Ca dhruv agrawalsebi icdr amendments

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  • 1. SEBI (ICDR) Regulations 2009 and Recent Amendments
    Simplifying the Issue Management
    CA DHRUV AGRAWAL
  • 2. An Overview
    SEBI (ICDR) Regulations deals with Issue of Specified Securities by a new Issuer or a Listed Issuer.
    Specified Securities as defined under SEBI ICDR Regulations
    vs. Securities as defined under SCRA:
    Equity Shares
    Non-Convertible Preference Shares
    Stocks
    Bonds Debentures
    Debentures Stock Derivates
    Convertible Preference Shares
    Units Issued by CIS Govt. Securities
    Convertible Securities
    Any marketable securities
    CA DHRUV AGRAWAL
  • 3. Structure of ICDR Regulations
    SEBI (ICDR) Regulations, 2009
    Preferential Issues
    Public Issues
    Bonus Issues
    IDR Issues
    Right Issues
    QIP
    Issues by SMEs
    General Obligations of Issuer and Merchant Banker in Public Issue / Right Issue
    Schedules
    CA DHRUV AGRAWAL
  • 4. What ICDR does not Regulate
    Public Issue of Debt Securities
    (Regulated by SEBI (Issue and Listing of Debt Securities) Regulations 2008)
    Issue of ADRs / GDRs
    (Regulated by RBI FCCBs and Ordinary Shares [Through Depository Receipt Mechanism] Scheme, 1993 )
    Issue of FCCBs
    (Regulated by RBI FCCBs and Ordinary Shares [Through Depository Receipt Mechanism] Scheme, 1993
    Issue of shares pursuant to ESOPs
    (Regulated by SEBI (Employee Stock Option Plan and Employee Stock Purchase Scheme) Guidelines, 1999)
    CA DHRUV AGRAWAL
  • 5. ICDR vs. DIP
    Exemption to certain banking and infrastructure companies from eligibility norms for making initial public offers (IPOs) is withdrawn.
    Offer for Sale by Listed Companies Allowed 
    Allotment on Firm Basis to specified categories is removed.
    Contribution by persons belonging to promoter group is no more covered under Promoters’ Contribution.
    Underwriting obligation is extended to the whole issue not just up to minimum subscription.
    CA DHRUV AGRAWAL
  • 6. ICDR vs. DIP – Contd.
    75% Book Building route is withdrawn.
    Efficient procedure and adequate disclosures under Book-Building Process Specified.
    Mandatory requirement of disclosure of any pledge of shares by promoters.
    Power to Stock Exchange to order revaluation of non-cash consideration for preferential allotment to promoters or related persons.
    CA DHRUV AGRAWAL
  • 7. Public Issues Framework
    Public Issue Framework under SEBI (ICDR) Regulations
    Type & Procedure
    Eligibility Requirements
    Allocation of Issue
    Pricing
    Promoters’ Contribution & Lock-in
    Book Build Issue
    Fixed Issue
    Issue Period
    CA DHRUV AGRAWAL
  • 8. Eligibility Requirements
    Primary Eligibility Requirements
    Rs. 3 Crores (Net Tangible Assets) in last 3 years
    Rs. 1 Crore (Net Worth) in last 3 years
    Distributable profits for 3 years in last 5 years
    In case of change of name, 50% revenues from activity suggested by new name
    Aggregate of all issues in one financial year not to exceed 5 times issuer’s pre issue net worth
    Alternate Eligibility Requirements:
    Issue through Book-Building Process with minimum 50% net offer to QIBs ;OR
    ‘Project’ has 15% participation from financial institutions/scheduled commercial banks of which 10% comes from appraisers and min. 10% net offer to QIBs
    AND
    10 Crores minimum post issue face value capital; OR
    2 years of compulsory market making post issue
    CA DHRUV AGRAWAL
  • 9. Other Pre-requisites
    Prospective allottees to be not less than 1000.
    Compulsory IPO Grading by credit rating agency before filling RHP with ROC
    No outstanding convertible securities or other right which would entitle the existing promoters or shareholders any option to receive equity shares after public offer.
    Firm arrangements of finance, through verifiable means, for 75% of the stated means of finance excluding the amount to be raised through the public issue to be made.
    Partly paid up shares to be made fully paid or forfeited in the manner specified, before the public offering.
    CA DHRUV AGRAWAL
  • 10. Other Key Decisive Criteria
    CA DHRUV AGRAWAL
    GLOBAL ACADEMY
  • 11. Minimum Listing Requirements
    CA DHRUV AGRAWAL
  • 12. Minimum Listing Requirement -BSE
    CA DHRUV AGRAWAL
  • 13. Minimum Listing Requirement -BSE
    CA DHRUV AGRAWAL
  • 14. Minimum Listing Requirement -NSE
    CA DHRUV AGRAWAL
  • 15. Minimum Listing Requirement -NSE
    CA DHRUV AGRAWAL
  • 16. Type & Procedure
    CA DHRUV AGRAWAL
  • 17. A Comparative Analysis
    CA DHRUV AGRAWAL
  • 18. Alternate Method of Book-Building
    Disclosure of Floor Price
    QIBs shall bid at any price above the floor price
    Allotment to QIB investors on Price Priority Basis i.e. Highest bidders get the bided number of shares
    Allotment of other investors on proportionate basis
    Other investors will be allotted shares at Floor Price
    Issuer may
    put a cap on number of specified securities
    Allow bidders to revise their bids
    Allow bidders to make multiple bids
    CA DHRUV AGRAWAL
  • 19. Listing and trading
    Pre-IPO Structuring
    Closing and
    Allotment
    Final Phase
    Kick Off Meeting
    Preparatory Phase of Issue
    RoC filing of final
    Prospectus
    Due Diligence and Documentation
    Marketing Phase of Issue
    Filing with SEBI and SE
    Pre-Marketing
    SEBI Approval &
    RoC Filing
    Roadshows & Price Band Discovery
    Book building and Pricing
    Procedure
    CA DHRUV AGRAWAL
  • 20. Pricing
    Free Pricing – Price to be determined by Issuer in consultation with Lead Merchant Banker
    Differential Pricing
    Retail Individual Investor my be offered shares at less price than that of other categories
    Anchor investors can not be offered shares at less price than any that of other categories
    In case of Composite issue, the price of public issue and right issue can be different.
    In case of alternate method of book building, shares may be issued to employees at lower price.
    (the differential pricing shall not be more than 10% of the floor price)
    CA DHRUV AGRAWAL
  • 21. Pricing Contd.
    CA DHRUV AGRAWAL
  • 22. Pricing Contd.
    CA DHRUV AGRAWAL
  • 23. Promoters’ Contribution
    OR
    OR
    Certain specified securities are ineligible for minimum promoters’ contribution
    CA DHRUV AGRAWAL
  • 24. Securities are ineligible for minimum promoters’ contribution
    Securities acquired during the preceding 3 years for consideration other than cash.
    Specified securities acquired during the preceding 1 year at a price below Issue price,
    However, if promoters pay the difference, or acquired pursuant to merger etc., then such securities are eligible.
    Securities allotted to promoters acquired during the preceding 1 year at a price below Issue price against funds brought in by them in case of conversion of partnership firm into company.
    Securities pledged with any creditor.
    CA DHRUV AGRAWAL
  • 25. Pricing and Lock-in of Promoters’ Contribution
    CA DHRUV AGRAWAL
  • 26. Allocation of Issue – Book Building Route
    Issue Size
    Offer through offer document
    Promoters’ Contribution
    Min. 20% of Issue Size
    Reservation
    Net offer to public
    Min. 25% of Issue Size
    Retail individual investor
    QIB
    Non-institutional investor
    Min. 15% of NOP
    Max. 50% of NOP
    Min. 35% of NOP
    Anchor Investor
    Mutual Funds
    Min. 5% of NOP
    Max. 30% of QIB
    CA DHRUV AGRAWAL
  • 27. Allocation of Issue – Fixed Price Issue
    Issue Size
    Offer through offer document
    Promoters’ Contribution
    Min. 20% of Issue Size
    Reservation
    Net offer to public
    Min. 25% of Issue Size
    Other investors
    Retail Individual Investors
    Min. 50% of NOP
    Max. 50% of NOP
    CA DHRUV AGRAWAL
  • 28. Issue Period
    CA DHRUV AGRAWAL
  • 29. Key Terms of Issue
    CA DHRUV AGRAWAL
  • 30. Key Considerations in Public Issue
    Fund requirement vs. maximum dilution
    Offer for sale or Fresh Issue or Combination of both
    Fixed Price issue or Book Building Issue
    Stock Exchanges, where to list.
    Involvement of Anchor Investor
    % of allotment to different category of investor.
    CA DHRUV AGRAWAL
  • 31. Right Issue & Key Considerations
    Right Issue
    Meaning – Issue of shares by a company to its existing shareholders
    Free Pricing
    Issue of Letter of Offer
    Key Considerations
    Rights Issue vs. Further Public offering
    Extent of Capital Expansion and its impact on EPS
    Increase in Promoters’ shareholding and applicability of SEBI Takeover Code.
    Reservation of rights for convertible instruments.
    CA DHRUV AGRAWAL
  • 32. Preferential Issue – Key Considerations
    Allotment of warrants or shares
    Relevant date for allotment of warrants – GM to approve allotment or BM to convert warrants
    Eligibility of allotees
    Shareholding of allottee should be in demat form
    No Prior sale of shares by the allottee
    Relationship with promoters and with other allottees shall be checked
    Allottee should have PAN No.
    Lock-in of securities for 3 years in case of promoters and 1 year in case of non-promoter.
    CA DHRUV AGRAWAL
  • 33. QIP – Key Considerations
    Relaxed timeline allowed upto a period of 12 months
    Conversion Period of eligible convertible securities is 60 Months
    Pricing of issue is allowed at the time of opening of Issue.
    No lock-in on acquisition of shares through QIP.
    Minimum allotment of 10% to Mutual Funds.
    FDI norms are applicable on allotment to NRIs.
    CA DHRUV AGRAWAL
  • 34. Recent Amendments in ICDR
    28 Aug 2009
    Promulgation of Regulations
    29 Sep 2009
    5 Copies of Offer document of Issue size upto Rs. 50 Crores to be filed with regional office and Offer document of Issue Size exceeding Rs. 50 Crores to be filed with Head office
    29 Sep 2009
    Explanation of ASBA facility such as Meaning of ASBA, Self-certified Syndicate Bank, Eligibility of Investors, Timelines, Process in brief.
    01 Jan 2010
    -Facility of ASBA extended from Book-Built Public and Right Issues to all Public and Right Issue
    11 Dec 2009
    • Amendment in Provisions wrt reservations
    • 35. Amendment in Provisions wrt Financial Statements
    • 36. Alternate Method of Book Building
    CA DHRUV AGRAWAL
    9810425103
  • 37. Recent Amendment in ICDR
    08 Jan 2010
    - Amendment in Provisions relating to differential pricing in Alternate Method of Book Building
    05 Mar 2010
    Mandatory disclosures of details of allottees in QIP and the corresponding Pre and Post QIP issuer shareholding of allottee in the Issuer company.
    06 Apr 2010
    Facility of ASBA extended to QIBs also which was not earlier available to them.
    13 Apr 2010
    • Definition of Employee extended to cover Employees of Holding & Subsidiary Companies
    • 38. Min. 30% allocation to RII in case of public issue of IDRs
    • 39. Introduction of Issue of specified securities by SMEs
    9810425103
    CA DHRUV AGRAWAL
  • 40. Recent Amendments in ICDR
    22 Apr 2010
    Reduction in Time between Issue closure and listing from average 22 days to 12 days
    26 Apr 2010
    Guidelines for market makers on Small and Medium Enterprise (SME) exchange/separate platform of existing exchange having nation wide terminal
    17 May 2010
    Issue of Model Equity Listing Agreement for SMEs
    18 May 2010
    Setting up of a Stock exchange/ a trading platform by a recognized stock exchange having nationwide trading terminals for SME
    CA DHRUV AGRAWAL
    9810425103
  • 41. Highlights of Amendments
    CA DHRUV AGRAWAL
  • 42. Audit of Financial Statements
    The financial statements stated in RHP can be certified by only those auditors who have subjected themselves to the peer review process of the Institute of Chartered Accountants of India (ICAI) and hold a valid certificate issued by the ‘Peer Review Board’ of the ICAI.
    Otherwise, Re-audit of Financial statements for one full financial year and the stub period.
    CA DHRUV AGRAWAL
  • 43. Definition of Employee
    Employee for the purpose of reservation shall cover
    a permanent and full-time employee, working in India or abroad, of:
    the issuer
    its Holding Company
    Its Subsidiary Company
    Its material associates
    a director of the issuer, whether whole time or part time.
    But does not include promoters and an immediate relative of the promoter
    CA DHRUV AGRAWAL
  • 44. Issue and Listing of shares by SMEs
    CA DHRUV AGRAWAL
  • 45. Issue and Listing of shares by SMEs
    No need to filing DRHP with SEBI before filing it with ROC or DSE
    SEBI will not give observations on offer document
    100% underwriting of issue is mandatory.
    Minimum 15% underwriting obligation of Merchant Banker
    Nominated Investors can also underwrite the issue
    Minimum Application Value = Rs. 1 Lac
    Minimum Number of Allottee = 50
    Compulsory Market Making for minimum 3 years
    Promoters’ holding is not eligible for being offered to market maker
    CA DHRUV AGRAWAL
  • 46. CA DHRUV AGRAWAL
    CONTACT
    GLOBAL ACADEMY OF PROFESSIONS
    D 60, 3RD FLR,LAXMI NAGAR,
    DELHI-92
    9810425103