Published on January 11, 2016
1. ROLE OF SEBI IN ISSUE OF SHARES M. AMUDHA & P.SRIJA
2. Introduction • The Securities and Exchange Board of India (SEBI) is the regulatory authority in India established under Section 3 of SEBI Act, 1992 which provides for establishment of Securities and Exchange Board of India (SEBI) with statutory powers for (a) protecting the interests of investors in securities (b) promoting the development of the securities market (c) regulating the securities market.
3. Different kinds of share issues
4. TYPES OF OFFER DOCUMENTS
5. Requirements in Issue of Shares Entry requirements for an issuer to make an issue / offer to public • An unlisted issuer making a public issue i.e (making an IPO) is required to satisfy the following provisions: • Entry Norm I (Profitability Route) • Entry Norm II (QIB Route) • Entry Norm III (Appraisal Route) • A listed issuer making a public issue (FPO) • Certain category of entities which are exempted
6. OTHER PROVISIONS • Minimum Promoter’s contribution and lock‐in • IPO Grading
7. SEBI’s ROLE IN AN ISSUE Draft observation to be filed SEBI – Value more than Rs. 50 lakhs Observation letter validity – 3 months no requirement of filing any offer document / notice to SEBI In case of preferential allotment and Qualified Institution Placement (QIP). In QIP, Merchant Banker handling the issue • Has to file the placement document with Stock exchanges for making the same available on their websites.
8. ‘DIP’ GUIDELINES How does SEBI ensure compliance with DIP? Eligibility Norms for issuing Securities: Conditions for issue of securities Filing of offer document Companies barred not to issue security Exemption from the eligibility norms
9. Sahara v/s SEBI • Whether the issue of OFCDS to millions of persons is a private placement and not covered by SEBI regulations ? • Whether listing provisions is mandatory for public issues or depends on ‘intention of the company’ ? Issues to be discussed:
10. LOCK-IN REQURIMENTS 20% of stake from IPO AIF’s (PE, SMR, Infrastructure, VCF) AIF’s contribution is only 10% Proposal approved by SEBI Recommendation is given by (PMAC)
11. PRICING IN ISSUE ISSUER MERCHANT BANKER SEBI APPROVAL
12. Book building Price band Working of BB Cut-off option Revise my bid Cancelling my bid
13. Firm allotment • “Allotment on firm basis” • Allotment is for investors • Price fixed in allotment is different from public offer
14. Intitutional investing
15. Classification of investors Retail individual investors • Bid’s not more than Rs 1,00,000 • Purchase securities for his or her personal account Qualified institutional investors • Bid’s more than 1,00,000 • Purchased for large institutions like bank, insurance companies, etc Non-institutional investors • Bids more than 1,00,000 • Purchase securities for NRI’s, trusts etc
16. Allotment to various investors
17. Intermediaries involved in the issue process Merchant banker Banker to the issue Registrars to the issue Underwiters
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