Material: It is Indicative only not Exhaustive in nature Primary Market Issue Management Merchant banker is the intermediary appointed

by companies in the primary market issue. It has to look at the entire issue management and works as the manager to the public issue. Principal steps in a public issue are as follows:
1. Vetting of Prospectus: the prospect is a document to communicate

information about the company. The SEBI Act requires all companies to prepare a prospectus for distribution of securities to investors. The content of prospectus and supplemental financial information are governed by the SEBI regulation. The prospectus is an important document. The company and its management is liable for information provided in the prospectus and for omission of any material information. The companys investment banker drafts the prospectus after conducting due diligence certificate investigation of the firm. The prospectusives the details of the business of the firm, management, names of the principal shareholders and their level of ownership, audited financial statements, underwriting agreement, information on the use of proceeds, dividend policies and capitalization. A discussion on the managements perception of all risk factors and competitive position is included. The company has to file the draft prospectus with SEBI with the help of a merchant banker. After the preparation of the prospectus, the merchant banker along with due diligence certificates and other compliances sends the same to the SEBI for vetting. On receiving the same the Board scrutinizes it and suggests changes within 21 days of receipt of prospectus. The company can come out with a public issue within 365 days, after the elapse of 21 days. A prospectus is also filed with the concerned stock exchanges along with the application for listing of securities... after making any changes, if any, made by SEBI, the final prospectus, duly signed by all the directors must be filed with the Registrar of Companies along with copy of all materials. The ROC may suggest changes which again reported to SEBI. The date on which the ROC card is obtained is the date of the prospectus. 2. Appointment of underwriters: the underwriter agrees to subscribe to a given number of shares when the public issue is not subscribed fully

by the public. The underwriter in essence gives the guarantee for public subscription in consideration for the underwriting commission. 3. Appointment of bankers: the banker to the issue collects the money on behalf of the company from the applicants. The money thus collected is kept in an escrow account is a designated account in which funds can be utilized only for a specified purpose. In other words, the banker to the issue has to keep the fund s in the escrow account on behalf of the bidders. These funds are not available to the company till the issue is completed and allocation is made. Commission is paid to the bankers to the issue. generally the bankers: a) keep a proper record of applications and money received from the investing public b) finalize the list of eligible allot tees after deleting invalid applications c) assist the finalization of allotment of securities d) Dispatch refund orders as required.
4. Appointment of registrars: the company appoints the registrar to the

a)

b)

c)
d) e) f) g) h) 5.

issue after consultation with the merchant banker. Sometime the same merchant banker renders the function of registrar and share transfer agent. If the issue is large the functions can be separated. The main duties of registrar Receive all application forms from the banks and acquire the relevant data regarding the subscription of the issue after the closure of the issue. Check the forms to ensure that all the required parameters are satisfied Identify all other technical defects Reconcile the application money as per the application forms with the actual received by the banker. Prepare the basis of allotment in conjunction with the lead manager as per the current guidelines Submit the basis for stock exchange approval Proceed with the allotment of shares and refunds within the prescribed time limits, after getting the approval from the stock exchange. Attend all the complaints of post allotments/listing and make efforts of speedy solutions. Share Tansfer Agents they maintain the record of holders of securities of the company for and on behalf of the company. They also handle all matters related to transfer and redemption of securities of the company.

6. Appointment of brokers: appointing a broker is not compulsory, but

approval of the stock exchange is mandatory. The names and addresses of the brokers to the issue should be given in the prospectus. The brokers enhance the sale of the issue. Their functions a) Use their contacts to invite the public for subscribing shares. b) Act as a connecting link between the prospective investors and the issue. c) Enhance the speedy subscription of the issue by the public.

What is a Book Building? SEBI defines book building as a process undertaken by which, a demand for the securities proposed to be issued by a corporate is elicited, built-up and the price of 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. Book building is a process used for making a public offer for issue of equity shares of a company, by collecting bids from investors. This provides an indicative price range, popularly known as price band. The issue price is fixed after analyzing the bids. The issuer company appoints a lead merchant banker to act as book runner to the issue. The book runner builds an order book comprising of bids from various investors which shows the demand for theshares of the company at various prices. Based on this feed back, the issue price is fixed. Types of book building options: there are two types of book building involved: 1) Open book: online display of demand for the issued securities is available. 2) Closed book: the bids are not made public. SEBI allows issuing companies to follow 100% book building , whereby, the entire process is completed in the first phase, without a mandatory fixed price offer after the completion of the book building issue. This requires minimum issue size of Rs 25 crores. In case an issuer company makes a 100% book building, then the following criteria for proportional allotment needs to be adhered:

 At least 35% of the net offer to the public shall be available for the allocation to Retail Individual Investor(RII);(Investors who apply shares worth less than Rs 200,000 Ex: General public) At least 15% of the net offer to the public shall be available for allocation to Non Institutional Investors(NIIs); and Ex-HNIs Not more than 50% of the net offer to the public shall be available for allocation Qualified Institutional Buyers(QIBs) Ex: FIIs, MFs) Except 100% book buiding, a 75% book building issue can be done. It is a two stage process, with a partial offer of 75% of the issue through book building whereby, a price is discovered by the usual bidding process and balance 25% is offered to the public through a fixed price offer-which is determined based on the initial book building process.