Indian Equity - Public Funding Chart Book PDF

CHAPTER 1- Indian Equity – Public Funding TYPES OF ISSUES INITIAL PUBLIC OFFER/FURTHER PUBLIC OFFER...

CHAPTER 1- Indian Equity – Public Funding TYPES OF ISSUES INITIAL PUBLIC OFFER/FURTHER PUBLIC OFFER IPO-UNLISTED ISSUER FPO- LISTED ISSUER Rights issue of Qualified institutional Initial public offer a) Time of filing the draft offer document (Draft ELIGIBILITY CRITERIA UNDER ICDR REGULATION FOR IPO securities placement COMPLIANCE Red Herring Prospectus or DRHP) Entities not eligible to make an Eligibility requirements for WITH ICDR Preferential initial public offer an initial public offer Further public offer REGULATION b) Time of registering or filing the final offer Private placement Issuer, any of its promoters, Net tangible assets of allotment document with ROC. (Prospectus) promoter group- debarred from atleast Rs. 3 crores in each GENERAL CONDITIONS accessing capital market by SEBI. of the preceding three full 1) Application to stock exchange for in-principle approval for listing of its years. Not more than 50% Additional Conditions for an Offer For Sale are monetary assets. specified securities on such stock exchanges and choosing one as designated stock exchange. Promoters or directors debarred If there are more than 50% APPLICABILITY NON-APPLICABILITY from accessing capital markets by of the net tangible assets, Shares must be fully paid-up. Shall be The offer for sale of a government company or 2) Has an agreement with a depository for dematerialization of securities. SEBI. then issues has made firm held by the sellers for a period of at least statutory authority or corporation or any commitments as to their 1 year prior to the filing of the draft offer special purpose vehicle set up and controlled 3) Promoters hold securities in dematerialized form. utilization. N.A. IPO made document. by any 1 or more of them, which is engaged in 4) All existing partly paid-up equity shares have either been fully paid-up or through OFS. the infrastructure sector. have been forfeited. Issuer or any of its promoters or average operating profit of Such holding period of 1 year shall be Equity shares offered for sale were acquired directors is a willful defaulter r a at least Rs.15 crores, during required to be complied with at the time pursuant to any scheme approved by a High 5) The issuer should make firm arrangements of finance through verifiable fraudulent borrower. the three preceding years of filing of the draft offer document. Court or approved by a tribunal or the Central means towards 75% of the stated means of finance excluding the amount to Any promoters or directors of the A networth of atleast Rs.1 Government which had been in existence for a be raised through the proposed public issue or through existing identifiable issuer are a fugitive offender. crore in each of the period of more than 1 year prior to approval internal accruals. preceding 3 full years, of such scheme. If there are any outstanding If issuer has changed its Conversion or exchange of equity shares If the equity shares offered for sale were 6) The amount for general corporate purposes, as mentioned in the draft convertible securities or any name within the last one arising out of the conversion or exchange issued under a bonus issue on securities held offer document and the offer document shall not exceed 25% of the amount other right which give option to year, at least 50% of the of the fully paid-up compulsorily for a period of at least one year prior subject being raised by the issuer. receive equity shares of the revenue has been earned by convertible securities must be completed to – (i) securities being issued out of free issuer. N.A. ESOS and fully paid- it from the activity indicated before prior to filing of the offer reserves and share premium. 7) The amount for general corporate purposes, and such objects where the up outstanding convertible by the new name. document. Full disclosures of the terms (ii) Such equity shares not being issued by issuer company has not identified acquisition or investment target in the securities required to be of conversion or exchange are made in utilisation of revaluation reserves or draft offer document and the offer document, shall not exceed 35% of the converted before filing the draft offer document. unrealized profits of the issuer amount being raised by the issuer (This condition is also applicable to FPO) prospectus/ DRHP. ELIGIBILTY AND GENRAL CONDITIONS FOR FPO Entities Not Eligible To Make A Eligibility Requirements For FPO 1) Application for listing to the recognized stock exchanges and FPO [Regulation 102] [Regulation 103] choose one of the exchanges as the Designated stock exchange. Partnership Firms Spinning off of a division 1. If the issuer, any of it’s a An issuer shall be eligible to make a 2) Agreement is entered into with a depository for promoter or directors, selling further public offer, if it has not changed In case of an issuer which had been a In case of an issuer formed out of a dematerialization of specified securities. shareholders are debarred its name in the last one year. if issuer partnership firm or a limited liability division of an existing company, the from accessing the capital has changed its name within the last 1 partnership it has to conform to following- 3) Promoters hold securities in dematerialized form. track record of distributable profits of market by SEBI. year it shall make a FPO if at least 50% 1) Adequate disclosures are made in the of the revenue in the preceding 1 full the division spun-off shall be considered 4) All existing partly paid up equity shares have either been fully financial statements as per Companies Act, year has been earned from the activity only if the requirements regarding paid up or have been forfeited. 2013. suggested by the new name. financial statements as provided for 5) The issuer should make firm arrangements of finance through 2) The financial statements are duly certified partnership firms and LLPs are complied 3. If the issuer or any of its In case of non fulfillment of the above- verifiable means towards 75% of the stated means of finance by a Chartered Accountant stating that: promoters or directors is a the issue is made through the book- with. excluding the amount to be raised through the proposed public i) Accounts and the disclosures are as per willful defaulter or a fraudulent building process and the issuer issue or through existing identifiable internal accruals. Schedule III of the Companies Act, 2013. borrower undertakes to allot at least 75% of the b) The financial statements present a true 4. If any of the promoters or net offer, to QIBs and to refund full a) The accounting standards of the Institute 6) The amount for general corporate purposes, as mentioned in the and fair view of the firm’s accounts directors of the issuer is a subscription money if it fails to make the of Chartered Accountants of India have been draft offer document and the offer document shall not exceed 25% of the amount being raised by the issuer. fugitive economic offender said minimum allotment to QIBs. followed.  Issue of Warrants [Regulation 13] FILING OF OFFER DOCUMENT [REGULATION 25 & 123] Eligibility to issue warrants in IPO- 1) The issuer shall file the draft offer document with the stock exchange(s) where the specified securities are proposed to be listed, and submit to the stock exchange(s) the details of the promoters.. specified security may have 1 2) Prior to making an IPO/FPO, the issuer shall file three copies of the draft offer document with SEBI along with fees as specified, through the lead manager(s). or more warrants attached to it 3) The lead manager(s) shall submit the following to SEBI along with the draft offer document: i. a certificate of agreement between the issuer and the lead manager(s); Tenure warrants shall not exceed ii. a due diligence certificate; 18 months from allotment iii. in case of an issue of convertible debt instruments, a due diligence certificate from the debenture trustee; 4) SEBI may specify changes or issue observations, on the draft offer document filed with it within a period of 30 days from the later of the following dates: If the warrant holder does not exercise his i. The date of receipt of the draft offer document filed with SEBI, a copy of in-principle approval letter issued by the recognised stock exchanges or option within 3 months from date of payment ii. The date of receipt of satisfactory reply from the lead merchant bankers, from any regulator or agency, where SEBI has sought any clarification or of consideration, such consideration made in respect of such warrants shall be forfeited. information. 5) If SEBI specifies any changes or issues observations on the draft offer document filed with it, the issuer and the lead merchant banker shall carry out such changers and Price or formula for determination of exercise price of the comply with the observations issued by SEBI before filing the prospectus, the red-herring prospectus or the shelf prospectus as the case may be with the Registrar of warrants shall be determined upfront and disclosed in the offer Companies or an appropriate authority, as applicable. document and at least 25% of the consideration amount based on the exercise price shall also be received upfront. Draft Offer Document and Offer Document To Be Available SECURITY DEPOSIT “Application supported The issuer shall, before the opening The draft offer document filed with SEBI shall be made public for comments, by Blocked of the subscription list, deposit ASBA bids to if any, for a period of at least 21 days from the date of filing. be accepted Amount” with the stock exchange or stock only in manner exchanges an amount calculated at In 2 days of filing the draft offer specified by the rate of 1% of the amount of the The lead manager(s) shall, after SEBI. issue size available for subscription document with SEBI, make a public The offer documents are to be expiry of the period stipulated Under ASBA.money is above, file with SEBI, details of the announcement in one English hosted on the websites and its to the public in the manner as may national, one Hindi national and contents are the same as filed with block in applicant’s own be specified by SEBI and the comments received from the bank account and if he one regional language daily the Registrar of Companies, SEBI public during that period and the receives shares in IPO amount so deposited shall be newspaper with wide circulation at and the stock exchanges, as consequential changes, if any, that refundable or forfeitable in the the place where the registered applicable. same is released to the are required to be made. manner specified by SEBI. office of the issuer is situated. issuer company. ASBA OPENING OF THE ISSUE SUBSCRIPTION UNDERWRITING 1) IPO/FPO- opened within 12 Minimum 1. The minimum subscription to be received in months from the date of issuance The issuer making IPO other than Underwriting by lead Subscription an issue shall be not less than 90% of the At least 75% of the of the observations by SEBI. through book building it shall managers and syndicate offer through offer document except in case net offer to be appoint merchant bankers or stock members, they shall not compulsorily of an offer for sale of specified securities. brokers, registered with the Board, subscribe to the issue in 2) Shall be opened after at least 3 allotted to the 2. In case of an IPO, the minimum subscription to act as underwriters if it desires any manner except for QIBs, and such to be received shall be subject to allotment working days from the date of to underwrite the issue fulfilling their portion cannot be filing the red herring prospectus- If issuer makes a public issue underwriting of minimum number of specified securities, underwritten. book built issue or the prospectus - through the book building process: obligations. which stipulates that atleast 25% of each fixed price issue with the Registrar class or kind of equity shares or debentures of Companies. The underwriting convertible into equity shares Lead manager(s) shall Oversubscription In case of oversubscription, an allotment of not Lead manager(s) shall obligations should undertake minimum fulfill the underwriting at least to the more than 1% of the net offer to the public for 3) Fast track issue- open within the underwriting obligation as obligations if syndicate extent of the purpose of making allotment in minimum period specifically stipulated under specified in the SEBI (Merchant member(s) fail. minimum lots. Bankers) Regulations, 1992. the Companies Act, 2013. For a subscription. shelf prospectus, the first issue may Underwriting agreement shall be opened within 3 months of the indicate the number of specified issuance of observations by SEBI. securities which they shall subscribe to at the predetermined price.  Allotment Procedure and Basis of Allotment Allotment, Refund and Payment of Interest 1) NO allotment in a public issue if the number of prospective allottees is less than one thousand. 2) NO excess allotment, EXCEPT- in oversubscription for rounding off to make allotment, in consultation with the designated stock exchange. Issuer and lead manager(s)- shall Lead manager(s) shall SEBI has made an endeavor to ensure that specified securities ensure that the allotment, reduce listing time to 3 working 3) The allotment, other than to the retail individual investors, non-institutional investors and anchor investors are allotted and/or application credit of dematerialised days from the date of closure of monies are refunded or securities, refunding or issue and accordingly mandated shall be on a proportionate basis, subject to minimum allotment being equal to the minimum application size. unblocked within time unblocking of application that the retail individual investors prescribed by SEB. In case of monies, as may be use the Unified Payments 4) Value of specified securities allotted, except in case of employees, in pursuance of any reservation shall not failure the issuer shall undertake applicable, are done Interface (UPI). However, till SEBI exceed 2 lakhs rupees for retail investors or up to 5 lakhs rupees for eligible employees. to pay interest at the rate of 15% electronically. notifies the same, securities are 5) Allotment of specified securities to each retail individual investor shall not be less than the minimum bid lot per annum listed in 6 working days. and to each non-institutional investor shall not be less than the minimum application size. 6) The authorised employees of the designated stock exchange,lead manager(s) and registrars to the issue to ensure that basis of allotment is finalised in a fair and proper manner. Release of Subscription Money To whom DIFFERENTIAL PRICING Conditions 1) Retail individual not lower than by more than 10% of the price at Other than lead manager(s) shall confirm to the bankers to the issue by way of copies of PRICING AND DIFFERENTIAL PRICING investors or retail which net offer anchor listing and trading approvals that all formalities in connection with the issue have been completed. individual shareholders investors. AND PROCEDURE 2) employees entitled for banker is free to release the money to the issuer or release the money for reservation made refund in case of failure of the issue 3)Anchor investor- in shall not be lower than the price offered to other book built issue applicants An issuer in an IPO and FPO 4) Employees- alternate not lower by more than 10% of the floor price If issuer fails to obtain listing or trading permission from the stock exchanges method of book building it shall refund through verifiable means the entire monies received within 4 may determine the price of specified securities in as specified under ICDR days. consultation with the lead Regulations, 2018 merchant banker or through 5) FPO –COMPOSITE the price of the specified securities offered in the Give if any such money is not repaid within 4 days after the issuer becomes liable to the book building process. ISSUE public issue may be different from the price offered justification repay it, the issuer and every director of the company who is an officer in in rights issue and state default shall, on and from the expiry of the 4th day, be jointly and severally discount in liable to repay that money with interest at 15% per annum. offer doc. The lead manager(s) shall ensure that the monies received in respect of the issue are released to the issuer. BOOK BUILT ISSUE- floor ISSUER price or price band in the red herring prospectus FIXED PRICE The announcement shall also contain all the SECURITY DEPOSIT ISSUE- Floor price or the final 1) Relevant financial ratios computed for both WHO-issuer WHEN- before the opening of the subscription list WITH WHOM- deposit with mention price shall not be less If issuer opts not to make disclosure of the upper and lower end of the price band the stock exchange or stock exchanges HOW MUCH - an amount calculated at the rate of 1% price/price than the face value of the floor price or price band in the red and also a statement drawing attention of the of the amount of the issue size available for subscription to the public. band in the specified securities. herring prospectus, the issuer shall be investors to the section titled “basis of issue announce the floor price or price band prospectus. price” of the offer document. MONITORING AGENCY at least two working days before the opening of the bid (in case of an 2) Relevant financial ratios shall be disclosed If the issue size exceeds Rs.100 crores, the issuer shall ensure that the use of the proceeds initial public offer) and at least one Cap on the price band/Coupon rate on the websites of stock exchanges where of the issue is monitored by credit rating agency registered with the SEBI working day before the opening of = less than or equal to 120% of the the bid (in case of a further public securities are proposed to be listed and shall The monitoring agency shall submit its report to the issuer on a quarterly basis, till 100% of floor price and it shall be at least offer), in all the newspapers in which also be pre-filled in the application forms the proceeds of the issue have been utilized. 105% of the floor price the pre issue advertisement was available on the websites of the stock released. exchanges.  Promoters contribution in IPO IN CASE OF IPO MINIMUM CONTRIBUTORS PRMOTION INELIGIBLE SECURITIES EXCEPTION 1. The promoters of the issuer shall hold at 1) The promoters shall contribute 20%, as the case may a) Specified securities acquired during the preceding 3 years, if these are:- However, Clause (b) shall not apply: least 20% of the post-issue capital. be, either by way of equity shares including SR equity  acquired for consideration other than cash and revaluation of assets a)if the promoters and AIFs/ FVCIs / scheduled 2. However, in case the post-issue shares held, if any or by way of subscription to or capitalisation of intangible assets is involved in such transaction; or commercial banks/ PFIs/ insurance companies, as shareholding of the promoters is less convertible securities.  resulting from a bonus issue by utilisation of revaluation reserves applicable pay to the issuer, the difference than 20%, /unrealised profits of the issuer/from bonus issue against equity shares between the price at which specified securities are 2) In case of any issue of convertible securities which are alternative investment funds which are ineligible for minimum promoters’ contribution. offered in the initial public offer and the price at convertible or exchangeable on different dates and if the foreign venture capital investors b) Specified securities acquired by promoters and AIFs/ FVCIs / scheduled which the specified securities had been acquired; promoters’ contribution is by way of equity shares scheduled commercial banks commercial banks/ PFIs/ insurance companies during the preceding b) if such specified securities are acquired in terms (conversion price being pre-determined), such public financial institutions one year at a price lower than the price at which specified securities of the scheme, as approved by a High Court or a contribution shall not be at a price lower than the insurance companies registered with are being offered to public in the initial public offer. tribunal or the Central Government, as applicable, weighted average price of the equity share capital IRDA c) Specified securities allotted to promoters and AIFs/ FVCIs / scheduled by promoters in lieu of business and invested arising out of conversion of such securities. may contribute to meet the shortfall in commercial banks/ PFIs/ insurance companies during the preceding 1 capital that had been in existence for a period of minimum contribution as specified for the In case of an initial public offer of convertible debt year at a price less than the issue price, against funds brought in by more than one year prior to such approval; promoters, subject to a maximum of 10% of the instruments without a prior public issue of equity shares, them during that period, in case of an issuer formed by conversion of 1 to an initial public offer by a government post-issue capital without being identified as the promoters shall bring in a contribution of at least or more partnership firms/LLPs, where the partners of the erstwhile company, statutory authority or corporation or promoter(s) 20% of the project cost in the form of equity shares, partnership firms/LLPs are the promoters of the issuer and there is no any special purpose vehicle set up by any of them, subject to contributing at least 20% of the issue size from change in the management. which is engaged in infrastructure sector. their own funds in the form of equity shares. d) Specified securities pledged with any creditor Promoters contribution in FPO SR. NO. SITUATION CONTRIBUTION/PRICE MINIMUM PUBLIC ISSUE Either to the extent of 20%. of the proposed issue size or to the PROMOTERS extent of 20% of the post-issue capital; EXEMPTION-The requirements of minimum promoters’ CONTRIBUTION contribution shall not apply in case of: 1. Composite issue extent of 20% of the proposed issue size or to the extent of 20% of the post-issue capital i. An issuer which does not have any identifiable 2. public issue or composite issue of convertible securities 20% by way of equity shares or by way of subscription to the promoter convertible securities ii. where the equity shares of the issuer are frequently 3. Issue of convertible securities which are convertible or Not be a price lower than the weighted average price of the traded on a recognised stock exchange for a period of exchangeable on different dates and if the promoters’ equity share capital arising out of conversion of such securities. at least three years and the issuer has redressed at least contribution is by way of equity shares 95% of the complaints received from the investors till 4. Further public offer or composite issue where the promoters Allotment at price determined in terms of the provisions the end of the quarter immediately preceding the contribute more than the stipulated minimum promoters’ relating to pricing of frequently trading shares or the issue month of the reference date, and contribution price, whichever is higher iii. The issuer has been in compliance with the SEBI (LODR) Regulations, 2015 for a minimum period of three years In case the promoters have to subscribe to equity shares or convertible securities immediately preceding the reference date. (i) Promoters shall satisfy the requirements of at least 1 day prior to the date of opening of the issue (ii) Amount of promoters’ contribution shall be kept in an escrow account with a scheduled commercial bank (iii)Where the minimum promoters’ contribution is more than Rs 100 crore and the further public offer is for partly paid shares, the promoters shall bring in at least Rs 100 crore rupees before the date of opening of the issue and the remaining amount may be brought on a pro-rata basis before the calls are made to the public The SR equity shares shall be LOCK IN REQUIREMENTS Equity shares held by an employee stock under lock-in until their option trust or transferred to the employees conversion to equity shares pursuant to exercise of options by the having voting rights same as that employees, in accordance with ESOS or ESPS of ordinary shares b)holding in excess of minimum - a)locked-in for a period of 18 months locked-in for a period of 6 The entire pre-issue share capital, from the date of allotment in the Equity shares held by a venture Months. held by persons other than the capital fund or AIF of category I IPO/FPO, whichever is later in case the majority of the issue promoters, shall be locked-in for Equity shares allotted to & II or a FVCI and such equity in case the majority of the issue proceeds excluding offer for sale is employees under proceeds excluding offer for sale is to a period of Six months. provisions of shares shall be locked-in for a For to be utilized for capital employee stock option period of at least 6 months from be utilized for capital expenditure, expenditure, then the lock-in this regulation Securities the date of purchase by the then the lock-in period shall be 3 period shall be 1 year shall not apply years Held by venture capital or AIF or FVCI. Promoters  Exit Opportunity To Dissenting Shareholders Minimum offer to public and reservation Conditions for Exit Offer “Dissenting Shareholders” mean those shareholders who Security Percentage Post issue capital at offer price have voted against the resolution for change in objects or Each class or kind of equity shares or 25% Less than or equal to 1600 crore rupees variation in terms of a contract, referred to in the offer proposal for change debentures convertible into equity shares. document of the issuer. or variation Each class or kind of equity shares or % = 400 crores More than 1600 crore rupees but less dissented by at debentures convertible into equity shares than or equal to 4000 rupees. least 10 per cent of EXIT OFFER PRICE the shareholders who voted in the each class or kind of equity shares or 10% above four thousand crore rupees general meeting debentures convertible into equity shares volume-weighted average highest price paid or Frequently traded shares RESERVATION CAN BE MADE FOR CONDITIONS FOR COMPETITIVE RESERVATION price paid or payable payable volume-weighted amount to be by the promoters or by the promoters or average market price utilized for the CATEGORY RESERVATION MAX. shareholders shareholders period of 60 trading days objects is less than AMOUNT during the 52 weeks 26 weeks immediately immediately preceding 75 % of the amount 1) Employees immediately preceding preceding the relevant the relevant date raised 2) Shareholders of listed subsidiaries or listed employees 5% of the post 2 lakhs the relevant date date promoter companies issue capital RESERVATION CANNOT BE MADE FOR Under - 2-5 lakhs subscription- employees Manner Of Providing Exit To Dissenting Shareholders Shareholders 10% of issue - 1) Lead manager(s) size 2) Registrar EXPLANATORY STATEMENT- disclosures, Issuer shall submit the voting results after 3) Syndicate member(s), NOTICE- passing of special applicable laws, statement to the effect- a) The unsubscribed portion, if any, after inter-se passing resolution with the list of dissenting 4) Their promoters, directors resolution for varying terms of providing an exit opportunity to the 5) Group or associate companies of the lead adjustments among the reserved categories shall be shareholder to stock exchange and info about exit offer dissenting shareholders manager(s), registrar and syndicate member(s) added to the net offer category. and their promoters, directors and employees. b) An applicant in any reserved category may make an application for any member of specified securities, but Appoint a merchant banker not exceeding the reserved portion for that category. Recognized stock exchange(s) shall Intimate recognised stock registered with SEBI and disseminate the same to public within 1 exchange(s) about the exit offer, finalize the exit offer price working day and its price. Tendering period shall start not ALLOCATION IN NET OFFER Create an escrow account- and deposit later than 7 working days from Dissenting shareholders shall the aggregate consideration in the the passing of the special have the option to withdraw REGULATIONS/ Regulations 32(1) & Regulations 32(2) & Regulations 32(4) & account at least 2 working days prior to acceptance till closure of the resolution and shall remain open INVESTORS 129(1) 129(2) 129(4) opening of the tendering period. tendering period. for 10 working days RII 35% 10% MINIMUM 50% NII 15% 15% QIB 50% (5% to MUTUAL 75% (5% TO MF) FUNDS INCL.) In 2 working days issuer shall give a) Under regulation 32(4) & 129(4)- Remaining to portion shall be allotted to : Facilitate tendering of shares i. individual applicants other than RIIs; and the following disclosures to RSE- Pay consideration to dissenting shareholders and settlement of the same ii. other investors including corporate bodies or institutions, irrespective of the number of aggregate number of shares who have accepted the exit offer within a through the recognised stock specified securities applied for tendered, accepted, payment of period of 10 working days from the last date exchange mechanism as b) Under regulation 32(3) & 129(3) - In an issue made through the book building process, the issuer may consideration and the post-offer of the tendering period specified by SEBI allocate up to 60% of the portion available for allocation to qualified institutional buyers to anchor shareholding pattern of the issuer investors. and a report by the merchant c) Under regulation 32(3) & 129(3) - In an issue made through book building process, from the portion available to non-institutional investors banker that the payment has been (a) 1/3rd shall be reserved for applicants with application size of more than 2 lakh rupees and up to 10 lakh duly made rupees; (b) 2/3rd shall be reserved for applicants with application size of more than 10 lakh rupees:  Issue price- decided in consultation ASBA Subscription period- minimum -7 days and If any of its promoters An applicant to the rights issue shall do so with lead manager and record date maximum - 30 days. No withdrawal of application shall or directors is a fugitive as per designated stock exchange only through the ASBA facility, which If the issuer, any of its be permitted after the issue closing date promoters, promoter economic offender. facility shall be provided by the issuer in group or directors of the manner specified by the Board. Payment option to shareholders Pricing the issuer are debarred The issue price shall not be less Payment through any other electronic from accessing the than the face value of the specified banking mode shall be permitted in  part payment on application with balance securities. money to be paid in call (part payment - not capital market by SEBI If any of the promoters or respect of an application made for any directors of the issuer is a reserved portion outside the issue period. be less than 25% of the issue price) or promoter or director of any other company which is  full payment on application The issue shall disclose the issue debarred from accessing price in the letter of offer filed with Payment of balance money in calls, outside the issue Eligibility conditions the capital market by SEBI; SEBI and the stock exchanges period, may be through electronic banking modes GENERAL CONDITIONS- The issuer making a rights issue of specified securities shall ensure that: a. Sought in-principle approval from stock exchange b. all its existing partly paid-up equity shares have either been fully paid-up or 2. Notify stock have been forfeited 1. Check 3. Convene the Board meeting 4. Appoint a merchant banker and 5. Issue shall be kept open for availability of exchange 2 days prior file a draft letter of Offer with SEBI. minimum 7 days and c. It has made firm arrangements of finance through verifiable means towards & notify the concerned Stock 75% of the stated means of finance for the specific project. authorized capital to board meeting Incorporate changes in offer letter. maximum 30 days. Exchanges immediately after. d. The amount for general corporate purposes shall not exceed 25% of the amount raised by the issuer. Matters to be decide in board meeting e. The amount for general corporate purposes, and such objects where the i. Quantum of issue and the proportion of rights shares. issuer has not identified acquisition or investment target, as mentioned in ii. Alteration of share capital, if necessary, and offering objects and the offer document shall not exceed thirty five per cent. of the shares to persons other than existing holders of shares amount raised. iii. Fixation of record date. File a copy of the letter of offer with Advertisement -date of completion of Where the issuer or any of its promoters or directors is a willful defaulter or a iv. Appointment of merchant bankers and underwriters the stock exchange despatch of letter of offer given in at least fraudulent borrower, the promoters or promoter group of the issuer shall not v. Approval of draft letter of offer or authorisation of managing director/ company secretary to finalise the Despatch letters of offer and the an English National Daily, one Hindi renounce their rights except to the extent of renunciation within the promoter group. letter of offer in consultation with the managers to the Composite Application Form to National Paper and a Regional Language issue, the stock exchange and SEBI. shareholders by registered post. Daily where registered office is situated. Reservations Convene Board Make an application to the Stock The issuer shall make a rights issue of equity Finalise the Meeting and make shares only if it has made reservation of Applications of shareholders who Make arrangement with Exchange(s) where the company’s allotment in allotment of equity shares of the same class in favour of apply both on plain paper and also bankers for acceptance of consultation with shares are listed for permission of the holders of outstanding compulsorily shares. in a composite application form are share application forms. Stock Exchange. listing of new shares. convertible debt instruments, if any, in proportion to the convertible part thereof liable to be rejected. equity shares reserved for the holders of fully or partly reservation for compulsorily convertible employees along “Preferential issue” means an issue of specified securities by a listed issuer to any select person or debt instruments shall be with rights issue - issued to such holder at the group of persons on a private placement basis and does not include an offer of specified securities value of allotment to PREFERENTIAL time of conversion of such made through employee stock option scheme, employee stock purchase scheme or an issue of sweat any employee shall convertible debt ISSUE not exceed Rs 2 instruments, on the same equity shares or depository receipts issued in a country outside India or foreign securities. lakhs. terms at which the equity undersubscription shares offered in the rights 2L-5L issue were issued.  Conditions for preferential issue Relevant Date Frequently and infrequently traded shares all equity shares allotted by way of preferential issue Frequently Traded Shares Infrequently Traded Shares shall be made fully paid up 1. Where shares of the issuer, in 1.Where the shares are not which the traded turnover on any frequently traded, the price special resolution has been passed by its recognised stock exchange during determined by the issuer shall take shareholders; The date 30 days prior to lssue pursuant to any relevant date referred the 240 trading days preceding the into account valuation parameters all the equity shares, held by the proposed allottees in the date on which the resolution of stressed assets clause (a) or a date 30 relevant date, is at least ten per cent including book value, comparable the issuer are in dematerialised form before an meeting of shareholders is under a framework specified days prior to the date of the total number of shares of trading multiples, and such other application seeking in-principle approval is made held to consider the by the RBI or a resolution on which the holders such class of shares of the issuer. parameters as are customary for issuer is in compliance with the conditions for continuous proposed preferential plan approved by the NCLT, of the convertible 2. However, where the share capital valuation. listing of equity shares as specified in the listing agreement issue. the date of approval of the securities become of a particular class of shares of the 2.Submit a compliance certificate, as pe SEBI listing Regulations,2015 corporate debt restructuring entitled to apply for package or resolution plan issuer is not identical throughout obtained from an independent issuer has obtained the Permanent Account Number of the equity shares. such period, the weighted average merchant banker or an shall be the relevant date. the proposed allottees number of total shares of such class independent registered valuer to Preferential issue the issuer has made an application seeking in-principle Preferential issue of Issue pursuant to of the issuer shall represent the the stock exchange where the of convertible approval on the same day when the notice has been sent equity shares resoltion total number of shares. equity shares of the issuer are securities in respect of the general meeting listed. PRICING Lock-In of Specified Securities Particulars Listed for 90 trading days or more Listed for less than 90 trading days CONDITION LOCK-IN Price not less than higher of the following: The 90 trading days volume price at which equity shares were Promoter or promoter group and equity shares allotted pursuant to 18 months from trading weighted average price (VWAP) of issued by the issuer in its initial exercise of options attached to warrants issued on preferential basis to approval the related equity shares quoted on public offer or the value per share promoter or promoter group (upto 20%) the recognised stock exchange arrived at in a scheme of Equity shares allotted in excess of the 20% 6 Months from trading approval preceding the relevant date compromise, arrangement and Convertible securities or warrant which are not listed on stock exchanges, 1 year from allotment OR amalgamation, pursuant to which Securities allotted on preferential basis to persons other than promoter 6 Months from trading approval the 10 trading days volume weighted the equity shares of the issuer were and promoter group and the equity shares allotted pursuant to exercise Where the price of the equity shares is determined, average prices of the related equity listed of options attached to warrants such price shall be recomputed by the issuer on shares quoted on a recognised stock OR convertible securities or warrants which are not listed on stock 1 year from allotment completion of 90 trading days from the date of exchange preceding the relevant date exchanges listing if such recomputed price is higher than the equity shares issued on a preferential basis pursuant to any resolution of 1 year from trading approval price paid on allotment, the difference shall be paid stressed assets under a framework specified by the RBI or a resolution by the allottees to the issuer. plan approved by the NCLT under the IBC 2016, Preferential issue to QIBs, not exceeding 5 in If the Articles of Association of the the average of the volume the lock-in provision shall not be applicable to the specified securities to number. Price - not less than 10 trading days issuer provide for a method of weighted average prices of the the extent to achieve 10% public shareholding volume weighted average prices of the related determination which results in a floor related equity shares quoted on equity shares quoted on a recognised stock price higher than that determined the recognised stock exchange 1) Lock-in of the equity shares allotted pursuant to conversion of convertible securities other than warrants, issued on preferential basis shall be reduced to the extent the convertible securities have already been exchange preceding the relevant date under these regulations, then the during the period shares have been locked-in. same shall be considered as the floor listed preceding the relevant date price for equity shares to be allotted OR 2) If the amount payable by the allottee, in case of re-calculation of price is not paid till the expiry of lock-in pursuant to the preferential issue. period, the equity shares shall continue to be locked-in till such amount is paid by the allottee. No allotment shall be made, either directly or the average of the 10 trading days 3) The entire pre-preferential allotment shareholding of the allottees, if any, shall be locked-in from the indirectly, to any QIB who is a promoter or any volume weighted average prices of relevant date up to a period of 90 trading days from the date of trading approval. person related to the promoters of the issuer: the related equity shares quoted 4) However, in case of convertible securities or warrants which are not listed on stock exchanges, the entire Provided that a qualified institutional buyer who on a recognised stock exchange pre-preferential allotment shareholding of the allottees, if any, shall be locked-in from the relevant date up does not hold any shares in the issuer and who has during the 2 weeks preceding the to a period of 90 trading days from the date of allotment of such securities. acquired rights in the capacity of a lender shall not relevant date be deemed to be a person related to the promoters. Lock-in requirements for an allottee who has become a promoter due to change in control shall be the same as those applicable to the promoters and promoter group under this regulation “Qualified Institutions Placement’ means allotment of eligible securities by a listed issuer to qualified institutional buyers (QIB’s) on private placement basis and includes an QUALIFIED offer for sale of specified securities by the promoters and/or promoters group on a private placement basis in terms of SEBI (ICDR) Regulations, 2018. INSTITUTIONAL PLACEMENT *Eligible Securities include equity shares, non-convertible debt instruments along with warrants and convertible securities other than warrants.  CONDITIONS FOR QIP CONDITIONS FOR QIP- RELEVANT DATE 1. A listed issuer may make a qualified institutions placement of eligible securities if it satisfies the following conditions: a) SPECIAL RESOLUTION Approval Completion Non-applicability In case of allotment of equity In case of allotment of eligible convertible shares, the date of the meeting in securities, either the date of the board meeting or A special resolution approving the Allotment pursuant to the special No shareholders’ resolution will be required which the board of directors or the committee of directors decides to open the QIP has been passed by its resolution shall be completed in case the QIP is through an offer for sale by the committee of directors duly issue of such convertible securities or the date on shareholders, and the special within a period of 365 days from promoters or promoter group for compliance authorised decides to open the which the holders of such convertible securities resolution shall, among other the date of passing of the with minimum public shareholding proposed issue. become entitled to apply for the equity shares relevant matters, specify that the resolution. requirements specified in the Securities allotment is proposed to be made Contracts (Regulation) Rules, 1957 through qualified institutions placement and the relevant date. Conditions for offer for sale (OFS) by promoters- Securities Contracts (Regulation) Rules, 1957 b) Equity shares of the same class – It shall mean equity shares which rank pari-passu in relation to rights as to dividend, voting or otherwise  Promoters and members of the promoter group Equity shares of the same class Condition  An OFS of fully paid up equity shares 1  Through a QIP Proposed to be allotted through QIP Pursuant to conversion or exchange of  For achieving minimum public shareholding eligible securities offered through QIP Have been listed on a stock exchange for a period of at least one year prior to the date of issuance of notice to its shareholders for convening the meeting to pass the special resolution 1. Shall not make OFS if it has purchased or sold any equity (i) shares of the issuer during twelve weeks period prior to the date of the opening of the issue; and Condition Issuer Transferee Company 2. They shall not purchase or sell any equity shares of the 2 issuer during the twelve weeks period after the date of