SEBI Issue of Capital &

Disclosure
Requirement (2009)
&
SEBI (Intermediaries)
Regulation Act (2008)
Presented By:

Kamal Bhutani
Shashank Rawat
Prerna Malpani

Prateek Jain
Jai Kishan
Dheeraj Kumar

SEBI Issue of Capital and

Disclosure Requirements
(ICDR) Regulations 2009

The SEBI (Issue of Capital and Disclosure

Requirements) Regulations, 2009 are applicable
for public issue; rights issue, preferential issue;
an issue of bonus shares by a listed issuer;
qualified institutions placement by a listed issuer
and issue of Indian Depository Receipts.

General conditions for public

issues and rights issues
If

the issuer, any of its promoters, promoter group or

directors or persons in control of the issuer are
debarred from accessing the capital market by SEBI or
If any of the promoters, director or person in control of
the issuer was or also is a promoter, director or person
in control of any other company which is debarred
from accessing the capital market under the order or
directions made by SEBI.
If the issuer of convertible debt instruments is in the
list of willful defaulters published by the RBI or it is in
default of payment of interest or repayment of
principal amount in respect of debt instruments issued
by it to the public, if any, for a period of more than 6
months.

 Unless

it has entered into an agreement with a

depository for dematerialization of equity shares and
convertible securities already issued or proposed to
be issued.
Unless all existing partly paid-up equity shares of the
issuer have either been fully paid up or forfeited.
Unless firm arrangements of finance through
verifiable means towards 75% of the stated means
of finance, excluding the amount to be raised
through the proposed public issue or rights issue or
through existing identifiable internal accruals, have
been made.

Appointment of Merchant banker

and other intermediaries

The issuer should appoint one or more merchant

bankers, at least one of whom should be a lead
merchant banker. The issuer should also appoint other
intermediaries, in consultation with the lead merchant
banker, to carry out the obligations relating to the
issue. The issuer should in consultation with the lead
merchant banker, appoint only those intermediaries
which are registered with SEBI. Where the issue is
managed by more than one merchant banker, the
rights, obligations and responsibilities, relating inter
alia to disclosures, allotment, refund and underwriting
obligations, if any, of each merchant banker should be
predetermined and disclosed in the offer document.

Conditions for Initial Public

offer
1)An

issuer may make an initial public offer

if:
a)

The issuer has net tangible assets of at least

Rs 3 crores in each of the preceding 3 years
of which not more than 50% are held in
monetary assets. If more than 50% of the
net tangible assets are held in monetary
assets, then the issuer has to make firm
commitment to utilize excess monetary
assets in its business or project.

b) The issuer has a track of distributable

profits in at least 3 out of the immediately
preceding 5 years.
c) The issuer company has a net worth Rs. 1
crore in each of the preceding 3 full years.
d) The aggregate of the proposed issue and
all previous issues made in the same financial
year in terms of issue size does not exceed 5
times its pre-issue net worth as per the
audited balance sheet of the preceding
financial year.

e) In case of change of name by the issuer

company within last one year, at least 50% of
the revenue for the preceding on year should
have been earned by the company from the
activity indicated by the new name.

2) Any issuer not satisfying any of the

conditions stipulated above may make an
initial public offer if:
a) The issue is made through the book
building process and the issuer undertakes to
allot at least 50% if the net offer to public to
qualified institutional buyers and to refund

it fails to make allotment to the

qualified institutional buyers.
B) The minimum post-issue face value
capital of the issuer should be rs.10
crore.
3. An issuer may make an initial public
offer of convertible debt instruments
without making a prior public issue of
its equity shares and listing.

4) An issuer cannot make an

allotment pursuant to a public
issue if the number of prospective
allotment is less than one
thousand.
5)No issuer can make an initial
public offer if there are any
outstanding convertible securities
or any other right which would

CONDITIONS FOR FURTHER

PUBLIC OFFER
An

issuer may make a further public offer if it satisfies

the following conditions:
a) The aggregate of the proposed issue and all previous
issues made in the same financial year in terms of
issue size does not exceed 5 times its pre-issue net
worth as per the audited balance sheet of the
preceding financial year.
b) If

it has changed its name within the last one year, at

least 50% of the revenue for the preceding one full
year has been earned by it from the activity indicated
by the new name.

PRICING
IN
PUBLIC
ISSUE
Presented By:

PRATEEK JAIN
04516659313

Introduction

The issuer determines the price of the

equity shares and convertible securities
in consultation with the lead merchant
banker or through the book building
process. In case of debt instruments, the
issuer determines the coupon rate and
conversion price of the convertible debt
instruments in consultation with the lead
merchant banker or through the book
building process.

Differential Pricing

An issuer may offer equity shares and convertible

securities at different prices; subject to the following
condition:

a.

The retail individual investors may be offered equity

shares at a price lower than the price at which net
offer is made to other categories of applicants

b.

Prices offered to an anchor investor cannot be lower

than the price offered to other applicants;

c.

Different prices offered in Public Issue & Rights Issue.

d.

Securities offered to employees

Promoters Contribution
The
promoters
of the
issuer are
required to
contribute
in the
public
issue as
follows:

IPO the
minimum
contribution should
not be less than
20% of the post
issue capital;
FPO 20 % of the
proposed issue
size or 20% of the
post-issue capital;
Composite Issue
20% of the
proposed issue
size or 20% of the
post-issue capital
ex. the rights issue
component.

Lock-in of Specified
Securities

In a public issue, the equity shares and convertible

debentures held by promoters are locked-in for the
period stipulated below:

(a) Minimum promoters contribution is locked-in for

a period of 3 year
(b) Promoters holding in excess of minimum
promoters contribution is locked-in for a period of
1 year;

However, excess promoters contribution in a

further public offer are not subject to lock in.

EXAMPLE:
RELIANCE POWER
Objects of the Issue:
The objects of the Issue are to:
1.

2.
3.

Fund subsidiaries to part-finance the construction and

development costs of certain of 12 power generation projects
currently under various stages of development;
General corporate purposes;
Achieve the benefits of listing on the Stock Exchanges.

Issue Detail:
Issue Open: Jan 15, 2008 - Jan 18, 2008
Issue Type: 100% Book Built Issue IPO
Issue Size: 260,000,000 Equity Shares of Rs. 10
Issue Size: Rs. 11,563.20 Crore
Face Value: Rs. 10 Per Equity Share
Issue Price: Rs. 405 - Rs. 450 Per Equity Share
Market Lot: 15 Shares
Minimum Order Quantity: 15 Shares

A R T I C
L E

BOOK
BUILDING
Presented By:
Prerna Malpani
04116659313

What is Book Building?

Book buildingis a process of generating, capturing, and recording

investor demand for shares during aninitial public offering(IPO), or other
securities during their issuance process, in order to support efficient
price discovery.

When a company wants to raise money it plans on offering its stock to the
public. This is typically takes place through either an IPO or an FPO (followon public offers).
The book building process helps determine the value of the security. Once
a company determines it wants to have an IPO, it will then contact a book
runner or a lead manager.
The book runner will determine the price range it is willing to sell the stock
Generally, the issue stays open for five days. At the end of the five days,
the book runner determines the demand of the stock for its given price
range.
Once the cost of the stock has been determined, then the issuing company
can decide how to divide its stock at the determined price to its bidders

Allocation in the net offer to public

THROUGH Book Building Process
1. Not less than 35% to retail individual investor
2. Not less than 15% to non institutional investors
3. Not more than 50% to Qualified Institutional Buyers;
5% of which would be allocated to mutual funds.
. If the issuer undertakes to allot at least 50% of the
net offer to public to QIB and to refund full
subscription money if it fails in doing so, then in that
case at least 50% of the net offer to public should be
alloted to QIB.

Allocation in the net offer to

public OTHER THAN THROUGH
Book Building Process
Minimum

50% to Retail Individual

Investor
Remaining to individual applicants
other than individual investors and
other investors
The unsubscribed portion in either of
the categories may be allocated to
applicants in other category

Example of Book Building

Process

Company XYZ wants to issue 100 shares through

book building. They demand is as follows.
Subscribed
( no. of shares)

Price

50

100

65

90

80

80

95

70

105

60

continue
d..
The

issue price will be that level at

which all the shares get subscribed.
In the above example, all the shares
are being subscribed to between Rs
60 Rs 70. Lets say at Rs 65 we are
able to place all our shares, this then
is the issue price (Rs 65).

The

bid will be open for a minimum

of five working days

Indian Depository
Receipts
A

foreign company can access Indian

securities market for raising funds through
issue of Indian Depository Receipts ( IDRs)
An IDR is an instrument denominated in
indian Rupees in the form of a depository
receipt created by a Domestic Depository
( custodian of security registered with the
SEBI) against the underlying equity of
issuing company to enable foreign
companies to raise funds from the indian
securities markets.

An issuing company making an issue of

IDR is required to satisfy the following:
It

should be listed in its home

country
It

should not be prohibited to issue

securities by any regulatory body

It

should have a track record of

compliance with security market

regulations in itshome country

Condition for issue of

IDR
An

issue of IDR is subject to the following

conditions:(a)Issue size should not be less than RS.50 crore.
(b)Procedure to be followed by each class of
applicant for applying should be mentioned in
the prospectus
(c) Minimum application amount should be
RS.20000
(d)At least 50% of the IDR issue should be
allotted to qualified institutional buyers on
proportionate basis

(e) The balance 50% maybe allocated among the categories of

non institutional investors and retail individual investors
including employees at the discretion of the issuer and the
member of allocation has to be disclosed in the prospectus.
Allotment to investors within a category will be on
proportionate basis.
Further at least 30% of the IDRs issued will be allocated to retail
individual investors and in case of under-subscription in retail
individual investor category, spill over to other categories to the
extent of under-subscription may be permitted.
( f ) At any given time, there will be only one denomination of IDR
of the issuing company