, if any, may be disclosed in the offer documents related to the concerned issue of capital.
6.5.2.2 Lead Merchant Banker shall ascertain whether the companies coming for fresh issue of capital propose to set up trusts in order to provide service to the investors in the matter of disposal of odd lot shares of the company held by them and if so, disclosures relating to setting up and operation of the trust shall be contained in the offer document.
6.5.2.3 Whenever any issue results in issue of shares in odd lots, the issuer company, shall as far as possible issue certificates in the denomination of 1-2-5-10-20-50 shares.
6.5.3 Rights of the instrument holders
6.5.4 How to apply - availability of forms, prospectus and mode of payment
6.5.4.1Applications by mutual funds
6.5.4.2 Applications by NRIs
6.5.4.2.1 The Lead merchant banker shall ensure the following disclosures:
6.5.4.3 Disclosures about Stock invests
"Registrars to the Issue have been authorised by the company ( through resolution of the Board passed on ______) to sign on behalf of the company to realise the proceeds of the Stockinvest from the issuing bank or to affix non allotment advice on the instrument or cancel the Stockinvest of the non allottees or partially successful allotees who have enclosed more than one stockinvest. Such cancelled stockinvest shall be sent back by the Registrars directly to the investors."
6.5.5 Despatch of Refund Orders
6.5.5.1 The following clause shall be incorporated in the prospectus:
"The company shall ensure despatch of refund orders of value over Rs.1500/- and share/debenture certificates by Registered Post only and adequate funds for the purpose shall be made available to the Registrars by the issuer company ".
6.5.6 Undertaking by the Issuer Company.
6.5.6.1 The following undertaking by the issuer company shall be incorporated in the offer document :
6.5.7 Utilisation of Issue Proceeds
6.5.7.1 A statement by the Board of Directors of issuer company to the effect that–
6.5.8 Any special tax benefits for company and its shareholders.
6.6 Particulars of the issue
6.6.1 Objects
6.6.2 Project Cost
6.6.3 Means of financing.
6.6.4 Appraisal
6.6.4.1 (a) The scope and purpose of the appraisal along with the date of appraisal shall be disclosed in the offer document.
(b) The offer document shall contain the cost of the project and means of finance as per the appraisal report.
(c) The weaknesses and threats, if any, given in the appraisal report, shall be disclosed in the offer document by way of risk factors.
6.6.5 Deployment of funds in the project
6.6.6 Name of monitoring agency, if applicable, to be disclosed.
6.7 Company, Management and Project
6.7.1 History and main objects and present business of the company
6.7.2 Subsidiary(ies) of the company, if any
6.7.3 Promoters and their Background
6.7.4 Key Managerial Personnel
6.7.5 Names, address and occupation of manager, managing director, and other directors (including nominee- directors, whole-time directors (giving their directorships in other companies)
6.7.6 Location of the Project
6.7.7 Plant and machinery , technology, process, etc.
6.7.8 Collaboration, any performance guarantee or assistance in marketing by the collaborators
6.7.8.1 Following information regarding persons/entities with whom technical and financial agreements have been entered into to be given:
etc.
6.7.10 Schedule of implementation of the project and progress made so far, giving details of land acquisition, civil works, installation of plant and machinery, trial production, date of commercial production, etc.
6.7.11 The products
6.7.11.1 Nature of the product/ s - consumer / industrial and end users
(b)Source of data used shall be mentioned.
6.7.11.3 Approach to marketing and proposed marketing set up.
6.7.11.4 Export possibilities and export obligations, if any (in case of a company providing any "service" particulars, as applicable, be furnished)
6.7.12 Future prospects
6.7.12.1 Capacity & Capacity Utilisation
6.7.13 Stock Market Data
6.7.13.1 Particulars of:-
6.8 Management Discussion and Analysis of the Financial Condition and Results of the Operations as Reflected in the Financial Statements.
6.8.3 A statement by the directors whether in their opinion there have arisen any circumstances since the date of the last financial statements as disclosed in the prospectus any which materially and adversely affect or is likely to affect the trading or profitability of the company, or the value of its assets, or its ability to pay its liabilities within the next twelve months.
6.9 Financial of Group Companies
6.9.1 The following information for the last 3 years based on the audited statements in respect of all the companies, firms, ventures, etc. promoted by the promoters irrespective of whether these are covered under section 370 (1)(B) of the Companies Act, 1956 shall be given, wherever applicable:
(b) The information regarding company(ies) which has become BIFR company or is under winding up or has a negative net worth shall be provided.
and justification for the same shall be spelt out and the conflict of interest situations shall be stated.
6.9.5 Sales or purchase between companies in the promoter group when such sales or purchases exceed in value in the aggregate 10% of the total sales or purchases of the issuer and also disclose material items of income or expenditure arising out of transactions in the promoter group.
6.10 Following particulars in regard to the company and other listed companies under the same management within the meaning section 370 (1)(B) of the Companies Act, 1956 which made any capital issue during the last three years shall be given
6.11 Promise vis-à-vis Performance
6.11.1 Issuer Company
6.11.2 Listed Ventures of Promoters
6.12 Projections
6.12.1 No projections of profits shall be made except
Provided that the projections by (a) and (b) above may be made only if:-
i) the projections are based solely on an appraisal by a public financial institution or a scheduled commercial bank;
ii) such appraising agency has financed the project or part thereof or is committed to finance the project or part thereof;
iii) the projections are not for a period exceeding two years from the date of expected commencement of commercial production or three years from the date of closure of the issue, whichever is later;
iv) the major assumptions on which projections are base are specified.
Explanation
For the purpose of eligibility of banks or FIs to appraise the projects and give projections in the offer documents, it is clarified that:
a) The subsidiaries of banks/FIs are not eligible for the purpose of giving projections in the offer documents.
If a project is appraised by a subsidiary of a bank or FI and the project is financed/committed to be financed by the parent bank/FI, the projections made by the subsidiaries cannot be given in the offer documents.
6.12.2 Forecast of Estimated Profits
Provided that such forecast shall not be given if;
6.13 Basis for Issue Price
6.13.1 Following information shall be disclosed for all issues irrespective of the issue price.
Provided that the projected earnings shall not be used as a justification for the issue price in the offer document.
Provided further that the accounting ratios disclosed in the prospectus in support of basis of the issue price shall be calculated after giving effect to the consequent increase in capital on account of compulsory conversions outstanding, as well as on the assumption that the options outstanding, if any, to subscribe for additional capital will be exercised.
g) An illustrative format of disclosure in respect of
basis for issue price is given in Schedule XV.
6.14 Outstanding litigations or Defaults
ii) The details of the past cases in which penalties were imposed by the concerned authorities.
6.15 Risk factors and management perception on the same, if any
6.16 Disclosure on Investor Grievances and Redressal System
The offer documents shall disclose the arrangements or any mechanism evolved by the company for redressal of investor grievances.
PART II
6.17 General Information
6.17.1 Consent of directors, auditors, solicitors/ advocates, managers to the issue, Registrar of Issue, Bankers to the company, bankers to the issue and experts.
6.17.2 Expert opinion obtained, if any
6.17.3 Change, if any, in directors and auditors during the last three years, and reasons, thereof
6.17.4 Authority for the issue and derails of resolution passed for the issue
6.17.4 Procedure and time of schedule for allotment and issue of certificates
6.17.5 Names and address of the company secretary, legal adviser, lead managers, co-managers, auditors, bankers to the company, bankers to the issue and brokers to the issue.
6.18 Financial Information
6.18.1 A report by the auditors of the company with respect to-
and, if no accounts have been made up in
respect of any part of the period of five years ending on a date three months
before the issue of the prospectus, containing a statement of that fact (and
accompanied by a statement of the accounts of the company in respect of that
part of the said period up to a date not earlier than six months of the date of
issue of the prospectus indicating the profit or loss for that period and the
assets and liabilities position as at the end of that period together with a
certificate from the auditors that such accounts have been examined and found
correct by them. The said statement may indicate the nature of provision or
adjustments made or are yet to be made).
6.18.2 If the company has no subsidiaries, the report shall -
6.18.3 If the company has subsidiaries, the report shall -
or, instead of dealing separately with the company’s profits or losses, deal as a whole with the profits or losses of the company, and, so far as they concern members of the company, with the combined profits or losses of its subsidiaries and
i) as a whole with the combined assets and liabilities of its subsidiaries, with
or without the company’s assets and liabilities or
ii) individually with the assets and liabilities of each subsidiaries
and shall indicate as respects the assets and liabilities of the subsidiaries, the allowance to be made for persons other than members of the company.
6.18.4 If the proceeds, or any part of the proceeds, of the issue of the shares or debentures are or is to be applied directly or indirectly -
6.18.5 If-
6.18.6 Principal terms of loan and assets charged as security.
6.18.7 Other provisions relating to accounts of the issuer company
b) If an incorrect accounting policy is followed, the re-computation of the financial statements shall be in accordance with correct accounting policies;
before considering extraordinary items and after considering the profit or
loss from extraordinary items.
b) An illustrative format of the disclosure of profits and losses on this basis is specified at Schedule X.
v. a) The statement of assets and liabilities shall be prepared after deducting the balance outstanding on revaluation reserve account from both fixed assets and reserves and the networth arrived at after such deductions.
vi. A suggested format of assets and liabilities is specified at Schedule XI.
c) The turnover disclosed in the Profit and Loss Statement shall be bifurcated into:-
d) The offer document shall disclose details of `Other Income' in all cases where such income (net of related expenses) exceeds 20% of the net profit before tax, including:
e) i) Changes (with quantification wherever possible) in the activities of the issuer which may have had a material effect on the statement of profit/loss for the five years.
ii) Disclosure of these changes in the activities of the company shall include discontinuance of lines of business, loss of agencies or markets and similar factors.
f) The following accounting ratios shall be given for each of the accounting periods for which financial information is given.
reserves.
g) i) A Capitalisation Statement showing total debt net worth, and the debt/equity ratios before and after the issue is made shall be incorporated.
6.19 Statutory and other information
6.19.1 Minimum Subscription
6.19.2 Expenses of the issue giving separately fee payable to :-
6.19.3 Underwriting commission and brokerage
6.19.4 Previous issue for cash
6.19.5 Previous public or rights issue, if any:
(during last five years)
Date of refunds
Date of listing on the stock exchange:
6.19.6 Commission or brokerage on previous issue
6.19.7 Issue of shares otherwise than for cash
6.19.8 Debentures and redeemable preference shares and other instruments issued by the company outstanding as on the date of prospectus and terms of issue.
6.19.9 Option to subscribe
6.19.10 Purchase of property
6.19.11 Following details may be given in the offer document:
ii) Any amount or benefit paid or given within the two preceding years or intended to be paid or given to any promoter or officer and consideration for payment of giving of the benefit.
b) The dates, parties to, and general nature of -
iii. A reasonable time and place at which any such contract or a copy thereof may be inspected.
6.19.12 Rights of members regarding voting, dividend, lien on shares and the process for modification of such rights and forfeiture of shares.
6.19.13 Restrictions, if any, on transfer and transmission of shares / debentures and on their consolidation / splitting.
6.19.14 Revaluation of assets, if any (during last five years)
6.19.15 Material contracts and inspection of documents, eg
SECTION II: CONTENTS OF ABRIDGED PROSPECTUS
6.20 The abridged prospectus shall contain the disclosures as specified under Section I of Chapter VI.
6.20.1 The disclosure requirement as specified shall also be applicable in case of abridged prospectus.
6.21 General Information
6.21.1 Name and address of registered office of the company
6.21.2 Name/s of stock exchanges where listing of the securities is proposed.
6.21.3 Date of opening, closing and earliest closing of the issue
6.21.4 Disclaimer Clause
6.21.5 Name and address of lead managers.
6.21.6 Name and address of registrars to the issue.
6.21.7 Name and address of trustee under debenture trust deed (in case of debenture issue)
6.21.8 Rating for the proposed debenture/ preference shares issue, if any, obtained from any other Credit Rating Agency
6.21.9 (a) The name, address telephone number, fax number and address of Compliance Officer.
(b) The investor’s attention shall also be invited to contact the compliance officer in case of any pre-issue / post-issue related problems such as non-receipt of letters of allotment / share certificates / refund orders / cancelled stockinvests, etc.
6.21.10 Provisions of sub section (1) of section 68A of the Companies Act, relating to punishment for fictitious applications.
6.21.11 Declaration about the issue of allotment letters/refunds within a period of 30 days and interest in case of delay in dispatching refund/ allotment letters @ 15% p.a. as at the rate as may be specified.
6.21.12 Risk Factors and Issue Highlights:
6.21.13 The Risk Factors and management perception on the same shall be printed along with Issue Highlights with equal treatment in printing in all respects.
6.22 Capital Structure of the company
6.22.1 Following details shall appear
e) Share Premium Account (before and after the issue)
6.22.2 A disclosure to the effect that the securities offered through this public/ rights issue shall be made fully paid up or forfeited within 12 months from the date of allotment of securities in a manner as specified in clause 8.5.2.
6.23 Terms of the present issue
6.23.1 Authority for the issue, terms of payment and procedure and time schedule for allotment and issue of certificates.
6.23.2 The caption "Interest in Case of Delay in Despatch of Allotment Letters/ Refund Orders in Case of Public Issues" shall appear.
6.23.2 How to apply - availability of forms, prospectus and mode of payment
6.23.2.1 Applications by NRIs
a) In the application form meant for Indian Public, the declaration relating to Nationality and Residentship shall be shown prominently as under:
"Nationality and Residentship (Tick whichever is applicable)
"Attention NRI Applicants: Payment must be made through their Non Resident External (NRE) / Foreign Currency Non Resident (FCNR) accounts or through cheques / drafts sent from abroad and drawn on convertible rupee accounts in India. Forms accompanied by cheques drawn on NR(O) accounts are liable to be rejected".
d) The application form should contain necessary instructions/provision for the following:
6.23.3 Any special tax benefits for
company and its shareholders
6.24 Particulars of the issue
6.24.1 Objects
6.24.3 Means of financing
6.25 Company, Management and Project
6.25.1 History and main objects and present business of the company
6.25.2 Promoters and their Background
6.25.3 Names, address and occupation of manager, managing director, and other directors (including nominee-directors, whole-time directors (giving their directorships in other companies)
6.25.4 Location of the Project
6.25.5 Plant and machinery , technology, process, etc
6.25.6 Collaboration, any performance guarantee or assistance in marketing by the collaborators
6.25.7.Infrastructure facilities for raw materials and
utilities like water, electricity,
etc.
6.25.8 Schedule of implementation of the project and progress made so far, giving details of land acquisition, civil works, installation of plant and machinery, trial production, date of commercial production etc
6.25.9 The products
6.25.9.1 Nature of the product/s - consumer / industrial and end users
6.25.9.2 Market including details of the competition, past production figures for the industry, existing installed capacity, past trends and future prospects regarding exports (if, applicable), demand and supply forecasts (if given, should be essentially with assumptions unless sourced from a market research agency of repute), etc. to be given.
6.25.9.3 Source of data used shall be mentioned.
6.25.9.3 Approach to marketing and proposed marketing set
up
6.25.9.4 Export possibilities and export obligations, if any (in case of a company providing any "service" particulars, as applicable, be furnished)
6.25.10 Future prospects
6.25.11 Stock Market Data
i) Particulars of:-
6.26 Following particulars in regard to the listed companies under the same management with the meaning of Section 370(1B) which made any capital issue in the last three years.
6.27 Basis for Issue Price
i) Following information shall be disclosed:-
Provided that projected earnings shall not be used as a justification for the issue price in the offer document.
Provided further that the accounting ratios disclosed in the prospectus in support of basis of the issue price shall be calculated after giving effect to the consequent increase of capital on account of compulsory conversions outstanding, as well as on the assumption that the options outstanding, if any, to subscribe for additional capital will be exercised.
6.28 Management perceptions of risk factors (e.g. Sensitivity to foreign exchange rate fluctuations, difficulty in availability of raw materials or in marketing of products, cost/ time overrun).
6.29 Outstanding litigations
6.30 Whether all Payment/ Refunds, Debentures, Deposits of banks or companies, Interest on Deposits, Debenture Interest, Institutional Dues have been paid up to date.
6.31 If not, details of the arrears if any to be stated.
6.30 Any material development after the date of the
latest balance sheet and its impact on performance and prospects of the company.
6.32 Expert opinion obtained if any.
6.33 Change, if any, in directors and auditors during the last three years and reasons thereof.
6.34 Option to Subscribe.
6.35 Material contracts and time and place of inspection.
6.36 Financial Performance of the Company for the Last Five Years:(Figures to be taken from the audited annual accounts in tabular form)
6.37 Statements after minimum subscription clause:
(b) No statement made in this Form shall
contravene any of the provisions of the Companies Act, 1956 and the rules made
thereunder".
SECTION III. CONTENTS OF THE LETTER OF OFFER
6.38 The letter of offer shall fulfil the requirements and shall contain disclosures as specified under Section I of this Chapter for the prospectus under the following heads:
Explanation:
For the purpose of rights issue, wherever the word 'RoC' appears, the same shall be deemed to refer Regional Stock Exchange.
6.39 Cover Pages
6.39.1. The front and back cover pages of the letter of offer shall comply with the requirements specified under clause 6.2 of Section I of this Chapter.
6.40 General information
6.40.1 Name and address of registered office of the
company.
6.40.2 Issue listed at: [Name (s) of the Stock Exchanges]
6.40.3 Opening, closing dates of the issue.
6.40.4 Name and address of Lead Merchant Bankers.
6.40.5 Name and address of Trustees under Debenture Trust Deeds (in case of debenture/ issue).
6.40.6 Rating for the Debenture/Preference Shares, if any, obtained from any Credit Rating Agency.
6.40.7 Provisions of sub-section (1) of Section 68A of the Companies Act, 1956 relating to punishment for fictitious applications.
6.40.8 Declaration about the issue of allotment letters/refunds within a period of 7 weeks and interest in case of delay in refund at the prescribed rate under Section 73(2)/(2A).
6.40.9 Declaration by the Board of Directors stating that all moneys received out of issue of shares or debentures through an offer document shall be transferred to a separate bank account other than the bank account referred to in sub-section (3) of section 73;
6.40.10 Minimum Subscription Clause: The minimum subscription clause shall be incorporated as under:
6.40.11 For Non-underwritten Rights Issue
6.40.12 For Underwritten Rights Issue
6.41 Capital structure of the company
6.42
Terms of the present issue
6.42.1 Authority for the issue, terms of payments and procedure and time schedule for allotment and issue of certificates.
6.42.2 How to apply - availability of forms, letter of offer and mode of payment.
6.42.3 Special tax benefits to company and shareholders under the Income tax Act, if any.
6.43 Particulars of the issue
6.43.1 Object of the issue.
6.43.2 Project Cost.
6.43.3 Means of financing (including contribution of promoters).
6.44 Company, management and project
6.44.1 History, main objects and present business of the company.
6.44.2 Background of promoters, Managing Director/ Whole time Director and names of nominees of institutions, if any, on the Board of Directors including key management personnel.
6.44.3 Location of the Project.
6.44.4 Plant and Machinery, technology, process etc.
6.44.5 Collaboration, performance guarantee if any, or assistance in marketing by the collaborators.
6.44.6 Infrastructure facilities for raw materials and
utilities like water, electricity,
etc.
6.44.7 Schedule of implementation of the project and progress made so far, giving details of land acquisition, execution of civil works, installation of plant and machinery, trial production, date of commercial production, if any.
6.44.8 the products -
6.44.9 Future prospects - The expected year when the company would be able to earn net profit, declare dividend.
6.44.10Change, if any, in directors and auditors during the last three years and reasons thereof.
6.45 Financial performance of the company for the last five years:
(Figures to be taken from the audited annual accounts in tabular form)
6.45.1 Balance Sheet Data: Equity Capital, Reserves (State Revaluation Reserve, the year of revaluation and its monetary effect on assets) and borrowings.
6.45.2 Profit and Loss data: Sales, Gross profit, Net profit, Dividend paid if any.
6.45.3 Any change in accounting policies during the last three years and their effect on the profits and the reserves of the company.
6.45.4 Stock market quotation of shares / debentures of the company, if any, (high/low price in each of the last three years and monthly high /low price during the last six months)
6.45.5 Details of any pending litigations, defaults against the company, these group companies and the business relationship of these companies with the issuing company.
6.45.6 Promise versus performance for the earlier Public / Rights issues of the Company, or group companies.
6.45.7 Financial performance of the subsidiary company / group company.
6.45.8 Justification of premium.
6.46 The information for the period between the last date of the balance sheet and profit and loss account sent to the shareholders and up to the end of the last but one month preceding the date of the letter of offer shall be furnished.
6.46.1 Working results of the company under following heads
(a) (i) Sales / turnover
(ii) Other income
(b) Estimated gross profit/loss
(excluding depreciation and taxes)
(c) (i) Provision for depreciation
(ii) Provision for taxes
(d) Estimated net profit/loss
6.46.2 Material changes and commitments, if any, affecting financial position of the company.
6.46.3 Week-end prices for the last four weeks; current market price; and highest and lowest prices of equity shares during the period with the relative dates.
6.47 Following particulars in regard to the listed companies under the same management within the meaning of section 370(1B) which made any capital issue in the last three years.
(rights)
6.48 Management discussion and analysis of the financial conditions and results of the operations as reflected in the financial statement.
6.48.1 Any material development after the date of the latest balance sheet and its impact on performance and prospects of the company.
6.50 Expert opinion obtained if any.
6.51
Statutory and other information
6.51.1 Option to Subscribe
(a)
The details of option to subscribed for securities to be dealt in a depository.
(b) The lead merchant banker shall incorporate a statement in the offer document and in the application form to the effect that the investor shall have an option either to receive the security certificates or to hold the securities in dematerialised form with a depository.
6.51.2 Material contracts and time and place of inspection.
6.52 Undertaking by Directors
" No statement made in this Form shall contravene any of the provisions of the Companies Act, 1956 and the rules made thereunder. All the legal requirements connected with the said issue as also the guidelines, instructions etc. issued by SEBI, Government and any other competent authority in this behalf have been duly complied with".
Signature of Directors Place : .......................
Date : .......................
6Inserted vide RMB (Compendium) Series Circular No.2
dated February 16, 2000
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POST-ISSUE OBLIGATIONS
7.0 The post issue obligations shall be as follows :
7.1 7 [Deleted]
7.2 Post- issue Monitoring Reports
7.2.1 Irrespective of the level of subscription, the post-issue Lead Merchant Banker shall ensure the submission of the post-issue monitoring reports as per formats specified in Schedule XVI.
7.2.2 These reports shall be submitted within 3 working days from the due dates.
7.2.1.1 Public Issues
(a) 3-Day Post Issue Monitoring Report
The due date for this report shall be the 3rd day from the date of closure of subscription of the issue.
(b) 78-Day Post Issue Monitoring Report
The due date for this report shall be the 78th day from the date of closure of subscription of the issue.
7.2.1.2 Rights Issues
(a) 3-Day Post-Issue Monitoring Report
The due date for this report shall be the 3rd day from the date of closure of subscription of the issue.
(b) 50-Day Post-Issue Monitoring Report
The due date for this report shall be the 50th day from the date of closure of subscription of the issue.
7.3 Redressal of Investor Grievances
7.3.1 The Post -issue Lead Merchant Banker shall actively associate himself with post-issue activities namely, allotment, refund and despatch and shall regularly monitor redressal of investor grievances arising therefrom.
7.4 Co-ordination with Intermediaries
7.4.1 (i) The Post-issue
lead merchant banker shall maintain close co-ordination 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, processing of the
applications including those accompanied by stockinvest and other matters till
the basis of allotment is finalised, despatch security certificates and refund
orders completed and securities listed.
(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.
7.4.1.1 Stock Invest
The lead merchant banker shall ensure compliance with the instructions issued by the RBI on handling of stock invest by any person including Registrars.
7.4.1.2 Underwriters
ii) In case, there is no definite information about subscription figures, the issue shall be kept open for the required number of days to take care of the underwriters' interests and to avoid any dispute, at a later date, by the underwriters in respect of their liability.
b) In case there is a devolvement on underwriters, the lead Merchant Banker shall ensure that the underwriters honour their commitments within 60 days from the date of closure of the issue.
c) In case of undersubscribed issues, 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 - XVII.
7.4.1.3 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.e. Bankers to an Issue), as per the provisions of section 73(3) of the Companies Act 1956, is released by the said bank only after the listing permission under the said Section has been obtained from all the stock exchanges where the securities was proposed to be listed as per the offer document.
7.5 Post-issue Advertisements
7.5.1 Post-issue Lead Merchant Banker shall ensure that in all issues, advertisement giving details relating to oversubscription, basis of allotment, number, value and percentage of applications received along with stockinvest, number, value and percentage of successful allottees who have applied through stockinvest, date of completion of despatch of refund orders, 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, one Hindi National Paper and a Regional language daily circulated at the place where registered office of the issuer company is situated.
7.5.2 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, during the period when the public issue is still open for subscription by the public.
7.5.3 Advertisement stating that "the subscription to the issue has been closed" may be issued after the actual closure of the issue.
7.6 Basis of Allotment
7.6.18 In a public issue of securities, the Executive Director/Managing Director of the Regional 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 in accordance with the following guidelines:
Provided, in the book building portion of a book built public issue notwithstanding the above clause, Clause 11.3.5 of Chapter XI of these Guidelines shall be applicable.
7.6.1.1Proportionate Allotment Procedure
The allotment shall be subject to allotment in marketable lots, on a proportionate basis as explained below:
Total number of applicants in category of 100s - 1,500
Total number of shares applied for - 1,50,000
Number of times oversubscribed - 3
Proportionate allotment to category - 1,50,000 x 1/3
= 50,000
Number of shares applied for by - 100
each applicant
Number of times oversubscribed - 3
Proportionate allotment to each
successful applicant - 100 x 1/3 = 33
(to be rounded off to 100)
7.6.1.2 Reservation for Small Individual Applicants
7.6.1.2.1 The above proportionate allotments of securities in an issue that is oversubscribed shall be subject to the reservation for small individual applicants as described below:
a) A minimum 50% of the net offer of securities to the public shall initially be made available for allotment to individual applicants who have applied for allotment equal to or less than 10 marketable lots of shares or debentures or the securities offered, as the case may be.
b) The balance net offer of securities to the public shall be made available for allotment to:
i) individual applicants who have applied for allotment of more than 10 marketable lots of shares or debentures or the securities offered and ;
ii) other investors including Corporate bodies/ institutions irrespective of the number of shares, debentures, etc. applied for.
c) The unsubscribed portion of the net offer to any one of the categories specified in (a) or (b) shall / may be made available for allotment to applicants in the other category, if so required.
Explanation
It is clarified that the words "a minimum of 50% of the public offer" used in sub-clause (a) above means that if the category of individual applicants upto 10 marketable lots was to be entitled to get 70% of the public offer in accordance with proportionate formula, the category should get 70%. If the category is entitled to get only 30% of the public offer in accordance with the proportionate allotment formula, there should be a reservation of a minimum of 50% of the net public offer.
97.6.2 The drawal of lots (where required) to finalise the basis of allotment, shall be done in the presence of a public representative on the Governing Board of the Regional Stock Exchange.
107.6.3 The basis of allotment shall be signed as correct by the Executive Director/Managing Director of the stock exchange and the public nominee (where applicable) in addition to the lead merchant banker responsible for post issue activities and the Registrar to the Issue. The stock exchange shall invite the public representative on a rotation basis from out of the various public representatives on its governing board."
7.7 Other Responsibilities
7.7.1 Lead Merchant Banker shall ensure payment of interest to the applicants for delayed dispatch of allotment letters, refund orders, etc. as prescribed in the offer document.
7.7.2 The Post-issue Lead Merchant Banker shall ensure that the despatch of refund orders / allotment letters /share certificates is done by way of registered post / certificate of posting as may be applicable.
7.7.3 In case of all issues, advertisement giving details relating to oversubscription, basis of allotment, number, value and percentage of applications received alongwith stockinvest, number, value and percentage of successful allottees who have applied through stockinvest, date of completion of despatch of refund orders, date of despatch of certificates and date of filing of listing application.
7.7.4 Such advertisement shall be released within 10 days from the date of completion of the various activities.
7.7.5 Post-issue Lead merchant banker shall continue to be responsible for post issue activities till the subscribers have received the shares/debenture certificates or refund of application moneys and the listing agreement is entered into by the issuer company with the stock exchange and listing/ trading permission is obtained.
7.8 Certificate Regarding Realisation of Stockinvests
7.8.1 The Post -Issue Lead Merchant Banker shall submit within two weeks from the date of allotment, a Certificate to the Board certifying that the stockinvests on the basis of which allotment was finalised, have been realised.
7Deleted vide RMB (Compendium) Series Circular No.2
dated February 16, 2000
8 Amended vide RMB (Compendium) Series Circular No.2
dated February 16, 2000
9 Inserted vide RMB (Compendium) Series Circular No.2
dated February 16, 2000
10 Inserted vide RMB (Compendium) Series Circular
No.2 dated February 16, 2000
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OTHER ISSUE REQUIREMENTS
8.0 The Lead Merchant Banker shall ensure compliance with the following:
8.1 Public Offer by Unlisted Companies with Post Issue Capital upto Rs.5 crores
8.1.1 An unlisted company, with a commercial operation of less than two years proposing to issue securities to the public, resulting in post issue capital of Rs.3 crores and not exceeding Rs.5 crores, shall be eligible to apply for listing of securities only on those stock exchange(s) where trading of securities is screen-based.
8.1.2 The issuer company shall appoint market maker(s) on all the stock exchanges where the securities are proposed to be listed.
8.1.3 The appointment of market makers shall be subject to the following :-
i. At least one market maker undertakes to make market for a minimum period of 18 months and at least one additional market maker undertakes to make market for a minimum period of 12 months from the date on which the securities are admitted to dealing.
ii. Market makers undertake to offer buy and sell quotes for a minimum depth of 3 marketable lots;
iii. 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%:
iv. The inventory of the market makers on each of such stock exchanges, as on the date of allotment of securities, shall be at least 5% of the proposed issue of the company.
8.1.4 The unlisted companies whose capital after the proposed issue of securities is less than Rs.3 crores shall be eligible to be listed only on the Over the Counter Exchange of India.
8.2 Listing of pure debt / convertible instruments issued by Unlisted infrastructure companies and Municipal Corporations
8.2.1 An unlisted infrastructure company making a public issue of pure debt instruments / convertible debt instruments and a Municipal Corporation making a public issue of pure debt instruments shall be eligible to apply for listing of these instruments in the stock exchanges subject to the following:
8.2.2.1 In case of change in standard denomination of equity shares, the compliance with the following shall be ensured while making disclosure in the offer document:-
(i) all the financial data affected by the change in denomination of shares shall be clearly and unambiguously presented in the offer document.
(ii) comparison of financial ratios representing value per share and comparison of stock market data in respect of price and volume of securities shall be clearly and unambiguously presented in the offer document.
(iii) the capital structure incorporated in the offer document shall be clearly presented giving all the relevant details pertaining to the change in denomination of the shares.
8.3 Rule 19(2)(b) of SC (R) Rules, 1957
8.3.1 In case of a public issue by an unlisted company, the net offer to public shall be at least 25% of the post-issue capital.
8.3.2 In case of a public issue by a listed company, the net offer to public shall be at least 25% of the issue size.
8.3.3 An infrastructure company, satisfying the requirements in Clause 2.4.1 (iii) of Chapter II, inviting subscription from public may not be required to offer at least 25% of its securities to public for subscription as required under rule 19(2)(b) of SC(R) Rules, 1957.
8.3.4 In case of public issues or offers for sale of
equity shares or securities convertible at a later date into equity by unlisted
companies in the information technology sector at least 10% of the securities
issued by such company may be offered to the public subject to the following:-
(i) minimum twenty lacs securities are offered to the
public (excluding reservation, firm allotment and promoter's contribution); and
(ii) the size of the offer to the public i.e. the offer price multiplied by the number of securities offered to the public at point (i) above, is minimum Rs.50 crores.
8.3.5 The issuer company is free to make reservations
and/or firm allotments to various categories of persons mentioned hereafter for
the remaining of the issue size subject to other relevant provisions of these
guidelines.
Explanation
|
Sr. No. |
Category of Persons | |
|
(i) |
Permanent employees (including working directors) of the company and in the case of a new company the permanent employees of the promoting companies | |
|
(ii) |
Shareholders of the promoting companies in the case of a new company and shareholders of group companies in the case of an existing company | |
|
(iii) |
Indian Mutual Funds | |
|
(iv) |
Foreign Institutional Investors (including non resident Indians and overseas corporate bodies) | |
|
(v) |
Indian and Multilateral development Institutions. | |
|
(vi) |
Scheduled Banks | |
|
Sr. No. |
Category of Persons |
|
(i) |
Indian and Multilateral Development Financial Institutions |
|
(ii) |
Indian Mutual Funds |
|
(iii) |
Foreign Institutional Investors (including non resident Indians and overseas corporate bodies) |
|
(iv) |
Permanent / regular employees of the issuer company |
|
(v) |
Scheduled Banks |
8.4 Capital Structure
8.4.1 For the purposes of presentation of the capital
structure in the specified
format, the lead merchant
banker shall take into account the following:
a) Proposed issue amount = (Promoters’ contribution in the proposed issue) + (firm allotment) + (offer through the offer document).
b) Offer through the offer document shall include net offer to the public and reservations to the permitted reserved categories and shall not include the promoters’ contribution in the proposed issue and firm allotment.
8.5 Firm Allotments and Reservations
ii) The unsubscribed portion, if any, after such inter se adjustments amongst the reserved categories shall be added back to the net offer to the public.
8.6 Terms of the Issue
8.6.1 Minimum Number of Share Applications and Application Money in public issue
i) In case of public issue at par, the minimum number of shares for which an application is to be made, shall be fixed at 200 shares of face value of Rs.10/- each.
ii) Where the public issue is at a premium or comprises security, whether convertible or non-convertible, or the public issue is of more than one security, the minimum application moneys payable in respect of each security by each applicant, shall not be less than Rs 2000/- irrespective of the size of premium subject to applications being for a multiple of tradeable lots;
Provided that the maximum tradeable lot in any case shall not exceed 100 shares.
|
Offer price per share |
Minimum Tradeable lot
|
|
Up to Rs 100 |
100 Shares |
|
Rs 101- Rs 400 |
50 Shares |
|
More than Rs. 400 |
10 Shares |
8.6.2 Securities Issued to be Made Fully Paid Up
8.7 Restriction on further Capital Issues
8.7.1 No company shall make any further issue of capital in any manner whether by way of issue of bonus shares, preferential allotment, rights issue or public issue or otherwise, during the period commencing from the submission of offer document to the Board on behalf of the company for public or rights issues, till the securities referred to in the said offer document have been listed or application moneys refunded on account of non-listing or undersubscription, etc.
8.7.2 (a) No company shall, pending conversion of Fully Convertible Debentures (FCDs) or Partly Convertible Debentures (PCDs), issue any shares by way of bonus or rights unless similar benefit is extended to the holders of such FCDs or PCDs, through reservation of shares in proportion to such convertible part of FCDs/PCDs.
(b) The share so reserved may be issued at the time of
conversion(s) of such debentures on the same terms on which the bonus or rights
issue was made.
8.7.3 (a) An issuer company shall not
withdraw rights issue after announcement of record date in relation to such
issue.
(b) In cases where the issuer has withdrawn the
rights issue after announcing the record date, the issuer company shall not make
an application for listing of any securities of the company for a minimum period
of 12 months from the record date.
Provided that shares resulting from the conversion of PCDs/FCDs/Warrants issued prior to the announcing of the record date in relation to rights issue may be granted listing by the concerned Stock exchange(s).
8.8 Period of Subscription
8.8.1 Public Issues
(a) Subscription list for public issues shall be kept open for at least 3 working days and not more than 10 working days.
(b) The public issue made by an infrastructure company, satisfying the requirements in Clause 2.4.1 (iii) of Chapter II may be kept open for a maximum period of 21 working days.
(c) The period of operation of subscription list of public issue shall be disclosed in the prospectus.
8.8.2 Rights Issues
8.8.2.1 Rights issues shall be kept open for at least 30 days and not more than 60
days.
8.9 Price Band
8.9.1 If in a draft offer document submitted to the Board, a price band as per the provisions of clause 3.5.1 of Chapter III of these Guidelines is mentioned, suitable explanatory notes indicating the financial implications, if the price were to be fixed at different ranges within the price band approved by the company Board / General Body, shall be disclosed in the offer document.
8.10 Retention of Oversubscription
8.10.1 The quantum of issue whether through a rights or a public issue, shall not exceed the amount specified in the prospectus/ letter of offer.
Provided that an oversubscription to the extent of 10% of the net offer to public is permissible for the purpose of rounding off to the nearer multiple of 100 while finalising the allotment.
8.11 Underwriting
8.11.1 The issuers have the option to have a public issue underwritten by the underwriter.
8.11.2 In respect of every underwritten issue, the lead merchant banker(s) shall accept a minimum underwriting obligation of 5% of the total underwriting commitment or Rs.25 lacs whichever is less.
8.12 Updation of Offer Document
8.12.1 The Lead Merchant Banker shall ensure that the particulars as per audited statements contained in the offer document are not more than 6 months old from issue opening date.
8.12.2 In respect of a Government company making a public issue, the auditors report in the prospectus shall not be more than six months old as on the date of filing of the prospectus with the Registrar of Companies or the Stock Exchange as the case may be.
8.13 Compliance Officer to be Appointed by Lead Merchant Banker
8.13.1 The merchant bankers shall appoint a senior officer as Compliance Officer to ensure that all Rules, Regulations, Guidelines, Notifications etc. issued by the Board, the Government of India, and other regulatory organizations are complied with.
8.13.2 The Compliance Officer shall co-ordinate with regulatory authorities in various matters and provide necessary guidance as also ensure compliance internally.
8.13.3 The Compliance Officer shall also ensure that observations made/ deficiencies pointed out by the Board do not recur.
8.14 Incentives to Prospective Shareholders
8.14.1 The issuer shall not offer any incentives to the prospective investors by way of medical insurance scheme, lucky draw, prizes, etc.
8.15 New Financial Instruments
8.15.1 The lead manager shall ensure adequate disclosures in the offer document, more particularly relating to the terms and conditions, redemption, security, conversion and any other relevant features of any new financial instruments such as Deep Discount Bonds, Debentures with Warrants, Secured Premium Notes etc.
8.16 Issue of Debentures Bearing Interest Less Than Bank Rate
8.16.1 Whenever FCDs are issued bearing interest at a rate less than the Bank Rate, the offer document shall contain disclosures about the price that would work out to the investor, taking into account the notional interest loss on the investment from the date of allotment of FCDs to the date(s) of conversions).
8.17 Requirement of Monitoring Agency
8.17.1 In case of issues exceeding Rs.500 crores, the issuer shall make arrangements for the use of proceeds of the issue to be monitored by one of the financial institutions.
8.17.2 A copy of the monitoring report as per the format specified at Schedule-XIX, shall be filed with the Board by the said monitoring agency, on a half yearly basis, till the completion of project, for the purposes of record.
8.18 Safety Net or Buy Back Arrangement
8.18.1 Any safety net scheme or buy-back arrangements of the shares proposed in any public issue shall be finalised by issuer company with the lead merchant banker in advance and disclosed in the prospectus.
8.18.2 Such buy back or safety net arrangements shall be made available only to all original resident individual allottees.
8.18.3 Such buy back or safety net facility shall be limited upto a maximum of 1000 shares per allottee and the offer shall be valid at least for a period of 6 months from the last date of despatch of securities.
8.18.4 The financial capacity of the person making
available buy back or safety net facility shall be disclosed in the draft
prospectus.
8.19 Utilisation of
funds in case of Rights Issues
8.19.1 The issuer company may utilise funds collected against rights issues after satisfying regional stock exchange that minimum 90% subscription has been received.
8.20 Option to Receive Securities in Dematerialised Form
8.20.1 The Lead merchant Banker shall incorporate a statement in the offer document and in the application form to the effect that the investors have an option to either receive securities in the form of physical certificates or hold them in a dematerialised form.
8.21 Issue Opening Date
8.21.1 An issue shall open within 365 days from the date of issuance of the observation letter by the Board, if any or 365 days from the 22nd day from the date of filing of the draft offer document with the Board, if no observation letter is issued.
8.21.2 Presentation of financials in case of change of denomination
In case of change in standard denomination of equity shares, the compliance with the following shall be ensured while making disclosure in the offer document:-
(i) all the financial data affected by the change in denomination of shares shall be clearly and unambiguously presented in the offer document.
(ii) comparison of financial ratios representing value per share and comparison of stock market data in respect of price and volume of securities shall be clearly and unambiguously presented in the offer document.
(iii) the capital structure incorporated in the offer document shall be clearly presented giving all the relevant details pertaining to the change in denomination of the shares.
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GUIDELINES ON ADVERTISEMENT
9.0 The Lead Merchant Banker shall ensure compliance with the guidelines on Advertisement by the issuer company.
9.1 Guidelines on Advertisements
9.1.1 An issue advertisement shall be truthful, fair and clear and shall not contain any statement which is untrue or misleading.
9.1.2 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.
9.1.3 An issue advertisement shall be considered to be misleading, if it contains -
a) Statements made about the performance or activities of the company in the absence of necessary explanatory or qualifying statements, which may give an exaggerated picture of the performance or activities, than what it really is.
b) 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.
9.1.4 a) An advertisement shall be set forth in a clear, concise and understandable language.
b) Extensive use of technical, legal terminology or complex language and the inclusion of excessive details which may distract the investor, shall be avoided.
9.1.5 An issue advertisement shall not contain statements which promise or guarantee rapid increase in profits.
9.1.6 An issue advertisement shall not contain any information that is not contained in the offer document.
9.1.7 No models, celebrities, fictional characters, landmarks or caricatures or the likes shall be displayed on or form part of the offer documents or issue advertisements.
9.1.8 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.
9.1.9 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.
9.1.10 No slogans, expletives or non-factual and unsubstantiated titles shall appear in the issue advertisements or offer documents.
9.1.11 If any advertisement carries any financial data, it shall also contain data for the past three years and shall include particulars relating to sales, gross profit, net profit, share capital, reserves, earnings per share, dividends and the book values.
9.1.12 (a) All issue advertisements in newspapers, Magazines, brochures, pamphlets containing highlights relating to any issue shall also contain risk factors given equal importance in all respects including the print size.
(b) The print size of highlights and risk factors in issue
advertisements shall not be less than point 7 size.
(c) It shall contain the names of Issuer company, address of its Registered Office, names of the main Lead Merchant Bankers and Registrars to the Issue.
Provided that an issue opening / closing advertisement which does not contain the highlights need not contain risk factors.
9.1.14 No corporate advertisement of issuer company shall be issued after 21 days of the filing of the offer document with the Board till the closure of the issue unless the risk factors as are required to be mentioned in the offer document, are mentioned in such advertisement.
9.1.15 No product advertisement of such company shall contain any reference directly or indirectly to the performance of the company during the period mentioned in clause 9.1.14.
9.1.16 (a) No advertisement shall be issued stating that
the issue has been fully subscribed or oversubscribed during the period the
issue is open for subscription, except to the effect that the issue is open or
closed.
(b) No announcement regarding closure of the
issue shall be made except on the last closing date.
(c) 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.
9.1.17 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.
9.1.18 No incentives, apart from the permissible underwriting commission and brokerage, shall be offered through any advertisements to anyone associated with marketing the issue.
9.1.19 In case there is a reservation for the NRIs, the issue advertisement shall specify the same and indicate the place in India from where the individual NRI applicant can procure application forms.
9.2 The Lead Merchant Banker shall also comply with the following:
a) to obtain undertaking from the issuer as part of Memorandum of Understanding to be entered into by the Lead Merchant Banker with the issuer company to the effect that the issuer company shall not directly or indirectly release, during any conference or at any other time, any material or information which is not contained in the offer documents.
b) to ensure that the issuer company obtains approval in respect of all issue advertisements and publicity materials from the Lead Merchant Banker responsible for marketing the issue and also ensure availability of copies of all issue related materials with the Lead Merchant banker at least till the allotment is completed.
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GUIDELINES FOR ISSUE OF DEBT INSTRUMENTS
10.0 A company offering Convertible/ Non Convertible debt instruments through an offer document, shall comply with the following provisions in addition to the relevant provisions contained in other chapter of these guidelines.
10.1 Requirement of credit rating
10.1.1 No public or rights issue of debt instruments (including convertible instruments) in respect of their maturity or conversion period shall be made unless credit rating from a credit rating agency has been obtained and disclosed in the offer document.
10.1.2 For a public / rights issue of debt security of issue greater than or equal to Rs.100 crores two ratings from two different credit rating agencies shall be obtained.
10.1.3 Where credit rating is obtained from more than one credit rating agencies, al the credit rating/s, including the unaccepted credit ratings, shall be disclosed.
10.1.4 All the credit ratings obtained during the three (3) years preceding the public or rights issue of debt instrument (including convertible instruments) for any listed security of the issuer company shall be disclosed in the offer document.
10.2 Requirement in respect of Debenture Trustee
10.2.1 In case of issue of debenture with maturity of more than 18 months, the issuer shall appoint a Debenture Trustee.
10.2.2 The names of the debenture trustees must be stated in the offer document.
10.2.3 A trust deed shall be executed by the issuer company in favour of the debenture trustees within six months of the closure of the issue.
10.2.4 Trustees to the debenture issue shall be vested with the requisite powers for protecting the interest of debenture holders including a right to appoint a nominee director on the Board of the company in consultation with institutional debenture holders.
10.2.5 The merchant banker shall, along with draft offer document, file with Board, certificates from their bankers that the assets on which security is to be created are free from any encumbrances and the necessary permissions to mortgage the assets have been obtained or a No Objection Certificate from the financial institutions or banks for a second or pari passu charge in cases where assets are encumbered.
10.2.6 The debenture trustee shall ensure compliance of the following:
Explanation:
The expression `replenishing of funds or acquiring shares in other companies' shall mean replenishment of funds or acquiring share holdings of other companies in the same group. In other words, the company shall not issue debentures for acquisition of shares / providing loan to any company belonging to the same group. However, the company may issue equity shares for purposes of repayment of loan to or investment in companies belonging to the same group.
10.3 Creation of Debenture Redemption Reserves(DRR)
10.3.1 A company has to create DRR in case of issue of debenture with maturity of more than 18 months.
10.3.2 The issuer shall create DRR in accordance with the provisions given below,
(a) If debentures are issued for project finance for DRR can be created upto the date of commercial production.
(b) The DRR in respect of debentures issued for project finance may be created either in equal instalments or higher amounts if profits so permit.
(e) DRR shall be treated as a part of General Reserve for consideration of bonus issue proposals and for price fixation related to post tax return.
10.4 Distribution of Dividends
(a) In case of new companies, distribution of dividend shall require approval of the trustees to the issue and the lead institution, if any.
(b) In the case of existing companies prior permission of the lead institution for declaring dividend exceeding 20% or as per the loan covenants is necessary if the company does not comply with institutional condition regarding interest and debt service coverage ratio.
(c) (i) Dividends may be distributed out of profit of particular years only after transfer of requisite amount in DRR.
(ii) If residual profits after transfer to DRR are inadequate to distribute
reasonable dividends, company may distribute dividend out of general reserve.
10.5 Redemption
10.5.1 The issuer company shall redeem the debentures as per the offer
document.
10.6 Creation of Charge
10.6.1 The security shall be created within six months from the date of issue of debentures.
Provided that if for any reasons the company fails to create security within 12 months from the date of issue of debentures the company shall be liable to pay 2% penal interest to debenture holders.
Provided further that if security is not created even after 18 months, a meeting of the debenture holders shall be called within 21 days to explain the reasons thereof and the date by which the security shall be created.
10.6.2 If the issuing company proposes to create a charge for debentures of maturity of less than 18 months, it shall file with Registrar of Companies particulars of charge under the Companies Act.
Provided that, where no charge is to be created on such debentures, the issuer company shall ensure compliance with the provisions of the Companies (Acceptance of Deposits) Rules, 1975, as, unsecured debentures / bonds are treated as "deposits" for purposes of these rules.
10.6.3 The proposal to create a charge or otherwise in respect of such debentures, may be disclosed in the offer document along with its implications.
10.7 Requirement of letter of option
10.7.1 Filing of letter of option
A letter of option containing disclosures with regard to credit rating, debenture holder resolution, option for conversion, justification for conversion price and such other terms which the Board may prescribe from time to time shall be filed with the Board through an eligible Merchant Banker, in the following cases:
10.7.1.1 In case of Roll over of Non Convertible portions of Partly Convertible Debentures(PCDs)/ Non Convertible Debentures (NCDs).
a. An option shall be compulsorily given to debenture holders to redeem the debentures as per the terms of the offer document.
b. Roll over shall be done only in cases where debenture holders have sent their positive consent and not on the basis of the non-receipt of their negative reply.
c. Before roll over of any NCDs or non-convertible portion of the PCDs, a fresh credit rating shall be obtained within a period of six months prior to the due date of redemption and communicated to debenture holders before roll over.
d. Fresh trust deed shall be executed at the time of such roll over.
e. Fresh security shall be created in respect of such debentures to be rolled over.
Provided that if the existing trust deed or the security documents provide for continuance of the security till redemption of debentures fresh security may not be created.
10.7.1.2 In case of conversion of instruments (PCDs/FCDs,etc.) into equity capital
Provided that where issues are made and cap price with justification thereon, is fixed beforehand in respect of any instruments by the issuer and disclosed to the investors before issue, it will not be necessary to give option to the instrument holder for converting the instruments into equity capital within the cap price.
10.7.1.3 In case of Conversion of Debentures Issued under Consent of Controller of Capital Issues (CCI)
the consent of the holders of PCDs / FCDs for the conversion terms shall be obtained individually and conversion will be given effect to only if the concerned debentureholders send their positive consent and not on the basis of non- receipt of their negative reply; and
such holders of debentures, who do not give such consent, shall be given an option to get the convertible portion of debentures redeemed or repurchased by the company at a price, which shall not be less than face value of the debentures.
c) where the consent from the Controller of Capital Issues stipulates cap price for conversion of FCDs / PCDs, the board of the Company may determine the price at which the debentures may be converted.
Provided that options to debentures / other instrument holders for conversion into equity not required where the consent from the Controller of Capital Issues stipulates cap price for conversion of FCDs and PCDs and the cap price has been disclosed to the investors before subscription is made.
The decision in the said meeting of debentureholders may be ratified by the shareholders in their meeting.
Such conversions shall be optional for acceptance on the part of individuals debenture holders.
The dissenting debenture holders shall have the right to continue as debenture holders if the terms of conversions are not acceptable to them.
iii) Where issue of PCDs and FCDs is made pursuant to the consent given by the Controller of Capital Issues and the consent specifies the timing of conversion but the price of conversion of PCDs / FCDs is to be determined at a later date, the following shall be complied with:-
a) the consent of the shareholders is to be obtained only for the purposes of fixing the price of conversion and not for the pre-poning and postponing the timing of the conversion approved by CCI.
a. The conversion price shall be reasonable (in comparison with previous conversion price where the terms of the issue provide for more than one conversion) and the conversion price shall not exceed the face value of that part of the convertible debenture which is sought to be converted.
b. In cases where an option is to be given to the debentureholders and, if any debentureholder does not exercise the option to convert the debentures into equity at a price determined in the general meeting of the shareholders, the company shall redeem that part of debenture at a price which shall not be less than its face value within one month from the last date by which option is to be exercised.
c. The provision in sub-clause (c) above shall not be applicable in case such redemption is to be made in accordance with the original terms of the offer.
B) In cases of issues of debentures fully or partly convertible, irrespective of value made in the past, where conversion was to be made at a price to be determined by CCI and the consent order does not provide for a specific premium or a cap price for conversion, the draft letter of option to the debentureholders filed with the Board shall contain justification for the conversion price.
10.8 Other requirements
10.8.1 No company shall issue of FCDs having a conversion period of more than 36 months, unless conversion is made optional with "put" and "call" option.
Sub-clause (a) shall not apply to the issue of fully convertible debentures providing conversion within a period of eighteen months.
10.8.5 The interest rate for debentures can be freely determined by the issuer company.
10.9 Additional Disclosures in respect of debentures
The offer document shall contain:-
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GUIDELINES FOR BOOK BUILDING
11.1 An issuer company proposing to issue capital through book building shall comply with the following:
A) 75% Book Building Process
11.2 In an issue of securities to the public through a prospectus the option for 75% book building shall be available to the issuer company subject to the following:
(i) The option of book-building shall be available to all body corporate which are otherwise eligible to make an issue of capital to the public.
(ii) (a) The book-building facility shall be available as an alternative to, and to the extent of the percentage of the issue which can be reserved for firm allotment, as per these Guidelines.
(b) The issuer company shall have an option of either reserving the securities for firm allotment or issuing the securities through book-building process.
(iii) The issue of securities through book-building process shall be separately identified / indicated as 'placement portion category', in the prospectus.
(iv) (a) The securities available to the public shall be separately identified as 'net offer to the public'.
(b) The requirement of minimum 25% of the securities to be offered to the public shall also be applicable.
(v) In case the book-building option is availed of, underwriting shall be mandatory to the extent of the net offer to the public.
(vi) The draft prospectus containing all the information except the information regarding the price at which the securities are offered shall be filed with the Board.
(vii) One of the lead merchant banker to the issue shall be nominated by the issuer company as a Book Runner and his name shall be mentioned in the prospectus.
(viii) (a) The copy of the draft prospectus filed with the Board may be circulated by the Book Runner to the institutional buyers who are eligible for firm allotment and to the intermediaries eligible to act as underwriters inviting offers for subscribing to the securities.
(b) The draft prospectus to be circulated shall indicate the price band within which the securities are being offered for subscription.
(ix) The Book Runner on receipt of the offers shall maintain a record of the names and number of securities ordered and the price at which the institutional buyer or underwriter is willing to subscribe to securities under the placement portion.
(x) The underwriter(s) shall maintain a record of the orders received by him for subscribing to the issue out of the placement portion.
(xi) (a) The underwriter(s) shall aggregate the offers so received for subscribing to the issue and intimate to the Book Runner the aggregate amount of the orders received by him.
(b) The institutional investor shall also forward its orders, if any, to the book runner.
(xii) On receipt of the information, the Book Runner and the issuer company shall determine the price at which the securities shall be offered to the public.
(xiii) The issue price for the placement portion and offer to the public shall be the same.
(xiv) On determination of the price of the underwriter shall enter into an underwriting agreement with the issuer indicating the number of securities as well as the price at which the underwriter shall subscribe to the securities.
Provided that the Book Runner shall have an option of requiring the underwriters to the net offer to the public to pay in advance all monies required to be paid in respect of their underwriting commitment.
(xv) On determination of the issue price within two day, thereafter the prospectus shall be filed with the Registrar of Company.
(xvi) The issuer company shall open two different accounts for collection of application moneys, one for the private placement portion and the other for the public subscription.
(xvii) One day prior to the opening of the issue to the public, Book Runner shall collect from the institutional buyers and the underwriters the application forms along with the application moneys to the extent of the securities proposed to be allotted to them / subscribed by them.
(xviii) (a) Allotments for the private placement portion shall be made on the second day from the closure of the issue.
(b) However, to ensure that the securities allotted under placement portion and public portion are pari passu in all respects, the issuer company may have one date of allotment which shall be the deemed date of allotment for the issue of securities through book building process.
(xix) In case the Book Runner has exercised the option of requiring the underwriter to the net offer to the public to pay in advance all moneys required to be paid in respect of their underwriting commitment by the eleventh day of the closure of the issue the shares allotted as per the private placement category shall be eligible to be listed.
(xx) (a) Allotment of securities under the pubic category shall be made as per the Guidelines.
(b) Allotment of securities under the public category shall be eligible to be listed.
(xxi) (a) In case of undersubscription in the net offer to the public spillover to the extent of under subscription shall be permitted from the placement portion to the net offer to the public portion subject to the condition that preference shall be given to the individual investors.
(b) In case of under subscription in the placement portion spillover shall be permitted from the net offer to the public to the placement portion.
(xxii) The issuer company may pay interest on the application moneys till the date of allotment or the deemed date of allotment provided that payment of interest is uniformly given to all the applicants.
(xxiii) (a) The Book Runner and other intermediaries associated with the book building process shall maintain records of the book building process.
(b) The Board shall have the right to inspect such
records.
B) 100% BOOK BUILDING PROCESS
11.3 In an issue of securities to the public through a prospectus option for 100% Book Building shall be available to any issuer company subject to the following:
11.3.1 (i) Issue of capital shall be Rs.25 crores and above.
(ii) Reservation or firm allotment to the extent of percentage specified in these Guidelines shall not be made to categories other than the categories mentioned in sub-clause (iii) below.
(iii) Book Building shall be for the portion other than the promoters contribution and the allocation made to;
(a) ‘permanent employees of the issuer company and in the case of a new company the permanent employees of the promoting companies';
(b) ‘shareholders of the promoting companies in the case of a new company and shareholders of group companies in the case of an existing company’ either on a ‘competitive basis’ or on a ‘firm allotment basis’.
(iv) The issuer company shall appoint an eligible Merchant Banker(s) as book runner(s) and their name(s) shall be mentioned in the draft prospectus.
(v) The Lead Merchant Banker shall act as the Lead Book Runner and the other eligible Merchant Banker(s), so appointed by the Issuer, shall be termed as Co-Book Runner(s).
(vi) The primary responsibility of building the book shall be that of the Lead Book Runner.
(vii) The Book Runner(s) may appoint those intermediaries who are registered with the Board and who are permitted to carry on activity as an ‘Underwriter’ as syndicate members.
(viii) The draft prospectus containing all the disclosures as laid down in Chapter VI except that of price and the number of securities to be offered to the public shall be filed by the Lead Merchant Banker with the Board.
Provided that the total size of the issue shall be mentioned in the draft prospectus.
(ix) (a) In case of appointment of more than one Lead Merchant Banker or Book Runner for book building, the rights, obligations and responsibilities of each should be delineated.
(b) In case of an under subscription in an issue, the shortfall shall have to be made good by the Book Runner(s) to the issue and the same shall be incorporated in the interse allocation of responsibility given in Schedule II.
(x) (a) The Board within 21 days of the receipt of the draft prospectus may suggest modifications to it.
(b) The Lead Merchant Banker shall be responsible for ensuring that the modifications / final observations made by the Board are incorporated in the prospectus.
(xi) (a) The issuer company shall after receiving the final observations if any on the offer document from the Board make an advertisement in an English National daily with wide circulation, one Hindi National newspaper and a Regional language newspaper with wide circulation at the place where the registered office of the Issuer company is situated.
(b) The advertisement so issued shall contain the salient features of the final offer document as specified in Form 2A of the Companies Act circulated along with the application form.
(xii) The issuer company shall compulsorily offer an additional 10% of the issue size offered to the public through the prospectus.
(xiii) The pre-issue obligations and disclosure requirements as specified in Chapter V and VI respectively of these Guidelines, shall be applicable to issue of securities through book building unless stated otherwise in this Chapter.
(xiv) The Book Runner(s) and the issuer company shall determine the issue price based on the bids received through the ‘syndicate members’.
(xv) On determination of the price, the number of securities to be offered shall be determined (issue size divided by the price which has been determined).
(xvi) Once the final price (cut-off price) is determined all those bidders whose bids have been found to be successful (i.e. at and above the final price or cut-off price) shall become entitle for allotment of securities.
(xvii) No incentive, whether in cash or kind, shall be paid to the investors who have become entitled for allotment of securities.
(xviii) On determination of the entitlement under sub-clause (xvi), the information regarding the same (i.e. the number of securities which the investor becomes entitled) shall be intimated immediately to the investors.
(xix) The final prospectus containing all disclosures as per these Guidelines including the price and the number of securities proposed to be issued shall be filed with the Registrar of Companies.
(xx) Arrangement shall be made by the issuer for collection of the applications by appointing mandatory collection centres as per these Guidelines.
(xxi) The investors who had not participated in the bidding process or have not received intimation of entitlement of securities may also make an application.
11.3.2 Additional Disclosures
Apart from meeting the disclosure requirements as specified in these Guidelines, the following disclosures shall be suitably made:
(i) The particulars of syndicate members along with the details of registrars, bankers to the issue, etc.
(ii) The following statement shall be given under the 'basis for issue price':-
"The issue price has been determined by the Issuer in consultation with the Book Runner(s), on the basis of assessment of market demand for the offered securities by way of Book-building."
(b) The following accounting ratios shall be given under the basis for issue price for each of the accounting periods for which the financial information is given:
where
available (giving the source from which industry P/E has been taken).
4. Net-Asset value per share based on last balance sheet.
5. The accounting ratios disclosed in the offer document shall be
calculated after giving effect to the consequent increase of capital on account of compulsory conversions outstanding, as well as on the assumption that the options outstanding, if any, to subscribe for additional capital shall be exercised.
11.3.3 Underwriting
(i) The entire offer other than to the categories referred to in clause 11.3 (iii) above shall be fully underwritten by the ‘syndicate members’/ Book Runner(s).
(ii) (a) The ‘syndicate members’ shall enter into an underwriting agreement with the Book Runner(s) indicating the number of securities which they would subscribe at the predetermined price.
(b) The Book Runner(s) shall in turn enter into an underwriting agreement with the Issuer company.
(iii) In the event of the syndicate members not fulfilling their underwriting obligations the Book Runner(s) shall be responsible for bringing in the amount devolved.
(iv) There shall not be any undersubscription in the category reserved for persons applying upto 10 tradeable lots as the Underwriters shall bring in the amount devolved subject to the fulfillment of the minimum shareholders criterion.
11.3.4 Procedure for bidding:
11.3.4.1 The method and process of bidding shall be subject to the following:
(i) Bid shall be open for atleast 5 days.
(ii) The advertisement mentioned at clause 11.3.1 (xi) shall also contain the following:
(a) the date of opening and closing of the bidding(not less than 5 days).
(b) the names and addresses of the syndicate members as well as the
bidding terminals for accepting the bids.
(c) the method and process of bidding.
(iii) Bidding shall be permitted only if an electronically linked transparent facility is used.
(iv) The ‘syndicate members’ shall be present at the bidding centres so that at least one electronically linked computer terminal at all the bidding centres is available for the purpose of bidding.
(v) (a) The number of bidding centres shall not be less than the number of mandatory collection centres specified in these Guidelines.
(b) The same norms as applicable for collection centres shall be applicable for the bidding centres also.
(vi) Individual as well as institutional investors shall place their bids only through the ‘syndicate members’ who shall have the right to vet the bids.
(vii) The investors shall have the right to revise their bids.
(viii) Bidding Form
(a) There shall be a standard bidding form to ensure uniformity in bidding and accuracy.
(b) The bidding form shall contain information about the investor, the price and the number of securities that the investor wishes to bid.
(c) The bidding form before being issued to the bidder shall be serially numbered at the bidding centres and date and time stamped.
(d) The serial number may be system generated or stamped with an automatic numbering machine.
(e) The bidding form shall be issued in duplicate signed by the investor and countersigned by the syndicate member, with one form for the investor and the other for the syndicate member(s)/Book Runner(s).
(ix) At the end of each day of the bidding period the demand shall be shown graphically on the terminals for information of the syndicate members as well as the investors.
11.3.5 Allocation / Allotment Procedure
(i) Atleast 15% of the issue size shall be reserved for allocation to individual investors applying upto 10 tradeable lots through the syndicate member.
(ii) 10% of the issue size offered to the public through the prospectus shall be reserved for allocation to individual investors who had not participated in the bidding process or have not received an intimation for entitlement of securities under clause 11.3 (xix).
(iii) Allotment to investors under sub-clauses (i) and (ii) of this clause, shall be made on the basis of the proportionate allotment system as specified in Schedule XVIII.
(iv) In case of undersubscription in the category referred to in clause (ii) of this clause, the Issuer company has the option to allocate it to whichever category it deems fit or let the undersubscribed portion lapse.
(v) (a) For the class of investors other than those mentioned at clauses (i) and (ii) of this clause, the allocation shall be determined by the Book Runner(s) based on prior commitment, investor quality, price aggression, earliness of bids, etc.
(vi) Allotment shall be made not later than 15 days from the closure of the issue failing which interest at the rate of 15% shall be paid to the investors.
(vii) Schedule XX may be referred to for Clarificatory Examples for issue size and allocation has been specified in Schedule XX.
(viii) Model Time Frame for Book Building is specified in Schedule XXI.
(ix) (a) The offer shall remain open for subscription from the public for a period of atleast 3 working days after completing all the requirements of advertisement and despatch of issue material to all the stock exchanges.
(b) During the time when the offer is open, the investors who have received an intimation of entitlement of securities under the clause (xviii) shall submit the application forms along with the application moneys.
(c) The other individual investors who had not participated in the bidding process or have not received intimation of entitlement of securities under clause (xviii) may also make an application.
11.3.6 Maintenance of Books and Records
11.3.6 (i) A final book of demand showing the result of the allocation process shall be maintained by the book runner/s.
(ii) The Book Runner/s and other intermediaries in the book building process associated shall maintain records of the book building prices.
(iii) The Board shall have the right to inspect the records, books and documents relating to the Book building process and such person shall extend full co-operation.
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GUIDELINES FOR ISSUE OF CAPITAL BY DESIGNATED FINANCIAL INSTITUTIONS
12.0 The following guidelines shall be applicable to the Designated Financial Institutions (DFIs) approaching capital market for funds through an offer document.
12.1 Promoters' contribution
12.1.1 There shall be no requirement of minimum promoters' contribution in respect of any issue by DFIs.
12.1.2 In case any DFI proposes to make a reservation for promoters, such contribution from the promoters shall come only from actual promoters and not from directors, friends, relatives, associates, etc.
12.2 Reservation for employees
12.2.1 The DFIs may make a reservation out of the proposed issues for allotment only to their permanent employees including their Managing Director(s) or any whole time Director.
12.2.2 Such reservation shall be restricted to the number of permanent employees on the pay rolls of the DFIs as on the date of the offer document multiplied by 200 shares of Rs. 10/- each or 20 shares of Rs. 100/- each as the case may be per employee, subject to a maximum of 5% of the issue size.
12.2.3 The shares allotted under the reserved category shall be subject to a lock in for a period of 3 years.
12.2.4 In case of public issue, unsubscribed portion, if any, in the reserved category shall be added back to the public offer.
12.2.5 In case of rights issue, unsubscribed portion if any, shall lapse.
12.2.6 Where the Managing Director or the Whole Time Director represents the promoters, he may acquire securities as part of the promoters' contribution but not under the reservation made for the employees in the proposed issue.
12.3 Pricing of issues
12.3.1 The DFIs may freely price their issues subject to the following conditions:
a) (i) The DFIs have 3 years' track record of consistent profitability with profits shown in their respective audited profit and loss accounts after providing for interest, tax and depreciation in 3 out of immediately preceding 5 years with profit during the last 2 years prior to the issue.
(ii) Where interest charged on debts outstanding for more than three years has been taken into Profit & Loss Account, the same shall be excluded for reckoning net profit.
(b) (i) DFI determines the issue price in consultation with the lead manager;
(ii) the issue price shall be authorised by a resolution passed at a duly convened meeting of the shareholders / company's Board.
(c) The offer document shall contain justification for the premium disclosing the following:
i) mode of calculation of the parameters including selection of any particular capitalisation rate and reasons therefor.
ii) whether revaluation reserves have been taken into account for determining book value; if so, the date of revaluation and whether such revaluation was done by an approved valuer and certified by the auditors.
iii) revaluation reserves shall be excluded if such revaluation has been done within 3 years from the close of previous financial year.
iv) past performance with reference to the earnings per share and book value for the past 5 years.
v) projected earning per share / book value for the next 3 years as per DFI’s own assessment.
vi) stock market data covering average high & low price of the share for the last 2 years and monthly high & low for the last 6 months, wherever applicable.
vii) all other factors which have been taken into account by the issuer for determining the premium.
12.4 Specific disclosures
12.4.1 The offer document of the DFI shall contain specific disclosures in respect of the following:
a. the present equity and equity after conversion in case of FCDs / PCDs;
b) actual Debt Equity Ratio (DER) vis-à-vis the desirable DER of 12:1.
c) Notional Debt Service Coverage Ratio (NDSCR) vis-a-vis the desirable minimum ratio of 1.2 to be maintained for each year.
Explanation:
1. (i) NDSCR in any year would be the ratio of 2 numbers where the numerator is the sum of net profit after tax, interest on loans, non-cash profits like depreciation and repayments received out of relending;
(ii) While the denominator is the sum of interest on borrowings, principal instalments on loans to be repaid and the apportioned principal instalments during the year on debentures.
2. While the DFI may have the discretion to make its own apportionment, a minimum of 10% of redemption value shall be apportioned each year.
3. In the case of PCDs/FCDs convertible beyond 18 months and optional at the hands of debenture holders, at least 50% of the debenture value shall be reckoned as probable redeemable debt and apportioned accordingly.
d) servicing behaviour on existing debentures, payment of interest or principal on due dates on term loans, debentures, bonds and fixed deposits;
e) outstanding principal or interest or lease rentals, etc. due from borrowing companies.
f) (i) the assets representing "loan and other assistance" portfolios may be classified into four broad groups as Standard Assets, Sub-standard Assets, Doubtful Assets and Loss Assets, and provisions made accordingly, as specified by the Reserve Bank of India.
(ii) the accounting policies and the aggregate of provisions made for Bad & Doubtful Debts.
(iii) the classification of assets and the provisioning for bad and doubtful debts has been duly certified by the statutory auditors of the DFIs.
12.5 Issue of debentures including bonds
12.5.1 Credit rating of debentures or bonds shall be compulsory, if conversion or redemption, falls after 18 months.
12.5.2 (a) Premium amount on conversion, time of
conversion, in stages, if any, shall be pre-determined and stated in the offer
document.
· (b) Redemption amount, period of maturity,
yield on redemption for the PCDs / NCDs shall be indicated in the offer
document.
12.5.3 (a) Issue of debentures / bonds with
maturity of 18 months or less are exempt from the requirement of appointment of
Trustee.
(b) In case of debenture / bonds with maturity beyond 18 months, a trustee or an agent, by whatever name called shall be appointed to take care of the interest of debenture / bond holders irrespective of whether or not the debentures / bonds are secured.
(c) Where the debentures / bonds are unsecured, the issuing DFI, incorporated as companies, shall ensure compliance with the provisions of the Companies (Acceptance of Deposits) Rules, 1975, as unsecured debentures / bonds are treated as "deposits" for purposes of these rules.
(d) The name of the trustee / agent shall be stated in the offer document and the trust deed or any other documents for the purpose shall be executed within six months of the closure of the issue.
12.5.4 (a) Any conversion in part or whole of the
debentures shall be optional at the hands of the debenture holder, if the
conversion takes place after 18 months from the date of allotment.
(b) In case of debentures with conversion period beyond 36
months, the issuer designated DFI may exercise call option provided disclosure
to this effect has been made in the offer document.
12.5.5 The interest rate for the debentures shall be freely determinable by the issuer DFI.
12.5.6 The discount on the non-convertible portion of the PCD, where arrangements for their buy-back have been made and the procedure for their purchase on spot trading basis shall be disclosed in the offer document.
12.6 Rollover of debentures / bonds
12.6.1 In case non-convertible portion of PCDs or Non Convertible Bonds / Debentures are to be rolled over with or without change in the interest rate(s), an option shall be given to those debenture / bond holders, who desire to withdraw from the scheme.
12.6.2 Roll over may be given effect to only in cases, where debenture / bond holders have sent their positive consent and not on the basis of the non-receipt of their negative reply.
12.6.3 Before roll over of any non-convertible bonds or debentures or non-convertible portion of the PCDs, fresh credit rating shall be obtained within a period of six months prior to the due date for redemption and communicated to the bond / debenture holders before roll over.
12.6.4 The letter of option regarding roll over shall be filed containing disclosure with regard to the credit rating, bond / debenture holder resolution, option for conversion and such other terms which the Board may stipulate from time to time.
12.7 Protection of the interest of debenture / bond holders
12.7.1 Trustees to the debenture / bond issue shall be vested with the requisite powers for protecting the interest of bond / debenture holders including a right to appoint a nominee director on the Board of the DFI in consultation with other institutional debentureholders in the event of default and such events of defaults should be specified in the offer document.
Provided that the right to appoint a nominee on the Board of the DFIs may not be insisted upon in cases where the composition of the Board of such DFI is determined by the statute incorporating such DFI.
12.7.2 Trustees shall obtain a certificate annually from
the DFI's auditors in respect of maintenance of DER and NDSCR as per the norms
mentioned in Clause 12.4.1 (b & c) and with regard to provisioning as per
Clause 12.4.1 (f) above.
Provided that if a DFI fails
to meet such criteria, no dividend shall be declared by such DFI for the
relevant year except with the approval of the trustees and the rate of dividend
shall not exceed 10%.
12.8 New financial instruments
12.8.1 DFI issuing any new financial instruments such as Deep Discount Bonds, Debentures with Warrants, Secured Premium Notes, etc., shall make adequate disclosures, more particularly relating to the terms and conditions, redemption, security, conversion and any other relevant features of such instruments
12.9 Bonus issues by DFIs
12.9.1 The issuer DFI shall forward a certificate duly signed by itself and duly counter-signed by its statutory auditor or by a company secretary in practice to the effect that the terms and conditions for issue of bonus shares as laid down below have been complied with:
a) The bonus issue is made out of free reserves built out of the genuine profits or share premium collected in cash only;
b) Reserves created by revaluation or sale of fixed assets are not capitalised.
c) Any special reserve created for the purpose of seeking tax benefits, capital reserves created as a result of sale of assets, any reserve created without accrual of cash resources and any other reserve not being in the nature of free reserves, even though such reserves cannot be capitalised, can be considered as free reserve for the purpose of calculation of residual reserves only.
d) All contingent liabilities disclosed in the audited accounts, which have a bearing on the net profits, shall be taken into account in the calculation of the residual reserves;
e) The residual reserves after the proposed capitalisation shall be at least 40 percent of the increased paid-up capital.
f) 30 per cent of the average profits before tax of the DFI for the previous three years shall yield a rate of dividend on the expanded capital base of the DFI at 10%.
g) The DFI has not failed in the maintenance of required DER, NDSCR during the last 3 years.
h) No bonus issue shall be made -
i) in lieu of dividend;
ii) unless the partly-paid shares, if any, are fully
paid-up;
iii) if there is default in payment of interest or principal in respect of fixed deposits and interest on existing debentures / bonds or principal on redemption thereof; and
iv) if there is default in payment of statutory dues of the employees such as contribution to provident fund, gratuity, bonus etc.
i) Any proposal for issue of bonus shall be given effect to within a period of six months from the date of approval of such proposal by the Board of the DFI or, the general body, as the case may be, whichever is later.
j) The shareholder shall be informed about the ability of the DFI about the estimated rate of dividend payable by the DFI during the year or the next following year after issue of bonus shares.
k) (i) No DFI shall, pending conversion of FCDs/PCDs, issue any shares by way of rights or bonus unless similar benefit is extended to the holders of such FCDs/PCDs through reservation of shares in proportion to such convertible part of FCDs/PCDs falling due for conversion within a period of 12 months from the date of rights / bonus issue.
(ii) The shares so reserved may be issued at the time of such conversions on the same terms on which the rights or bonus issues were made.
12.10 Other Requirements
12.10.1 Where a DFI's shareholding is held by various merchant bankers, the appointment of any one of them as a lead manager shall be on the basis of least shareholding.
12.10.2 Subscription list for public issues shall be kept open for minimum of at least 3 working days and maximum 21 working days and the same shall be disclosed in the offer document.
12.10.3 Rights issues shall be kept open for a minimum
of 15 days but not exceeding 60 days.
12.10.4 (a) The
prospectus shall specify the minimum and maximum target amount proposed to be
raised through the issue.
(b) The maximum target amount shall not exceed twice the minimum target.
12.10.5 (a) The requirement as to the minimum subscription of 90% applicable to the issues made by companies shall not apply to an issue made by DFI.
(b) DFI is free to retain any amount received by it even if it is less than the minimum target amount.
12.10.6 Where in terms of the consent issued by the Controller of Capital Issues, the price / time of conversion of PCDs/FCDs is to be determined at a later date by the Controller, such price and the timing of conversion shall be determined at a general meeting of the shareholders subject to-
a) the consent of the holders of PCDs / FCDs for the
conversion terms shall be obtained individually and conversion shall be given
effect to only if the concerned debentureholders send their positive consent and
not on the basis of non-receipt of their negative reply; and
12.10.7 such holders of debentures, who do not give such consent, shall be given an option to get the convertible portion of debentures redeemed or repurchased by the DFI at a price, which shall not be less than the face value of the debentures.
12.10.8 Where the consent from the Controller of Capital
Issues stipulates a cap price for conversion of FCDs / PCDs and the cap price
has been disclosed to the investors before subscription is made, the Board of
the DFI may determine the price at which the debentures may be converted and in
such cases an option may not be given to debenture holders.
12.10.8 The provisions of the Companies Act, 1956 and other
applicable laws / listing requirements of the stock exchange, etc., wherever
applicable, shall be complied with by the DFIs in connection with issue of
shares, debentures and bonds etc.
12.11 Utilisation of money before allotment
12.11.1 DFIs may utilise the moneys raised by them out of the public issues of debt instruments before allotment and/or listing of the instruments, provided that:
i) the DFI pays interest to the investors from a date not later than the date from which such permission to utilize the funds is granted;
ii) the DFI undertakes to refund the entire money to the investors in the event of its inability to obtain listing permission from any of the stock exchanges where application for listing of such instruments has been made; and
iii) the DFI has complied with the provisions of the Companies Act, 1956 wherever applicable.
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GUIDELINES FOR PREFERENTIAL ISSUES
13.0 The preferential issue of equity shares/ Fully Convertible Debentures (FCDs) / Partly Convertible Debentures (PCDs) or any other financial instruments which would be converted into or exchanged with equity shares at a later date, by listed companies whose equity share capital is listed on any stock exchange, to any select group of persons under section 81(1A) of the Companies Act 1956 on private placement basis shall be governed by these guidelines.
13.1 Such preferential issues by listed companies by way of equity shares/ Fully Convertible Debentures (FCDs) / Partly Convertible Debentures (PCDs) or any other financial instruments which would be converted into / exchanged with equity shares at a later date, shall be made in accordance with the pricing provisions mentioned below:
13.1.1 Pricing of the issue
13.1.1.1 The issue of shares on a preferential basis can be made at a price not less than the higher of the following:
i) The average of the weekly high and low of the closing prices of the related shares quoted on the stock exchange during the six months preceding the relevant date;
OR
ii) The average of the weekly high and low of the closing prices of the related shares quoted on a stock exchange during the two weeks preceding the relevant date.
Explanation
a) "relevant date" for the purpose of this clause means the date thirty days prior to the date on which the meeting of general body of shareholders is held, in terms of Section 81(1A) of the Companies Act, 1956 to consider the proposed issue.
b) "stock exchange" for the purpose of this clause means
any of the recognised stock exchanges in which the shares are listed and in
which the highest trading volume in respect of the shares of the company has
been recorded during the preceding six months prior to the relevant date.
13.1.2 Pricing of shares arising out of warrants, etc.
13.1.2.1 (a) Where warrants are issued on a preferential basis with an option to apply for and be allotted shares, the issuer company shall determine the price of the resultant shares in accordance with Clause 13.1.1.1 above.
(b) The relevant date for the above purpose may, at the option of the issuer be either the one referred in explanation (a) to Clause 13.1.1.1 above or a date 30 days prior to the date on which the holder of the warrants becomes entitled to apply for the said shares.
13.1.2.2 The resolution to be passed in terms of section 81(1A) shall clearly specify the relevant date on the basis of which price of the resultant shares shall be calculated.
13.1.2.3 (a) An amount equivalent to atleast ten percent
of the price fixed in terms of Clause 13.1.1.1 above shall become payable for
the warrants on the date of their allotment.
(b) The
amount referred to in sub-clause (a), shall be adjusted against the price
payable subsequently for acquiring the shares by exercising an option for the
purpose.
(c) The amount referred to in sub-clause (a) shall be forfeited if the option to acquire shares is not exercised.
13.1.3 Pricing of shares on conversion
13.1.3.1 Where PCDs/FCDs/other convertible instruments, are issued on a preferential basis, providing for the issuer to allot shares at a future date, the issuer shall determine the price at which the shares could be allotted in the same manner as specified for pricing of shares allotted in lieu of warrants as indicated in Paras 13.1.2.1& 13.1.2.2 above.
13.2 Currency of financial instruments
13.2.1 In case of Warrants/PCDs/FCDs/or any other financial instruments with a provision for the allotment of equity shares at a future date, either through conversion or otherwise, the currency of the instruments shall not exceed beyond 18 months from the date of issue of the relevant instrument.
13.3 Non-transferability of financial instruments
13.3.1 (a) The instruments allotted on a preferential basis to the promoter / promoter group as defined in Chapter VI in Clause [6.4.2 (m)] of these guidelines, shall be subject to lock-in of 3 years from the date of their allotment.
(b) In any case, not more than 20% of the total capital of the company, including capital brought in by way of preferential issue, shall be subject to lock-in of three years from the date of allotment.
(c) The lock-in on shares acquired by conversion of the convertible instrument/exercise of warrants, shall be reduced to the extent the convertible instrument warrants have already been locked-in.
EXPLANATION:
(a) For the purpose of this clause "total capital" of the company shall mean -
(i) equity share capital issued by way of public/rights issue including equity shares emerging at a later date out of any convertible securities/exercise of warrants and
(ii) equity shares or any other security convertible at a later date into equity issued on a preferential basis in favour of promoter/promoter groups.
(b) (i) For computation of 20% of the total capital of the company, the amount of minimum promoters contribution held and locked-in, in the past as per guidelines shall be taken into account.
(ii) The minimum promoters contribution shall not again be put under fresh lock-in, even though it is considered for computing the requirement of 20% of the total capital of the company, in case the said minimum promoters contribution is free of lock-in at the time of the preferential issue.
13.3.2 These locked in shares/instruments can be transferred to and amongst promoter/promoter group subject to continuation of lock-in in the hands of transferees for the remaining period and compliance of Securities and Exchange Board of India (Substantial Acquisition of shares and Takeovers) Regulations, 1997, if applicable.
13.4 Currency of shareholders resolutions
13.4.1 (a) Allotment pursuant to any resolution passed at a meeting of shareholders of a Company granting consent for preferential issues of any financial instrument, shall be completed within a period of three months from the date of passing of the resolution.
(b) If allotment of instruments and dispatch of certificates is not completed within three months from the date of such resolution, a fresh consent of the shareholders shall be obtained and the relevant date referred to in explanation (a) in paragraph 13.1.1.1 above will relate to the new resolution.
13.5 Certificate from Auditors
13.5.1(a) In case of every issue of
shares/warrants/FCDs/PCDs/ or other financial instruments having conversion
option, the statutory auditors of the issuer Company shall certify that the
issue of said instruments is being made in accordance with the requirements
contained in these guidelines.
(b) Copies of the
auditors certificate shall also be laid before the meeting of the shareholders
convened to consider the proposed issue.
13.6 Preferential allotments to FIIs
13.6.1 Preferential allotments, if any to be made in case of Foreign Institutional Investors, shall also be governed by the guidelines issued by the Government of India/Board/Reserve Bank of India on the subject.
13.7 Non-Applicability of the guidelines
13.7.1 Clauses 13.1 to 13.5 shall not be applicable in the following cases:
(ii) (a) where further shares are allotted to a person / group of persons in accordance with the provisions of rehabilitation packages approved by BIFR.
(b) In case, such persons are promoters or belong to promoter group as defined in Clause 6.4.2(m) of Chapter VI of these guidelines, the lock-in provisions shall continue to apply unless otherwise stated in the BIFR order.
(iii) where further shares are allotted to All India public financial institutions in accordance with the provision of the loan agreements signed prior to August 4, 1994.
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GUIDELINES FOR OTCEI ISSUES
14.0 Any company making an initial public offer of equity share or any other security convertible at a later date into equity shares and proposing to list them on the Over The Counter Exchange of India (OTCEI) shall comply with all the requirements specified in these guidelines:
14.1 Eligibility norms
14.1.1 Any company making an initial public offer of equity share or any other security convertible at a later date into equity shares and proposing to list them on the OTCEI, is exempted from the eligibility norms specified in Clause 2.2 of Chapter II of these guidelines subject to its fulfilling the following besides the listing criteria laid down by the OTCEI:
14.1.2 Any offer for sale of equity share or any other security convertible at a later date into equity shares resulting out of a Bought out Deal (BOD) registered with the OTCEI is exempted from the eligibility norms specified in Clause 2.2 of Chapter II of these guidelines subject to the fulfilment of the listing criteria laid down by the OTCEI.
Provided that the issuer company which has made issue of capital under Clause 14.1.1 & 14.1.2 above, shall not delist its securities from OTCEI for a minimum period of three years from the date of admission to dealing of such securities on OTCEI..
14.2 Pricing Norms
14.2.1 Any offer for sale of equity share or any other security convertible at a later date into equity shares resulting out of a Bought out Deal (BOD) registered with OTCEI is exempted from the pricing norms specified in Clause 3.2 of Chapter III of these guidelines subject to the following conditions:
i) The promoters after such issue shall retain at least 20% of the total issued capital with the lock-in of three years from the date of the allotment of securities in the proposed issue; and
ii) At least two market makers (One Compulsory and one additional market maker) are appointed in accordance with the Market Making guidelines stipulated by the OTCEI.
14.3 Projections
14.3.1 In case of securities proposed to be listed on OTCEI , for the purpose of Clause (6.12.1) of Chapter VI of these guidelines, projections based on the appraisal done by the sponsor who undertakes to do market making activity in the securities offered in the proposed issue can be included in the offer document subject to compliance with other conditions contained in the said clause.
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GUIDELINES FOR BONUS ISSUES
(b) The shares so reserved may be issued at the time of conversion(s) of such debentures on the same terms on which the bonus issues were made.
15.1.1 The bonus issue shall be made out of free reserves built out of the genuine profits or share premium collected in cash only.
15.1.2 Reserves created by revaluation of fixed assets are not capitalised.
15.1.3 The declaration of bonus issue, in lieu of dividend, is not made.
15.1.4 The bonus issue is not made unless the partly-paid shares, if any existing, are made fully paid-up.
15.1.5 The Company -
(a) has not defaulted in payment of interest or principal in respect of fixed deposits and interest on existing debentures or principal on redemption thereof and
(b) has sufficient reason to believe that it has not defaulted in respect of the payment of statutory dues of the employees such as contribution to provident fund, gratuity, bonus etc.
15.1.6 A company which announces its bonus issue after the approval of the Board of Directors must implement the proposal within a period of six months from the date of such approval and shall not have the option of changing the decision.
15.1.7 (i) The Articles of Association of the company shall contain a provision for capitalisation of reserves, etc.
(ii) If there is no such provision in the Articles the company shall pass a Resolution at its general body meeting making provisions in the Articles of Associations for capitalisation.
15.1.8 Consequent to the issue of Bonus shares if the subscribed and paid-up capital exceed the authorised share capital, a Resolution shall be passed by the company at its general body meeting for increasing the authorised Capital.
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OPERATIONAL GUIDELINES
16.0. The eligible merchant bankers shall ensure compliance with the following:
16.1 Submission of draft and final offer document
16.1.1 (a) The offer documents of size upto Rs. 20 crores shall be filed by lead merchant bankers with the concerned regional office of Board under the jurisdiction of which the registered office of the issuer company falls.
(b) The jurisdiction of regional offices/ head office shall be as per Schedule XXII.
16.1.2. (a) As per Clause 5.6 of Chapter V of the Guidelines, the draft offer document filed with the Board shall be made public.
(b) The lead merchant banker shall make10 copies of the draft offer document available to Board and 25 copies to the Stock Exchange(s) where the issue is proposed to be listed.
(c) Copies of the draft offer document shall be made available to the public by the lead merchant bankers / Stock Exchange.
(d) The lead merchant banker and the Stock Exchanges(s) may charge such reasonable charge for providing a copy of the draft offer document.
16.1.3. The Lead Merchant Banker shall also submit to Board the draft offer document on a computer floppy as per the format specified in Schedule XXIII.
16.1.4. (a) The Lead Merchant Bankers shall submit two copies of final printed copy of the final offer document to dealing offices of Board at least 11"within three (3) days of filing offer document with Registrar of Companies / concerned Stock Exchange(s) as the case may be".
12(b) The lead merchant banker shall submit one final printed copy of the final offer document to Primary Market Department, SEBI, Head Office, within three (3) days of filing the offer document with Registrar of Companies / concerned Stock Exchange(s) as the case may be."
13(c) The lead merchant banker shall submit a computer floppy containing the final prospectus/ letter of offer to Primary Market Department, SEBI, Head Office, as specified in Schedule XXIII within three (3) days of filing the final prospectus/ letter of offer with the Registrar of Companies/ concerned Stock Exchange(s). Along with the floppy, the lead manager shall submit an undertaking to SEBI certifying that the contents of the floppy are is in HTML format and are identical to the printed version of prospectus/ letter of offer filed with Registrar of Companies/ concerned Stock Exchange as the case may be.
16.1.5 Whenever offer documents (for public/ rights issues, takeovers or for any other purpose) are filed with any Department/ office of Board, the following details 14"certified as correct" shall be given by the lead merchant banker in the forwarding letters:
16.1.6 Offer documents not accompanied by the information referred to in clause 16.1.5 may be rejected.
16.1.7 (a) Lead Merchant Bankers shall obtain similar information from other intermediaries to ensure that they comply with these guidelines and are eligible to be associated with the concerned issue.
(b) The intermediaries shall also indicate in their letters that they have obtained such information from other intermediaries.
16.1.8 Despatch of issue material
16.1.8.1(a) Lead merchant bankers shall ensure that whenever there is a reservation for NRIs, 10 copies of the prospectus together with 1000 application forms are despatched in advance of the issue opening date directly along with a letter addressed in person to Adviser (NRI), Indian Investment Centre, Jeevan Vihar Bldg., Sansad Marg, New Delhi - 110001.
(b) Twenty copies of the prospectus and application forms shall be despatched in advance of the issue opening date to the various Investors Associations.
16.1.9 Underwriting
16.1.9.1 (a) While selecting underwriters and finalising underwriting arrangements, lead merchant bankers shall ensure that the underwriters do not overexpose themselves so that it may become difficult to fulfil underwriting commitments.
(b) The overall exposure of underwriter(s) belonging to the same group or management in an issue shall be assessed carefully by the lead Merchant Banker.
(c) OTC Dealers registered with Board under Securities and Exchange Board of India (Stock Brokers and Sub-Brokers) Rules and Regulations, 1992 shall be treated at par with the brokers of other stock exchanges in respect of underwriting arrangement.
Instructions on post-issue obligations
16.2.0 The merchant banker shall ensure compliance with the following post-issue obligations:
16.2.1 Association of Resource Personnel
16.2.1.1 (a) In terms of Clause 7.1 of Chapter VII of these Guidelines in case of over-subscription in public issues, a Board nominated public representative shall be associated in the process of finalisation of basis of allotment.
(b) The lead merchant banker shall intimate the person so nominated the date, time, venue etc. in respect of process of finalisation of basis of allotment.
(c) The expenses of the public representatives associated in the allotment process of oversubscribed issues shall be borne by the lead merchant bankers and recovered from the issuers.
(d) Honorarium at minimum of Rs.500/- per day plus normal conveyance charges shall be paid to the public representatives.
(e) The Board's Regional Managers at New Delhi, Chennai and Calcutta shall be associated with the public representatives.
16.2.2. Redressal of investor grievances
16.2.2.1.(a) The merchant bankers shall assign high priority to investor grievances and take all preventive steps to minimise the number of complaints.
(b) The lead merchant banker shall set up proper grievance monitoring and redressal system in co-ordination with the issuers and the Registrars to Issue, and take all necessary measures to resolve the grievances quickly.
16.2.2.2. The merchant bankers shall actively associate with the post-issue refund and allotment activities and regularly monitor investor grievances arising therefrom.
16.2.3. Submission of post issue monitoring reports
16.2.3.1. (a) The concerned lead merchant banker shall submit, in duplicate, the Post Issue Monitoring Reports specified in Clause 7.2 of Chapter VII of these Guidelines, within 3 working days from the due dates either by registered post or deliver at respective regional offices/ head office at the addresses given in Schedule XXII.
(b) Where the offer document has been dealt with by any of the regional offices of the Board, a copy of the report shall be sent to the Board's Head office, Mumbai.
16.2.3.2. The Lead Merchant Banker(s) shall inform the Board on important developments about the particular issues being lead managed by them during the intervening period of the reports.
16.2.4. Issue of No objection certificate(NOC)
16.2.4.1 (a) As per the Listing Agreement of the Stock Exchanges, the issuer companies shall deposit 1% of the amount of securities offered to the public and/or to the holders of the existing securities of the company, as the case may be, with the regional Stock Exchange, which can be released by the concerned stock exchange only after obtaining an NOC from the Board.
(b) An application for NOC shall be submitted by issuer company to the Board in the format specified in Schedule XXIV.
16.2.4.2 The following conditions shall be complied before submitting the application for issue of NOC:
a) Completion of 4 months from the date of obtaining the listing permission from the concerned Regional Stock Exchange or the last date when the listing permission was obtained from any of the other stock exchanges, where the securities are proposed to be listed, whichever is later.
b) Satisfactory redressal of all complaints received at the Board against the Company.
c) Certificate from the Regional Stock Exchange to the issuer company to the effect that underwriting/brokerage commission as well as Registrars/Lead merchant bankers fees have been duly paid by the company.
16.2.4.3. Applications for issue of NOC shall be filed with the concerned regional office of Board under the jurisdiction to which the registered office of the issuer company falls, as specified in Schedule XXII.
16.2.4.4. In cases where issues (i.e. public/rights/offer of sale or any other) fail and the investors monies are fully refunded, an NOC from the Board may not be required and the concerned regional Stock Exchange can refund the 1% security deposit after duly verifying that the refund orders have actually been despatched.
16.2.4.5 (a) The complaints with respect to non-receipt of underwriting /brokerage commission and non-receipt of Registrars/Lead merchant bankers fees may be filed with the concerned Regional Stock Exchanges.
(b) Responses against complaints forwarded by the Board to the concerned companies shall be submitted to the Board as per the proforma specified in Schedule XXV for updation of records.
16.3.0. Registration and renewal of registration of Merchant Bankers
16.3.1.1(a) Application for renewal of Certificate of Registration shall be made by the Merchant Bankers as per regulation 9 of Securities and Exchange Board of India (Merchant Bankers) Rules and Regulations, 1992.
(b) While filing the renewal application for the certificate of registration as merchant banker, it shall provide a statement highlighting the changes that have taken place in the information that was submitted to the Board for the earlier registration and a declaration stating that no other changes other than as mentioned in the above statement has taken place.
(c) Merchant Bankers while forwarding the renewal application in form A as per Securities and Exchange Board of India (Merchant Bankers) Rules and Regulations, 1992, shall also forward the additional information as specified in Schedule XXVI.
16.3.2. Reporting requirements in respect of merchant banking activities
16.3.2.1. (a) In terms of regulation 28 of Securities and Exchange Board of India (Merchant Bankers Regulation) 1992, the merchant bankers shall send half yearly report in the format specified at Schedule XXVII relating to their merchant banking activities.
(b) The report referred to in sub-clause (a) shall be submitted twice a year, as on March 31 and September 30 and it should reach the Board within three months from the close of the period to which it relates.
16.4 Registration with Association of Merchant Bankers of India (AMBI)
16.4.1 Registered Merchant Bankers shall inform the Board of their having become a member of AMBI with relevant details.
16.5 Issue of Penalty Points
16.5.1 (a) Penalty points may be imposed on the merchant banker for violation of any of the provisions of operational guidelines under these Chapters.
(b) The Merchant Banker, on whom penalty point of four or more has been imposed may be restrained from filing any offer document or associating or managing any issues for a particular period.
(c) The Board may initiate action under the SEBI (Merchant Bankers) Regulations against the Merchant Bankers, irrespective of whether any penalty point is imposed or not.
(d) Imposition of penalty point is not a condition precedent for initiation of proceeding against the Merchant Banker under the Securities and Exchange Board of India (Merchant Bankers) Regulations.
11 Replaced for words "10 days prior to issue opening
date" vide RMB (Compendium) Series Circular No.2 dated February 16, 2000
12 Amended vide RMB
(Compendium) Series Circular No.2 dated February 16, 2000
13 Inserted vide RMB
(Compendium) Series Circular No.2 dated February 16, 2000
14 Inserted vide RMB
(Compendium) Series Circular No.2 dated February 16, 2000
15 Inserted vide RMB
(Compendium) Series Circular No.2 dated February 16, 2000
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MISCELLANEOUS
17. 0 Directions by the Board
17.1 In case of violation of these Guidelines, the Board may in the interest of the securities market and in the interest of the investors may pass the following directions under section 11B:
(a) directing the persons concerned to refund any money collected under an issue to the investors with or without requisite interest, as the case may be.
(b) directing the persons concerned not to access the capital market for a particular period.
(c) directing the stock exchange concerned not to list or permit trading in the securities.
(d) directing the stock exchange concerned to forfeit the security deposit deposited by the issuer company.
(e) any other direction which the Board may deem fit and proper in the circumstances of the case.
Provided that before issuing any directions the Board may give a reasonable opportunity to the person concerned.
Provided further that if any interim direction is sought
to be passed, the Board may give post decisional hearing to such person.
17.2 Action against intermediaries
17.2.1 The Board may initiate action including for suspension or cancellation of certificate of registration of any intermediary who fails to exercise due diligence or who fails to comply with the obligations entrusted under the guidelines or who is alleged to have violated any of these Guidelines.
Provided that no such certificate of registration shall be suspended or cancelled unless the procedure specified in the regulations applicable to such intermediary is followed.
17.3 Repeal and Saving
17.3.1 The Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines, 1992 and the clarifications issued from time to time are hereby repealed.
17.3.2 Notwithstanding such repeal:-
(a) Anything done or any actin taken or purported to have been done or taken including observation made in respect of any draft offer document, any enquiry or investigation commenced or show cause notice issued in respect of the said guidelines shall be deemed to have been done or taken under the corresponding provisions of these guidelines;
(b) Any application made to the Board under the said Guidelines and pending before it shall be deemed to have been made under the corresponding provisions of these Guidelines.
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(Clause 5.3.1.2)
MEMORANDUM OF UNDERSTANDING BETWEEN THE LEAD MERCHANT BANKER TO THE ISSUE AND THE ISSUER COMPANY
THIS MEMORANDUM OF UNDERSTANDING MADE BETWEEN ....... (name of the issuing company), A COMPANY WITHIN THE MEANING OF THE COMPANIES ACT, 1956 AND HAVING ITS REGISTERED OFFICE AT ......... (registered office address of the issuing company) (HEREINAFTER REFERRED TO AS "the Company") AND ........ a Company registered under the Companies Act 1956, and having its registered office at...................... with the branch office at (hereinafter referred to as the "Lead Merchant Banker").
WHEREAS:
1. The Company is taking steps for issue of ...................... (particulars of the issue) to the public / existing shareholders of the Company; the said issue of shares/debentures is hereinafter referred to as "the issue"; AND
2. The company has approached the Lead Merchant Banker to manage the issue and the Lead Merchant Banker has accepted the engagement inter-alia subject to the company entering into memorandum of understanding for the purpose being these presents;
NOW, THEREFORE, the Company and the Lead Merchant Banker do hereby agree as follows:
1. Besides the Lead Merchant Banker, .......... , ............ , and ................., would be acting as the co-managers to the issue.
2. The Company hereby declares that it has complied with or agrees to comply with all the statutory formalities under the Companies Act, Guidelines for Disclosure and Investor Protection issued by the Securities and Exchange Board of India (hereinafter referred to as "the Board") and other relevant statutes to enable it to make the issue and in particular in respect of the following matters:
(Give details and particulars of statutory compliances which the company has to fulfil before making the issue)
Consent of the general body has been obtained vide ........... (details of the resolution) and in accordance to the terms of the Resolution passed by the General Meeting held on .............. (date of the meeting).
3. The company undertakes and declares that any information made available to the Lead Merchant Banker or any statement made in the Offer Documents shall be complete in all respects and shall be true and correct and that under no circumstances it shall give or withhold any information or statement which is likely to mislead the investors.
4. The Company also undertakes to furnish complete audited annual report(s), other relevant documents, papers, information relating to pending litigations, etc. to enable the Lead Merchant Banker to corroborate the information and statements given in the Offer Documents.
5. The Company shall, if so required, extend such facilities as may be called for by the Lead Merchant Banker/(s) to enable him to visit the plant site, office of the Company or such other place/(s) to ascertain for himself the true state of affairs of the company including the progress made in respect of the project implementation, status and other facts relevant to the issue.
6. The Company shall extend all necessary facilities to the Lead Merchant Banker to interact on any matter relevant to the Issue with the solicitors / legal advisors, auditors, co-managers, consultants, advisors to the Issue, the financial institutions, banks, or any other organisation, and also with any other intermediaries who may be associated with the issue in any capacity whatsoever.
7. The Company shall ensure that all advertisements prepared and released by the Advertising Agency or otherwise in connection with the Issue conform to regulations, guidelines etc. issued by the Board and instructions given by the Lead Merchant Banker/(s) from time to time and that it shall not make any misleading, incorrect statement in the advertisements, press releases, or in any material relating to the Issue or at any Press / Brokers / Investors Conferences.
8. The Company shall not, without prior approval of the Lead Merchant Banker, appoint other intermediaries or other persons such as Registrars to the Issue, Bankers to the Issue, Refund Bankers, Advertising Agencies, Printers for printing application forms, allotment advices / allotment letters, share certificates / debenture certificates, refund orders or any other instruments, circulars, or advices.
9. In consultation with the Lead Merchant Banker, the company shall, whenever required, enter into a Memorandum of Understanding with the concerned intermediary associated with the issue, clearly setting forth their mutual rights, responsibilities and obligations. A certified true copy of such Memorandum shall be furnished to the Lead Merchant Banker.
10. The Company shall take such steps as are necessary to ensure the completion of allotment and despatch of letters of allotment and refund orders to the applicants including NRIs soon after the basis of allotment has been approved by the stock exchanges and in any case not later than the statutory time limit and in the event of failure to do so pay interest to the applicants as provided under the Companies Act, 1956.
11. The Company shall take steps to pay the underwriting commission and brokerage to the underwriters and stock brokers, etc. within the time specified in any agreement with such underwriters or within a reasonable time.
12. The Company undertakes to furnish such information and particulars regarding the issue as may be required by the Lead Merchant Banker to enable him to file a report with the Board in respect of the issue.
13. The company shall keep the Lead Merchant Banker informed if it encounters any problems due to dislocation of communication system or any other material adverse circumstance which is likely to prevent or which has prevented the Company from complying with its obligations, whether statutory or contractual, in respect of the matters pertaining to allotment, despatch of refund orders / share certificates / debenture certificates etc.
14. The company shall not resort to any legal proceedings in respect of any matter having a bearing on the issue except in consultation with and after receipt of the advice from the Lead Merchant Banker.
15. The company shall not access the money raised in the issue till finalisation of basis of allotment or completion of offer formalities.
16. The company shall refund the money raised in the issue to the applicants if required to do so for any reason such as failing to get listing permission or under any direction or order of SEBI. The company shall pay requisite interest amount if so required under the laws or direction or order of SEBI.
17. Clauses relating to rights of Lead Merchant Banker vis-à-vis the issuer shall be inserted.
18. Consequences of breach.
In Witness whereof the parties hereto have set their hands on the day and the year hereinabove written.
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(Clause 5.3.2.1)
INTERSE ALLOCATION OF RESPONSIBILITIES
(a) Capital structuring with the relative components and formalities such as composition of debt and equity, type of instruments.
(b) Drafting and Design of the offer document and of advertisement / publicity material including newspaper advertisements and brochure / memorandum containing salient features of the offer document.
(c) The designated Lead Merchant Banker shall ensure compliance with the Guidelines for Disclosure and Investor Protection and other stipulated requirements and completion of prescribed formalities with Stock Exchange, Registrar of Companies and SEBI.
(d) Marketing of the issue, which will cover, inter alia, formulating marketing strategies, preparation of publicity budget, arrangements for selection of (i) ad-media, (ii) centres of holding conferences of brokers, investors etc. (iii) bankers to issue, (iv) collection centres (v) brokers to issue and (vi) underwriters and the underwriting arrangement, distribution of publicity and issue material including application form, prospectus and brochure, and deciding on the quantum of issue material.
(e) Selection of various agencies connected with issue, namely Registrars to Issue, printers and advertising agencies.
(f) Follow-up with bankers to the issue to get quick estimates of collection and advising the issuer about closure of the issue, based on the correct figures.
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(Clause 5.3.3.1)
FORMAT OF DUE DILIGENCE CERTIFICATE TO BE GIVEN
BY LEAD MERCHANT BANKER(S) ALONGWITH DRAFT OFFER DOCUMENT
To,
SECURITIES AND EXCHANGE BOARD OF INDIA
Dear Sirs,
SUB.: ISSUE OF ____________________ BY _______________LTD.
We, the under noted Lead Merchant Banker (s) to the above mentioned forthcoming issue state as follows :
(2) On the basis of such examination and the discussions with the company, its directors and other officers, other agencies, independent verification of the statements concerning the objects of the issue, projected profitability, price justification and the contents of the documents mentioned in the Annexure and other papers furnished by the company, WE CONFIRM that:
(a) the draft prospectus/letter of offer forwarded to the Board is in conformity with the documents, materials and papers relevant to the issue;
(b) all the legal requirements connected with the said issue as also the guidelines, instructions, etc. issued by the Board, the Government and any other competent authority in this behalf have been duly complied with; and
(c) the disclosures made in the draft prospectus / letter of offer are true, fair and adequate to enable the investors to make a well informed decision as to the investment in the proposed issue.
(3) We confirm that besides ourselves, all the intermediaries named in the prospectus/letter of offer are registered with the Board and that till date such registration is valid.
PLACE: LEAD MERCHANT BANKER(S) TO THE ISSUE DATE: WITH
HIS/ THEIR SEAL (S)
ANNEXURE TO THE DUE DILIGENCE
CERTIFICATE FOR THE ISSUE OF _______________________ BY
______________________________LIMITED
1. Memorandum and Articles of Association of the Company.
3. Necessary clearance from governmental, statutory, municipal authorities etc. for implementation of the project, wherever applicable.
4. Documents in support of the track record and experience of the promoters and their professional competence.
5. Listing agreement of the Company for existing securities on the Stock Exchanges.
6. Consent letters from Company's auditors, Bankers to issue, Bankers to the Company, Lead Merchant Bankers, Brokers and where applicable, Proposed Trustees.
7. Applications made by the company to the financial institutions/banks for financial assistance as per object of the Issue and copies of relative sanction letters.
8. Underwriting letters from the proposed underwriters to the issue.
9. Audited Balance Sheets of the Company/Promoter companies for relevant periods.
Shareholders and Debenture holders.
11. Certificate from Architects or any other competent authority on project implementation schedule furnished by the company, if applicable.
12. Reports from Government agencies / expert agencies / consultants / company regarding market demand and supply for the product, industry scenario, standing of the foreign collaborators, etc.
13. Documents in support of the infrastructural facilities, raw material availability, etc.
14. Auditors' Report indicating summary of audited accounts for the period including that of subsidiaries of the company.
15. Stock Exchange quotations of the last 3 years duly certified by regional stock exchange in case of an existing company.
16. Applications to RBI and approval thereof for allotment of shares to non-residents, if any, as also for collaboration terms and conditions.
17. Minutes of Board and General Body meetings of the company for matters which are in the prospectus.
18. Declaration in Form 32 from Directors (for particulars of Directorship) or the Company Secretary's certificate in this regard.
19. Revaluation certificate of company's assets given by Government Valuer or any other approved Valuer.
20. Environmental clearance as given by Pollution Control Board of the State Government or the Central Government as applicable.
21. Certificate from company's solicitors in regard to compliance of legal provisions of the Prospectus as also applicability of FERA/MRTP provisions to the company.
22. Other documents, reports etc. as are relevant / necessary for true, fair and adequate disclosures in the draft prospectus / letter of offer (to give details).
23. True copy of the Board resolution passed by the
issuer authorising a representative of the Registrar to act on its behalf in
relation to handling of stockinvests.
PLACE: LEAD MERCHANT BANKER (S) TO THE ISSUE
DATE: WITH HIS / THEIR SEAL (S)
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(Clause 5.3.3.2 (ii))
FORMAT FOR DUE DILIGENCE CERTIFICATE AT THE TIME OF FILING THE OFFER DOCUMENT WITH ROC.
To,
Securities and Exchange Board of India
Mumbai/Chennai/New
Delhi/Calcutta
Dear Sir(s),
Sub: Public issue of ______shares of _______ etc. (Details of the issue)
This is to certify that the offer document filed with Registrar of companies on ______ was suitably updated under intimation to the Board and that the said offer document contains all the material disclosures in respect of the issuer company as on the said date.
We confirm that the registrations of all the Intermediaries named in the offer document are valid as on date and that none of these intermediaries have been debarred from functioning by any regulatory authority.
We confirm that written consent from shareholders has been obtained for inclusion of their securities as part of promoters’ contribution subject to lock-in .
We further confirm that the securities proposed to form
part of promoters’ contribution and subject to lock-in, have not been disposed /
sold / transferred by the promoters during the period starting from the date of
filing the draft prospectus with SEBI till date.
Yours faithfully,
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(Clause 5.3.3.2(iii))
FORMAT FOR DUE DILIGENCE CERTIFICATE AT THE TIME OF
OPENING OF THE ISSUE.
To,
Securities and Exchange Board of India
Mumbai/Chennai/New Delhi/Calcutta
Dear Sir(s),
Sub: Public issue of
______shares of _______ etc.(Details of the issue)
This is to certify that all the material disclosures in respect of the issuer company as on the date of opening of the issue have been made through the offer document filed with ROC on _____and subsequent amendments/ advertisements (if applicable) dated ______.
We confirm:
Yours faithfully,
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(Clause 5.3.3.2(iv))
FORMAT FOR DUE DILIGENCE CERTIFICATE AFTER THE ISSUE HAS OPENED BUT BEFORE IT CLOSES FOR SUBSCRIPTION.
To,
Securities and Exchange Board of
India
Mumbai/Chennai/New
Delhi/Calcutta
Dear Sir(s),
Sub: Public issue of ______shares of _______ etc. (Details of the issue)
This is to certify that all the material disclosures in respect of the issuer company as on date have been made through the offer document filed with ROC on _____and subsequent amendments/ advertisements (if applicable) dated ______.
We confirm that the registrations of all the Intermediaries named in the offer document are valid as on date and that none of these intermediaries have been debarred from functioning by any regulatory authority as on date.
We also confirm that the securities proposed to form
part of promoters’ contribution and subject to lock-in, have not been disposed /
sold / transferred by the promoters during the period starting from the date of
filing the draft prospectus with SEBI till date.
Yours faithfully,
[BACK]
(Clause 5.9.1)(c))
MANDATORY COLLECTION CENTRES
|
A. |
NORTHERN REGION |
|
|
S. No. |
Exchange |
City |
|
1. |
Ludhiana Stock Exchange |
Ludhiana |
|
2. |
Delhi Stock Exchange |
Delhi |
|
3. |
Jaipur Stock Exchange |
Jaipur |
|
4. |
U.P. Stock Exchange |
Kanpur |
|
|
|
|
|
B. |
SOUTHERN REGION |
|
|
S. No. |
Exchange |
City |
|
1. |
Hyderabad Exchange |
Hyderabad |
|
2. |
Bangalore Stock Exchange |
Bangalore |
|
3. |
Coimbatore Stock Exchange |
Coimbatore |
|
4. |
Cochin Stock Exchange |
Cochin |
|
5. |
Madras Stock Exchange |
Madras |
|
6. |
Mangalore Stock Exchange |
Mangalore |
|
|
|
|
|
C. |
EASTERN REGION |
|
|
S. No. |
Exchange. |
City |
|
1. |
Calcutta Stock Exchange |
Calcutta |
|
2. |
Gauhati Stock Exchange |
Gauhati |
|
3. |
Magadh Stock Exchange |
Patna |
|
4. |
Bhubaneswar Stock Exchange |
Bhubaneswar |
|
|
|
|
|
D. |
WESTERN REGION |
|
|
S. No. |
Exchange |
City |
|
1. |
Bombay Stock Exchange |
Bombay |
|
2. |
National Stock Exchange |
Bombay |
|
3. |
OTC Exchange of India |
Bombay |
|
4. |
Pune Stock Exchange |
Pune |
|
5. |
M P Stock Exchange |
Indore |
|
6. |
Vadodara Stock Exchange |
Vadodara |
|
7. |
Ahmedabad Stock Exchange |
Ahmedabad |
|
8. |
Saurashtra Kutch Stock Exchange |
Rajkot |
[BACK]
(Clause 6.4.2.1(b))
PROMOTERS CONTRIBUTION AND LOCK-IN
|
Sr. No... |
Date of Allotment |
Date when made fully paid-up |
Consideration (Cash, bonus, kind, etc.) |
No. of shares |
Face Value |
Issue Price |
% of Post-Issue paid-up capital |
Lock-in Period |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
[BACK]
[Clause 6.4.2.1(c)(ii)]
PROMOTERS CONTRIBUTION AND LOCK-IN IN RESPECT OF PROMOTERS WHOSE NAME FIGURE IN THE PROSPECTUS AS PROMOTERS IN THE PARAGRAPH ON "PROMOTERS AND THEIR BACKGROUND"
|
Sr. No. |
Name of the promoter |
Date of Allotment |
Date When made fully paid-up |
Consideration (Cash, bonus, kind, etc.) |
No. of shares |
Face Value |
Issue Price |
% of Post- Issue paid-up capital |
Lock-in Period |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
[BACK]
[Clause 6.18.7(iv)(b)]
STATEMENT OF PROFITS AND LOSSES
Year ended March 31,
|
|
1991 |
1992 |
1993 |
1994 |
1995 |
|
|
(Rupees In Lac) | ||||
|
Income |
|
|
|
|
|
|
Sales : |
|
|
|
|
|
company |
1000 |
1240 |
1640 |
1800 |
1800 |
company |
100 |
60 |
60 |
200 |
200 |
|
c) Total |
1100 |
1300 |
1700 |
2000 |
2000 |
|
Other income |
10 |
30 |
40 |
60 |
100 |
|
Increase (Decrease) in Inventories |
40 |
(70) |
60 |
180 |
310 |
|
|
1150 |
1260 |
1800 |
2240 |
2410 |
|
Expenditure |
|
|
|
|
|
|
Raw Materials consumed |
400 |
480 |
630 |
1110 |
1200 |
|
Staff Costs |
200 |
220 |
240 |
340 |
400 |
|
Other manufacturing expenses |
250 |
260 |
280 |
540 |
650 |
|
Administration Expenses |
40 |
42 |
60 |
80 |
85 |
|
Selling and Distribution Expenses |
110 |
120 |
130 |
190 |
250 |
|
Interest |
60 |
55 |
90 |
200 |
140 |
|
|
1095 |
1227 |
1495 |
2635 |
2795 |
|
Net Profit before tax and extraordinary items |
55 |
33 |
305 |
(295) |
(385) |
|
Taxation |
25 |
12 |
144 |
(185) |
(235) |
|
Net Profit before Extraordinary Items |
30 |
21 |
161 |
(110) |
(150) |
|
Extra-ordinary items (net of tax) |
- |
49 |
(64) |
800 |
1000 |
|
Net Profit after Extraordinary Items |
30 |
70 |
97 |
700 |
850 |
[BACK]
(Clause 6.18.7.(vi))
STATEMENT OF ASSETS AND LIABILITIES
As at March 31ST
|
|
1991 |
1992 |
1993 |
1994 |
1995 | |
|
|
|
|
(Rupees in lac ) | |||
|
A. |
Fixed Assets : Gross Block |
440 |
750 |
900 |
922 |
1350 |
|
|
Less Depreciation |
(55) |
(107) |
(170) |
(250) |
(320) |
|
|
Net Block |
385 |
643 |
730 |
672 |
1030 |
|
|
Less : Revaluation Reserve |
(100) |
(95) |
(89) |
(83) |
(75) |
|
|
Net Block after adjustment for Revaluation Reserve |
285 |
548 |
641 |
589 |
955 |
|
B. |
Current Assets, Loans and Advances : Inventories |
485 |
420 |
720 |
1030 |
3200 |
|
|
Sundry Debtors |
28 |
30 |
30 |
500 |
2500 |
|
|
Cash and Bank Balances |
13 |
14 |
22 |
200 |
400 |
|
|
Loans and Advances |
78 |
100 |
85 |
1100 |
2000 |
|
|
Other Current Assets |
70 |
80 |
55 |
200 |
220 |
|
|
|
674 |
644 |
912 |
3080 |
8320 |
|
C. |
Liabilities and Provisions : Secured Loans |
376 |
607 |
616 |
620 |
460 |
|
|
Unsecured Loans |
3 |
3 |
- |
- |
4000 |
|
|
Current Liabilities and Provisions |
250 |
180 |
330 |
460 |
1100 |
|
|
|
(629) |
(790) |
(946) |
(1080) |
(5560) |
|
D. |
Networth |
330 |
402 |
607 |
2589 |
3715 |
|
E. |
Represented by |
|
|
|
|
|
|
|
1. Share Capital |
300 |
300 |
400 |
1600 |
2000 |
|
|
2. Reserves |
130 |
197 |
296 |
1072 |
1790 |
|
|
Less Revaluation Reserve |
(100) |
(95) |
(89) |
(83) |
(75) |
|
|
Reserves (Net of Revaluation Reserves) |
30 |
102 |
207 |
989 |
1715 |
|
|
Networth |
330 |
402 |
607 |
2589 |
3715 |
|
|
|
|
|
|
|
|
[BACK]
(Clause 6.18.7.(viii))
TAX SHELTER STATEMENT
YEAR ENDED MARCH 31ST
|
|
1991 |
1992 |
1993 |
1994 |
1995 | ||||
|
|
|
(Rupees in lac ) | |||||||
|
Tax at Notional Rate |
28 |
70 |
89 |
546 |
675 | ||||
|
Adjustments : Export Profits |
(4) |
(5) |
(20) |
(100) |
(120) | ||||
|
Difference between Tax Depreciation and Book Depreciation |
(6) |
(8) |
(9) |
(10) |
(10) | ||||
|
Other Adjustments |
3 |
3 |
4 |
4 |
5 | ||||
|
Net Adjustments |
(7) |
(10) |
(25) |
(106) |
(125) | ||||
|
Tax Saving thereon : |
(3) |
(5) |
(13) |
(49) |
(58) | ||||
|
Total Taxation |
25 |
65 |
76 |
497 |
617 | ||||
|
Taxation on extra-ordinary items |
- |
53 |
(68) |
682 |
852 | ||||
|
Tax on profits before extra - ordinary items |
25 |
12 |
144 |
(185) |
(235) | ||||
[BACK]
(Clause 6.18.7.(iii))
CAPITALISATION STATEMENT
Pre-issue as As Adjusted
at 30-6-1995 for issue
(Rupees in lac )
Short-Term Debt 1870 1870
Long Term Debt 4370 4370
Shareholders Funds
Share Capital 4000 4450
Reserves 14570 37520
Total Shareholders Funds 18570 41940
Long Term Debt/Equity 0.24:1 0.10:1
Note: Since 31-3-1995 (which is the last date as of which financial information has been given in para of this document) share capital was increased form Rs.3000 lacs to Rs.4000 lacs by the issue of bonus shares in the ratio of 1 share for every 3 shares.
[BACK]
(Clause 6.12.2(iii))
FORM OF AUDITOR’S CERTIFICATE REGARDING PROFIT FORECAST
The Directors
XYZ Company Limited
Dear Sirs,
We have reviewed the accounting policies, standards and calculations adopted in arriving at the forecast of the profit after taxation but before extraordinary items of XYZ Company Limited for the year ending _________for which the directors of the company are solely responsible as set out in the section headed "Profit Forecast" in the prospectus of the Company dated _____ (the "Prospectus"). The forecast has been prepared by the directors of the Company based on the unaudited accounts of the company for the months ended _______ and a forecast of the results of the Company for the remaining _____ months of the year ending ________ on the basis of that the company has been in existence throughout the entire year.
In our opinion, the profit forecast, as far as the
accounting policies, standards and calculations are concerned, has been properly
complied in accordance with the assumptions made by the directors of the company
as set out in the Prospectus / offer documents and is presented on the basis
consistent in all material respects with the accounting policies normally
adopted by the Company as set out in the report on the profits and losses of the
Company for the years ended ___________ made by us and disclosed in the
Prospectus.
Yours faithfully,
[BACK]
(Clause 6.13.1(g))
BASIS FOR ISSUE PRICE
(a) 1992-93 Rs. .41
(b) 1993-94 Rs. 8.39
(c) 1994-95 Rs.13.82
(d) Weighted Average Rs.10.94
to Issue Price
(a) Based on 94/95 EPS 37.63
(b) Industry P/E
(* Based on Economic Times of 26/6/95)
Minimum Return on Total Net Worth after Issue
Needed to maintain EPS at Rs.13.82 14.65%
(a) As at 31-3-1995 Rs.46.40
(b) After issue Rs.94.29
(c) Issue price Rs.520.00
[BACK]
(Clause 7.2.1)
POST ISSUE MONITORING REPORTS
PUBLIC ISSUE
SUBSCRIPTION STATUS : (SUBSCRIBED / UNDERSUBSCRIBED)
3-DAY MONITORING REPORT
(RESPONSIBILITY: POST ISSUE LEAD MERCHANT BANKER)
(To be submitted IN DUPLICATE : Within 3 days from closure of the Public Issue)
1. Name of the Issuer Company :
2. Issue opening date :
3. Earliest closing date :
4. Actual closing date :
5. Date of filing prospectus with RoC :
6. Issue Details (as per the prospectus)
Etc.)
for different categories :
6.3 Amt. per instrument on application
for different categories :
6.4 Issue Size : (Rs lakhs)
(a) Promoters' contribution :
(a)(i) Date of submission of auditors' certificate to SEBI for receipt of
promoters' contribution :
(including reserved categories
and net public offer)
(b) (i) Reserved Category Amount reserved (Rs lakhs)
Firm basis Competitive basis
-------------------------------------------------------------------------------
Mutual funds
FIS / Banks
FIIs
NRIs / OCBs
Employees
Others (Please specify)
-------------------------------------------------------------------------------
(b)(ii) Net public offer :
7(a). Provisional Subscription Details of Net Public offer (including unsubscribed portion of reserved categories
i) Total amount to be collected on application : Rs lakhs
ii) Amount collected on application : Rs lakhs
iii) % subscribed i.e. % of (ii) to (i) : (%)
7(b). Amount subscribed by the reserved categories on competitive basis : Rs. lakhs
8) Please tick mark whether 90% minimum subscription of the amount through offer document is collected.
(i) YES (ii) NO
Signed by ... Signed by .....
Registrars to the Issue Company
Signed by.....
Lead Merchant Banker(s)
Place: Date :
Note: This is the responsibility of Lead Merchant banker(s) to give correct information after verifying it from the company and the Registrar to the issue.
PUBLIC ISSUE
SUBSCRIPTION STATUS : (SUBSCRIBED / UNDERSUBSCRIBED)
78-DAY MONITORING REPORT
(RESPONSIBILITY: POST ISSUE LEAD MERCHANT BANKER)
(To be submitted IN DUPLICATE: Within 78 days from closure of the public issue)
1. Name of the Company :
2. Issue opening date :
3. Actual closing date :
4. 3-Day Report
Due on :
Submitted on :
5. No. of Collecting Banks :
(Allso specify no. of Bank Branches)
6. Bank-wise names of branches which did
not submit final consolidated certificates
within 21 days from closure of issue and
mention the dates when they actually
submitted :
added back to net public offer)
1) No. of applications recd. :
2) No. of instruments applied for :
4) No. of times issue subscribed :
5) No. of applications
accompanied by stock invests :
through stock invest :
7) Amount of subscription received
through stock invest : Rs.
8) Percentage of subscription
through stock invest in total
subscription :
(b) Information relating to reserved categories
Reservations No.of applications No. of instruments Amount
applied for subscribed
------------------------------------------------------------------------------------------------
NRIs
FIs
FIIs
MFs
Employees
Others
(Specify)
-------------------------------------------------------------------------------------------------
The firm allottees who did not meet their commitments though mentioned in the prospectus (Please give their names and amount and whether the promoters have subscribed to that amount before opening of the issue).
9. Actual Date of finalisation of Basis of Allotment (enclose copy) :
10. Allotment Details
10.1 No. of successful allottees per 1 lac shares :
stock-invest applicants :
stockinvest applicants :
allottees in total allottees :
10.5 No. of unsuccessful allottees :
11. Actual Date(s) of completion of
despatch of -
(a) Refund Orders :
(b) Cancelled stock invests :
(c) Certificates/Allotment Letters :
(d) Certificate/allotment letter against
application by stock Invest :
(e) Reasons for delay in
despatch, if any :
period, if so, for which period :
of completion of despatch of -
(a) Refund Orders :
(b) Cancelled Stockinvests :
(c) Certificate/Allotment Letters :
(d) Reasons for delay in despatch, if any :
(e) Whether interest paid for delayed period :
RBI for approval for despatch of share
certificates :
(g) Date of approval received from RBI :
13. Amount of refund due : Rs.
14. Refund Banker(s) (Name and Address):
15. Date of transfer of refund
amount to Refund Banker, if any :
16. Date of completion of despatch of refund orders/
cancelled stock invests :
17 Name of Regional Stock Exchange :
18 Names of other stock exchanges
where listing is sought :
19. Date on which application
was filed with each stock exchange
for listing of instruments :
given by each stock exchange (Enclose copies
of permission letters of stock exchanges) :
21. Reasons for delay in listing for trading, if any :
TO BE FILLED UP IN CASE OF UNDERSUBSCRIBED ISSUES ONLY:
amount of issue underwritten :
2. Extent of under subscription
on the date of closure of the issue
a) Percentage :
b) Amount :
3. Total no. of Underwriters :
mention how the shortfall was met :
5. No. of Underwriters to whom
devolvement notices had been issued :
6. Date of Issue of devolvement notices :
7. No. of Underwriters who
did not pay devolvement (Please give names,
amount underwritten and reasons for not paying) :
8. In case of default from underwriters,
mention how the shortfall was met :
up shortfall not as underwriter :
a) Name of FI/MF :
b) No. of Instruments applied for :
c) Amount Received :
CERTIFIED that the information given above and also in the enclosures are true to the best of our knowledge and no refund orders / allotment letters / certificates are pending for despatch in respect of the issue.
CERTIFIED that shares to be locked in are duly inscribed
with the words "Share cannot be hypothecated / transferred / sold till
.........)
Signed by ... Signed by .....
Registrars to the Issue Company
Signed by.....
Lead Merchant Banker(s)
Place: Date :
Note:
(i) It is the responsibility of Lead Merchant banker(s) to give correct information after verifying the facts from the company and the Registrar to the issue.
(ii) The lead merchant
banker shall enclose a certificate from the refund banker that the amount of
refund due from the company to investors is deposited in a separate account
giving details of the total amount deposited in the account and date of deposit.
**********
RIGHTS ISSUE
SUBSCRIPTION STATUS : (SUBSCRIBED / UNDERSUBSCRIBED)
3-DAY MONITORING REPORT
(RESPONSIBILITY: POST ISSUE LEAD MERCHANT BANKER)
(To be submitted IN DUPLICATE: Within 3 days from closure of the Rights Issue)
1. Name of the Company :
2. Issue Opening date :
3. Actual closing date :
4. Date of filing letter of
offer with the stock Exchange :
5. Issue Details (as per the letter of offer) :
5.1 Basis of offer (Ratio) :
5.2 Nature of instrument :(Equity/FCD/PCD/NCD/Others, etc)
5.3 Offer price per instrument :
5.4 Amt. per instrument on application :
5.5 Issue Size : Amt in Rs lakhs
6. Record date :
7. Provisional Subscription Details of the issue:
i) Total Amount to be collected on application : Rs lakhs
ii) Amount collected on application : Rs lakhs
iii) % subscribed i.e. % of (ii) to (i) : (%)
iv) Please tick mark whether 90% minimum subscription collected :
(i) YES (ii) NO
Signed by ... Signed by .....
Registrars to the Issue Company
Signed by.....
Lead Merchant Banker(s)
Place: Date :
Note:
It is the responsibility of
Lead Merchant banker(s) to give correct information after verifying it from the
company and the Registrar to the issue.
RIGHTS ISSUE
SUBSCRIPTION STATUS : (SUBSCRIBED / UNDERSUBSCRIBED)
50-DAY MONITORING REPORT
(RESPONSIBILITY: POST ISSUE LEAD MERCHANT BANKER)
(To be submitted IN DUPLICATE : Within 50 days from closure of the Rights Issue)
1. Name of the Company :
2. Issue Opening date :
3. Actual closing date :
4. Issue Details ( as per the letter of offer)
4.1 Basis of offer :
4.2 Nature of instrument : (Equity/FCD/PCD/NCD, etc.)
4.3 Offer price per instrument :
4.4 Amt. per instrument on application :
4.5 Issue Size : Rs in lakhs
5. 3 Day Report Due on :
Submitted on :
6. No. of Collecting Banks :
(Also specify No. of Bank Branches)
7. Bank-wise names of branches which did
not submit final consolidated certificate within
21 days from closure of issue and mention
the dates when they actually submitted :
8. Details of Subscription :
(i) percentage of rights taken up by-
a) Promoters :
b) Other Shareholders :
(ii) percentage of rights renounced by -
a) Promoters :
shareholders/ renounces :
Board :
(v)Out of the unsubscribed portion as in
(iv) above, taken by:
(a) Promoters :
(b) Others :
9. Promoters shareholdings : No .of Shares Percentage
(a) Prior to the Issue :
(b) On Expanded Capital after the rights issue:
copy of the basis of allotment) :
Refund Banker :
(b) Amount of refund due :
to Refund Banker, if any :
12. Actual Date(s) of completion of
despatch of -
(a) Refund Orders :
(b) Certificate/Allotment Letters :
(c) Reasons for delay in despatch, if any :
period, if so, for which period :
13. Name of Regional Stock Exchange :
14. Names of other stock exchanges
where listing is sought :
of the issue :
stock exchange for listing of instruments :
by each stock exchange (Enclose copies of
permission letters of stock exchanges) :
TO BE FILLED UP IN CASE OF UNDERSUBSCRIBED ISSUES ONLY:
closure of the issue
a) Percentage :
b) Amount :
2. Details of Standby assistance, if any
(a) No. of Underwriters :
devolvement (Please give names, amount
underwritten and reasons for not paying) :
up shortfall not as underwriter
a) Name of FI/MF :
b) No. of Instruments applied for :
c) Amount Received :
CERTIFIED that the information given above and also in the enclosures are true to the best of our knowledge and no refund orders / allotment letters / certificates are pending for despatch in respect of the issue.
CERTIFIED that shares to be locked in are duly inscribed
with the words "Share can not be hypothecated / transferred / sold till
.........)
Signed by ... Signed by .....
Registrars to the Issue Company
Signed by.....
Lead Merchant Banker(s)
Place: Date :
Note:
(i) It is the responsibility of Lead Merchant banker(s) to give correct information after verifying it from the company and the Registrar to the issue.
(ii) The lead Merchant Banker shall enclose a certificate from the refund banker that the amount of refund due from the company to investors is deposited in a separate account giving details of the total amount deposited in the account and date of deposit.
[BACK]
(Clause 7.4.1.2(c))
UNDERWRITING DEVOLVEMENT STATEMENT
NAME OF THE MERCHANT BANKER :
NAME OF THE ISSUER COMPANY :
ISSUE SIZE :
ISSUE - WISE STATEMENT OF
NON-ACCEPTANCE OF UNDERWRITING DEVOLVEMENT
|
SR. NO. |
NAME OF THE UNDERWRITER |
AMOUNT UNDERWRITTEN |
AMOUNT DEVOLVED |
DATE OF ISSUE OF NOTICE OF DEVOLVEMENT, IF ANY |
REASONS FOR NOT ACCEPTING DEVOLVEMENT |
|
|
|
|
|
|
|
[BACK]
(Clause 7.6.1.1.(c))
BASIS OF ALLOTMENT PROCEDURE
Size of public offer - 2,00,000 equity shares of Rs.10/- each .
No. of times oversubscribed - 3 times.
Total Number of shares applied for - 6,00,000 equity
shares.
|
Sr. No. |
No. of Shares applied For category (Category-wise) |
No. of applicants |
Total No. Of shares applied by each applicant (2x3) |
Proportionate allocation to each Category (One-third) |
No. of Shares Allotted Per application by rounding off |
No. of successful applicants |
Total No. of shares allotted (6x7) |
|
(1) |
(2) |
(3) |
(4) |
(5) |
(6) |
(7) |
(8) |
|
|
|
|
|
|
|
|
|
|
1. |
100 |
1,500 |
1,50,000 |
50,000 |
100 |
500 |
50,000 |
|
|
|
|
|
+9,900* |
|
+ 99* |
+ 9,900 |
|
2. |
200 |
400 |
80,000 |
26,700 |
100 |
267 |
26,700 |
|
|
|
|
|
|
|
|
|
|
3. |
300 |
300 |
90,000 |
30,000 |
100 |
300 |
30,000 |
|
|
|
|
|
|
|
|
|
|
4. |
400 |
300 |
1,20,000 |
40,000 |
100 |
300 |
30,000 |
|
|
|
|
|
|
|
|
|
|
5. |
500 |
200 |
1,00,000 |
33,300 |
200 |
167# |
33,400 |
|
|
|
|
|
+ 100 # |
|
|
|
|
6. |
600 |
100 |
60,000 |
20,000 |
200 |
100 |
20,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
6,00,000 |
2,00,000 |
|
|
2,00,000 |
Notes:
entitled to allotment of 100, 133, 166 and 200 equity shares respectively. However, the actual entitlement would be rounded off to 100 shares each for categories 3 and 4 and 200 shares for categories 5 and 6 respectively.
[BACK]
(Clause 8.17.2)
FORMAT OF THE REPORT TO BE SUBMITTED BY THE MONITORING AGENCY
NAME OF THE MONITORING AGENCY:
MONITORING REPORT FOR THE HALF YEAR ENDED _________
1. Name of the Company:
a. Issue date, type of issue(public/rights),
type of instrument(Equity/FCDs, NCDs ,PCDs etc)
c. Amount collected (Rs crores)
the monitoring of issue proceeds.
4. Project details (to be monitored):
a. Name of the project (particulars and location):
b. Cost of the project details: (Rs crores)
(As mentioned in the offer document)
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Item Head |
Original Cost |
Revised |
Remarks |
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If, any cost overrun, how it is proposed to be financed.
c. Progress in the project:
i) Expenditure incurred during the six months period (Rs crores)
|
Item Head |
During Six months |
Cumulative |
Type of investment/ Amount invested Maturity Earnings
instrument Rs in lakhs date
f) If
there is any delay in implementation of the project, the same may be specified
the reason thereof and the proposed course of action. (Please give the
comparative statement of schedule of various activities as mentioned in the
offer document and their actual implementation).
Signature
Name:
Designation:
(Name of the Monitoring Agency)
15.1.10 A certificate duly signed by the issuer company and counter signed by statutory auditor or by Company Secretary in practice to the effect that the provision of clause 15.1.1 to 15.1.9 have been complied with shall be forwarded to the Board.
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CLARIFICATORY EXAMPLES
Allocation in such a scenario shall be as follows;
Allocation for individual investors applying for upto 10 tradeable lots through the syndicate members shall be atleast 15% of the post-issue capital (Rs. 100 crores) i.e. atleast Rs. 15 crores.
Allocation to Institutional investors as well as other investors applying through the syndicate members shall be Rs.65 crores( Rs. 80 crores - Rs. 15 crores).
Allocation to individual investors applying not through the syndicate members but during the time when the issue is open would be 10% of the issue size offered to the public through the prospectus(Rs. 80 crores) i.e. Rs. 8 crores.
Due to allocation to individual investors applying not through the syndicate members the post issue capital would increase to Rs. 108 crores and therefore the promoters need to bring in extra capital of Rs. 2.4 crores to ensure that their post issue holding (Rs.20 crores + Rs. 2.4 crores = Rs. 22.4 crores) does not fall below the minimum specified percentage( 20% of Rs.110.4 crores i.e. Rs. 108 crores + Rs. 2.4 crores).
Allocation to individual investors would therefore total at least Rs. 23 crores( Rs. 15 crores + Rs. 8 crores).
Similarly, the computation can be worked out for varying levels of promoters contribution.
The point that needs to be understood is that in case of a company going in for an initial public offer and availing the facility of Book Building, the allocation to individual investors applying through the syndicate members shall be with reference to the post issue capital, while the allocation to individual investors applying not through the syndicate members shall be with reference to the issue size offered to the public through the prospectus.
In case the promoters participate to the extent of 20% of the proposed issue, then the promoters contribution shall be Rs. 10 crores. The amount available for Book Building, in such a case, shall be Rs. 40 crores, which is the issue size offered to the public through the prospectus.
Allocation for individual investors applying for upto 10 tradeable lots through the syndicate members shall be atleast 15% of the proposed issue size(Rs. 50 crores) i.e. atleast Rs.7.5 crores.
Allocation to Institutional investors as well as other investors applying through the syndicate members shall be Rs.32.5 crores( Rs. 40 crores - Rs. 7.5 crores). Allocation would be determined by the Book Runner(s) in consultation with the Issuer as well as the syndicate members on the basis of prior commitment, quality of investor, earliness of bid, price aggression etc.
Allocation to individual investors applying not through the syndicate members but during the time when the issue is open would be 10% of the issue size offered to the public through the prospectus(Rs. 40 crores) i.e. Rs. 4 crores.
Due to allocation to individual investors applying not through the syndicate members the capital issued through the present issue would increase to Rs. 54 crores and therefore the promoters need to bring in extra capital of Rs. 1.2 crores to ensure that their post issue holding( Rs.10 crores + Rs. 1.2 crores = Rs. 11.2 crores) does not fall below the minimum specified percentage( 20% of Rs. 55.2 crores i.e. Rs. 54 crores + Rs. 1.2 crores).
Allocation to individual investors would therefore total at least Rs. 11.5 crores( Rs. 7.5 crores + Rs. 4 crores).
In case of a listed company going in for a further issue of capital and availing the facility of Book Building, the allocation to individual investors applying through the syndicate members shall be with reference to the proposed issue , while the allocation to individual investors applying not through the syndicate members shall be with reference to the issue size offered to the public through the prospectus.
In case the promoters shareholding after disinvestment remains at 20% of the total issued capital, then the promoters contribution shall be Rs. 20 crores. The amount available for Book Building, in such a case, shall be Rs. 80 crores, which is the issue size offered to the public through the prospectus.
Allocation for individual investors applying for upto 10 marketable lots through the syndicate members shall be atleast 15% of the post issue capital(Rs. 100 crores) i.e. atleast Rs. 15 crores.
Allocation to individual investors applying not through the syndicate members but during the time when the issue is open would be 10% of the issue size offered to the public through the prospectus(Rs. 80 crores) i.e. Rs. 8 crores.
Allocation to Institutional investors as well as other investors applying through the syndicate members shall be Rs.57 crores (Rs. 80 crores - Rs. 15 crores - Rs. 8 crores). Allocation would be determined by the Book Runner(s) in consultation with the Issuer as well as the syndicate members on the basis of quality of investor, earliness of bid, price aggression etc.
Allocation to individual investors would therefore total at least Rs. 23 crores( Rs. 8 crores + Rs. 15 crores).
In case of an unlisted company going in for an offer for sale and availing the facility of Book Building, the allocations to the individual investors applying through the syndicate members shall be with reference to the post-issue capital, while the allocations to the individual investors not applying through the syndicate members shall be with reference to the issue size offered to the public through the prospectus.
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BOOK BUILDING - MODEL TIME FRAME
After, the final observation from SEBI has been received on the offer document, the minimum number of application forms accompanied with Form 2A and offer document containing the final observations received from SEBI, without mentioning the final price, shall be despatched to the members of the Stock Exchanges. However, the issue opening and closing date shall be mentioned in the application form. A minimum of 200 application forms per active member of the Stock Exchange where the securities of the issuer company are proposed to be listed and 10,000 forms each to other Stock Exchanges shall be despatched. Further, minimum 1000 offer document, containing the final observations received from SEBI , to each Stock exchange where the securities of the issuer company are proposed to be listed and minimum 200 offer document, containing the final observations received from SEBI, each to other Stock Exchanges would also have to be despatched. These shall be despatched subject to the condition that a minimum gap of 14 days is maintained between the receipt of these applications and the issue opening date.
After, the price has been determined on the basis of bidding the statutory public advertisement containing, inter alia, the price as well as a table showing the number of securities and the amount payable by an investor, based on the price determined, shall be issued. The statutory advertisement may be issued before the ROC filing. There shall be a minimum time gap of five (5) days between the statutory public advertisement and the issue opening date. The statutory public advertisement shall be issued for a continuos period of three days in an English National daily with wide circulation, one Hindi National paper and a Regional language newspaper with daily circulation at the place where the registered office of the issuer company is situated.
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(clause 16.1.1(b), 16.2.3.1, 16.2.4.3)
JURISDICTION OF REGIONAL OFFICES/ HEAD OFFICE OF THE BOARD
REGIONAL OFFICE TERRITORIAL JURISDICTION ADDRESS OF
HEAD OFFICE SEBI OFFICE
NORTHERN REGION Haryana, Himachal Pradesh, Built-up Space
Jammu and Kashmir, Punjab, Block No.1,
Rajasthan, Uttar Pradesh, Rajendra Bhavan
Chandigarh and Delhi Rajendra Place
Dist. Centre
NEW DELHI - 8.
EASTERN REGION Assam, Bihar, Manipur, FMC, Fortuna,
Meghalaya,Nagaland, Orissa, 5th Floor,
West Bengal, Arunachal 234/3A, AJC
Pradesh ,Mizoram &
Tripura. Bose Road CALCUTTA - 47.
SOUTHERN REGION Andhra Pradesh, Karnataka, 3rd Floor,
Kerala, Tamilnadu and D’monte
Pondicherry. Building,No.32
D’monte Colony
TTK Road,
Alwarpet
CHENNAI - 18.
HEAD OFFICE Gujarat, Maharashtra, 1)Mittal Court,
Madhya Pradesh, Dadra and `B’ Wing,
Nagar Haveli and Goa. 1st Floor, 224
Nariman Point
MUMBAI - 21.
2) Earnest House,
14th Floor
Nariman Point
MUMBAI - 21.
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SCHEDULE XXIII
(clause 16.1.3 & 16.1.4(c))
FORMAT FOR SUBMITTING DRAFT & FINAL OFFER
DOCUMENT ON A
COMPUTER
FLOPPY
6. If the requirements of this circular regarding submission of soft copy of the offer document are not fulfilled, the offer document would not be processed.
7. Merchant bankers are further advised to confirm to SEBI in writing, within one day of the posting of draft offer document on the website (if the next day is a holiday, on the first working day), that the contents of the draft offer document appearing on the website are in order.
8. The merchant bankers are advised to follow the above procedure explained above in respect of the draft offer document, for the final offer document as well. The sticker mentiones at clause (5) above shall contain following additional information:
a) date of filing with Registrar of Companies/ stock exchange
b) issue opening date"
16Amended vide RMB (Compendium) Series Circular No.2
dated February 16, 2000
[clause 16.2.4.1 (b)]
APPLICATION FORM FOR ISSUE OF NO OBJECTION CERTIFICATE FOR
RELEASE OF 1% DEPOSIT PLACED WITH THE REGIONAL STOCK EXCHANGE
(to be submitted to the Board on Issuer Company's Letter Head)
1. Issue details indicating :
a) Name of the Company
b) Details of Registrars
c) Nature and size
d) Date of closure
e) No. of applications received and amount subscribed
f) No. of times the issue was subscribed
g) First and last date of despatch of original refund orders/cancelled stock-invests
h) First and last date of despatch of allotment letters/certificate
i) First and last date of sending certificates to NRIs. (Enclose RBI approval letter. If approval is not received, date of filing the documents with RBI along with a copy of letter forwarded to RBI)
j) Mode of despatch of Refund orders/Allotment letters/ Certificates.
k) Total amount transferred to the Refund Acount and balance outstanding as of latest date (Enclosed bank certificate)
a) Name & address of Compliance officer;
a) Status of investor complaints as on a recent date against the company in the following format :
____________________________________________________________
Sr. No. Source No. of Complaints
Received Resolved Pending
____________________________________________________________
(i) Directly
(ii) SEBI
(iii) Stock Exchange
(iv) Investor Associations
____________________________________________________________
b) State briefly the nature of complaints indicating the approximate percentage break-up of various types
c) Give reasons for pendency of complaints
4. A copy of the letter from the concerned Regional stock exchange directing the company to obtain NOC from the Board.
5. A copy of the letter from the respective stock exchanges giving permission for trading in the shares of the issue for which NOC is sought (Give reasons for delay, if any, in listing of securities)
7. Certificate from Registrars that certificates to NRIs have been despatched.
8. Any other information.
CERTIFIED that the information given above and also in
the enclosures are true to the best of our knowledge and no refund
orders/allotment letters/certificates are pending for despatch in respect of the
issue.
FOR COMPANY Place :
(Name & Signature of Date :
Authorised Signatory)
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[BACK]
SCHEDULE XXV
[clause 16.2.4.5(b)]
PROFORMA FOR SENDING RESPONSES TO SEBI
(i) The proforma in which companies shall send their responses to investor complaints is as specified below.
(ii) The proforma shall be
strictly adhered to, failing which the replies will not be updated.
|
SR.NO. |
COMPANY REF. NO. |
TYPE / CATEGORY |
NAME OF COMPL-AINANT |
ACTION TAKEN IN BRIEF |
DATE OF ACTION |
DESPATCH DETAILS REG. NO. |
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Note :
(a) Action taken in brief should indicate the action taken by the company to resolve the complaint.
(b) Where the company has asked the investor to execute an indemnity bond, the company has to invariably furnish the proof of original despatch of refund orders / certificates / dividends / interest warrants / maturity amounts by giving date of despatch and Registration no.
(c) In cases where further details are sought from the investor like Application No., Folio No., Bank Serial No., etc. and no response is forthcoming from the investor, the company is required to send at least two reminders by UCP over an interval of two months each from the despatch of first letter and intimate SEBI giving proof of postal despatch of such reminder letters along with one specimen copy of the reminders sent.
Sample Example :
|
SR.NO. |
COMPANY REF. NO. |
TYPE / CATE -GORY |
NAME OF COMPL-AINANT |
ACTION TAKEN IN BRIEF |
DATE OF ACTION |
DESPATCH DETAILS REG. NO. |
|
1. |
95/1/35808/ 01 |
IA |
XYZ |
Refund Order No. 2345678 |
31/12/94 |
3329 |
|
2. |
95/1/24678/ 02 |
IA |
ABC |
Indemnity format sent Original R/O sent lost in postal transit |
5/5/95 12/12/94 |
2684 |
|
3. |
94/1/98356/ 09 |
IA |
LMN |
Bank Sr. Number asked on --------. Reminder I sent on --------. Reminder II sent on --------. (Specimen enclosed with postal proof)
|
10/01/95 15/03/95 25/05/95 |
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4. |
94/1/12346/ 09 |
IIIB |
PQR |
Shares transferred |
06/03/95 |
34566 |
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SCHEDULE XXVI
[CLAUSE 16.3.1.1(c)]
ADDITIONAL INFORMATION FOR RENEWAL OF REGISTRATION AS MERCHANT BANKER
1.0 Key personnel
1.1 Detailed bio-data clearly giving following information for the key personnel who joined merchant banking division after the previous registration.
(a) Name
(b) Qualification
(c) Designation in the applicant company.
(d) Experience Details giving information about: name of the organisation, duration, area of work [including of applicant company, if any].
1.2 A copy of experience certificate from previous employers, copy of Appointment letter, acceptance letter, copy of experience certificates and copy of salary slip in the applicant company.
2.0 Details of directors
2.1 If any of the Directors are wholetime directors the same to be indicated.
3.0 Details of membership of stock exchange
3.1 If the applicant company / associate company /group company / subsidiary company of these are member of any recognised stock exchange, the following be submitted:
4.0 Final accounts
4.1 A Copy of Audited annual accounts (including Auditors report and schedules) as on ...... .........(latest F.Y.)/ as on date of meeting the networth criteria.
5.0 State whether issuer company is registered as Non Banking Finance Company with RBI. If yes , state the place where it is registered and give the registration number and details about any comment of RBI for their inspection for latest three financial years.
6.0 Declarations to be furnished :(to be signed by two Directors)
"We hereby declare and undertake as under:
i) That the applicant company, its promoter, director, partner or employee has not at any time been convicted for any offence involving moral turpitude or has been found guilty of any economic offence.
ii) That the applicant company/associate company, its promoters, directors, partners or employees are not involved in any litigation connected with the securities market and there are no charges against them as on date.
iii) That none of the associate, subsidiary, inter-connected or group company of the applicant company has applied or has been granted registration by the board to undertake merchant banking activities.
iv) That the applicant company/associate company, its directors, partners are not facing any charges/ disciplinary action from any stock exchange.
v) That the applicant company, its associates, its director, partner or principal officer is not involved in the securities scam and are not named in the Janakiraman Committee Report/ J P C Report. (If involved, detailed comments may be forwarded).
vi) That all investments indicated in the certified annual accounts are held in the name of the company only." (If not, details of such holdings may be forwarded).
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[CL.16.3.2.1 (a)]
FORMAT FOR HALF YEARLY REPORT TO BE SUBMITTED BY MERCHANT BANKERS
(For the period ending September / March 199 )
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Name |
Induction/ retirement/ resignation
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Reasons |
Effective Qualification Date |
Brief Experience (in case of induction) |
Share in the company |
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Name |
Date of App./ Resignation/ Termination
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Qualification |
Experience |
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8. Change including addition to/in associate concerns
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Name of Co./ firm |
Nature of change |
Activities Handled |
Nature of interest with Merchant Banker |
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Activity When commenced/ Object of the new activities/
discontinued reasons for discontinuation.
Name of issuer Type of issue Instrument
Companies (public/rights/
composite)
Offer Amount Issue Price/ Issue opening
(Rs. In Lakhs) Conversion Price date
Issue Closing No. of times Functional date oversubscribed Responsibility
Stock Exchanges Reasons for delay First date of
where instruments in listing trading in
were to be listed respective SEs
Opening trading Current market Remarks
price at respective price
SEs
13. Underwriting activities
13.1 Total number of issues underwritten during the period.
13.2 Total amount underwritten during the period (Rs. In lakhs).
13.3 Outstanding underwriting commitment at the close of the period (Rs in lakhs).
13.4 Details of disputed/devolved cases
|
Sr. No.
|
Name of the issuer |
Instrument |
Amount underwritten (Rs.in lakhs) |
Amount devolved (Rs. in lakhs) |
Devolvement met yes/no |
If not met, the reasons thereof & how dispute was settled |
Penalty / warning if any issued by SEBI |
14 Redressal of Investor Grievances
14.1 System of redressal of investor grievances ( a brief write up).
(i) Number of investor grievances received during the period.
(ii) Nature of grievances.
(iii) Number of grievances resolved.
(iv) Number of grievances pending.
(v) The date of oldest grievance.
15. Financial information
Capital Structure Year ended Previous
(Rs in lakhs) Year ended
(Rs. In lakhs)
i) Paid-up capital
ii) Free reserves
iii) Secured loan
iv) Unsecured loan
v) Others
TOTAL
i) Fixed Assets (net block)
ii) Quoted investment at cost/market price whichever is lower
iii) Unquoted investment
iv) Current assets
v) Misc. exp. not written off
vi) Others
TOTAL
(Please enclose the copy of latest audited financial results alongwith schedules)
Name of the Investment/ Percentage of
shareholder disinvestment total paid-up
capital
PLACE:
DATE: AUTHORISED SIGNATORY