ISSUE OF SECURITIES

Support: 022-33097600|support@gols.in
Today’s Topics
Lesson 17
Issue of Securities

Introductions
• Co-ordinated efforts
• Cooperation of no of agencies
• Mangers to the issue, underwriters, brokers,
registrar to the issue, solicitors / legal
advisors, printers, publicity and advertising
agents, financial institutions, auditors and
govt bodies
• Its pre issue activities
• Post issue activities

Issue of equity shares
• ICDR regulations

Applicability of the Regs

Eligibility norms for public issue

Contd….

Alternative eligibility norms for public issue

Types of Issue
• Primary Issue
• Secondary Issue
• Issue of Equity or any security convertible at a later
date into equity is a Primary Issue

• Get the flow chart from pg 390
• Voice over

Debarment
• If SEBI has debarred the issuer or promoters
or promoter group or directors or PACs
• From accessing capital market

Filing of Offer Document

Issue of securities in dematerialised form
• A company can not make public or rights issue
or an offer for sale of securities, unless the
company enters into an agreement with a
depository for dematerialisation of securities
already issued or proposed to be issued to the
public or existing shareholders; and the
company gives an option to subscribers/
shareholders/ investors to receive the security
certificates or hold securities in
dematerialized form with a depository

Partly paid up shares
• These Regulations also require that all the
existing partly paid-up shares must be made
fully paid or the subscription money be
forfeited if the investor fails to pay call money
within 12 months.
• A company can not make a public or rights
issue of securities unless firm arrangements of
finance through verifiable means towards 75%
of the stated means of finance, excluding the
amount to be raised through proposed
Public/Rights issue, have been made.

Fast Track Issues
• SEBI has Long list of requirements to comply
with for the Issuer companies.
• The companies which are having well
established and compliant given an option for
being satisfying certain specified requirements
• Alternatively you can download the ICDR
guidelines and refer the same.

Contd….
• Only for existing listed companies
• Should be listed on nationwide for last 3 preceding years
• Avg mkt capitalisation of public shareholding should be
atleast 3000 crores for a year
• Annualised turnover should be atleast 2% of the wieghted avg
no. of shares during the previous 6 months
• 95% investor grievances / complaints have been resolved /
redressed till the previous quarter
• Has complied with all listing agreement requirements in
preceding 3 years
• No auditors qualification
• No prosecution proceedings / show cause notices pending
against company / promoters / directors
• Promoter group holding in dematerialised form.

Pricing
• An issuer can determine the price or
determine the coupon rate and conversion
price of convertible debt
• instruments of specified securities in
consultation with the lead merchant banker or
through the book building process.

Differential pricing
• Retail individual – those who are entitled to
reservation – application of upto Rs.2 cr – can
be offered securities at a price lower than the
price to others, the price should not be < 10%
• Book built issue – anchor investor – can be at
different price
• Composite issue – price offered for public
issue coupled with rights can be at different
price

Price and price band
• Price / price band – draft prospectus
• Floor price / band – red herring prospectus
• Price to be determine at a point just before
filing the document with ROC

Face value of equity shares
• Denomination of shares
• Free to fix
• Can be 10 or 2 or 5 or 1 or 100

Promoters contribution
Minimum of 20% of the post issue capital of the
Company for unlisted companies; for listed
companies, either to extent of 20% in issue or to
ensure post issue holding of 20%
Following shares are ineligible for the
computation of Promoter’s contribution
–Issued in last one year at a price lower than
issue price, unless topped up
–Issued in last three years out of bonus issue or
revaluation reserve for consideration other than
cash

Promoters’ contribution to be brought in before public issue opens
• Full amount including premium at least one
day prior to the issue date,
• Kept under escrow
• With scheduled commercial bank
• Promoters contribution contributed prior to
issue, issuer to give cash flow statement and
its utilisation

Exemption from requirement of promoters contribution
• In case of public issue of securities by a
company which has been listed on a stock
exchange for at least 3 years and has a track
record of dividend payment for at least 3
immediately preceding years.
• In case of companies where no identifiable
promoter or promoter group exists.
• In case of rights issues.

Lock in requirements
• For Promoters:
• Lock-in for a period of 3 years from the date
of allotment or from the date of
commencement of commercial production,
whichever is later
• Balance pre-issue capital, other than held by
Indian and Foreign Venture Funds (registered
with SEBI) and shares held for at least one
year and being offered for sale in the issue
• Must be locked-in for a period of 1 year from
the date of allotment

Securities lent to stabilising agent under green shoe option
• If promoters lent their shares to Stabilizing
agent
• Those shares are exempted from lock-in
requirments
• From the date of such lending till ending of
lent period

Transferability of shares under lock in
• Inter se promoter transfer is allowed under
lock in period
• SAST regs to be complied with

Pledging of securities
• Promoters contribution can be pledged
• With banks / financial institutions
• As collateral security
• For sanction of loan

ISSUE OF SECURITIES

Recommended

Recommended

More Related Content

What's hot

What's hot (20)

Viewers also liked

Viewers also liked (20)

Similar to ISSUE OF SECURITIES

Similar to ISSUE OF SECURITIES (20)

Recently uploaded

Recently uploaded (12)

ISSUE OF SECURITIES