This document summarizes the key regulations around initial public offerings (IPOs) and further public offerings (FPOs) in India as per the SEBI (Issue of Capital and Disclosure Requirements) Regulations 2018. It outlines the eligibility criteria for issuers, promoters and directors. It also describes the important aspects of pricing, offer documents, advertising, underwriting, minimum subscription levels, allotment process and post-issue requirements. Key points include minimum net worth, profit and asset requirements for issuers, lock-in periods for promoter shares, minimum 90% subscription threshold and proportionate allotment to retail and non-anchor investors.

1. SEBI (ISSUE OF CAPITAL AND
DISCLOSURE REQUIREMENTS)
REGULATIONS, 2018
BY NIKHIL PALE

2. IMPORTANT POINTS
• ELIGIBLITY CRITERIA
• APPOINMENT
• PRICING
• OFFER DOCUMENTS
• PRE-ISSUE ADVERTISEMENT
• UNDERWRITING
• PROMOTER CONTRIBUTION
• ISSUE PERIOD(PROCEDURE)
• MINIMUM SUBSCRIPTION
• ALLOTMENT
• POST-ISSUE ADVERTISEMENT

3. ELIGIBILITY CRITERIA
• ENTITIES NOT ELIGIBLE TO MAKE IPO
• ELIGIBILITY REQUIREMENT FOR IPO
• GENERAL CONDITION FOR IPO
• ENTITIES NOT ELIGIBLE TO MAKE FPO
• ELIGIBILITY REQUIREMENT FOR FPO
• GENERAL CONDITION FOR FPO
• ADDITIONAL CONDITIONS FOR OFFER FOR SALE

4. ENTITIES NOT ELIGIBLE TO MAKE IPO
• If the issuer, any of its promoters, promoter group, selling shareholders are debarred from accessing the
capital market by SEBI
• If any of the promoters or director of the issuer is a promoter or director of any other company which is
debarred from accessing the capital market by SEBI
• If the issuer or any of its promoter or directors is willful defaulter.
• If any of the promoter or directors of the issuer is fugitive offender
• If there is any outstanding convertible securities are pending to convert in Equity shares
Except
1)ESOP
2) Conversion of securities is PRIOR to IPO
I

5. ELIGIBILITY REQUIREMENT FOR IPO
• The issuer has net tangible assets of at least Rs. 3 crores on restated and consolidated basis, in
Each of the preceding three full years of ( 12 months each) of which not more than 50% is held in
monetary assets
* Exception 50% limit shall not apply if entire issue is through an offer for sale
Further, if more than 50% is in monetary assets there should be a firm commitment to utilize such
excess in its business or projects.
• The issuer has an average operating profit of at least Rs. 15 crores, calculated on restated and
consolidated basis, during the three preceding years with operating profits in each of the three
preceding years
• The issuer has net worth of at least Rs. 1 crore in EACH of the preceding 3 full years, calculated on
restated and consolidated basis
• In case the issuer has changed its name within the last one years , at least 50 % has been earned
by its NEW NAME
• If aforementioned conditions not satisfied, initial public offer can be made only if the issue is made
through the book-building process and the issuer undertakes to allot at least 75% of the net offer to
qualified institutional buyers.

6. GENERAL CONDITION FOR IPO
• In-principle approval for listing on one or more Stock Exchanges.
• Agreement with a depository for dematerialization.
• Securities held by the promoters should in dematerialized form prior to filing of
the offer document.
• Existing partly paid-up equity shares have either been fully paid-up or have been
forfeited.
• It has made firm arrangements of finance through verifiable means towards 75%
of the stated amount excluding the amount to be raised through the proposed
public issue.
• The amount for general corporate purposes, as mentioned in draft offer document
and offer documents shall not exceed 25% of the amount being raised by the
issuer.

7. ENTITIES NOT ELIGIBLE TO MAKE FPO
• If the issuer, any of its promoters, promoter group, selling shareholders
are debarred from accessing the capital market by SEBI
• If any of the promoters or director of the issuer is a promoter or
director of any other company which is debarred from accessing the
capital market by SEBI
• If the issuer or any of its promoter or directors is willful defaulter.
• If any of the promoter or directors of the issuer is fugitive offender

8. ELIGIBILITY REQUIREMENT FOR FPO
• In case the issuer has changed its name within the last one years , at least 50 %
has been earned by its NEW NAME
• If aforementioned conditions not satisfied, initial public offer can be made
only if the issue is made through the book-building process and the issuer
undertakes to allot at least 75% of the net offer to qualified institutional
buyers and refund full subscription money if it fails to make the said minimum
allotment to qualified institutional buyers.

9. GENERAL CONDITION FOR FPO
• In-principle approval for listing on one or more Stock Exchanges.
• Agreement with a depository for dematerialization.
• Securities held by the promoters should in dematerialized form
prior to filing of the offer document.
• Existing partly paid-up equity shares have either been fully paid-up
or have been forfeited.
• It has made firm arrangements of finance through verifiable means
towards 75% of the stated amount excluding the amount to be
raised through the proposed public issue.
• The amount for general corporate purposes, as mentioned in draft
offer document and offer documents shall not exceed 25% of the
amount being raised by the issuer.

10. Example of Firm Arrangement
project requirement
1000cr
Step 1: Firm arrangement of 300cr [ 75% of 400cr ] should be made
Step2 : Issue securities and raise money
1000cr
Public issue
600cr
Loan 400cr

11. OFFER FOR SALE
Conditions
1) Shares must be fully paid up
2) Shares must be held for at least 1year exception Bonus
shares can be immediately sold as offer for sale , if the existing
share are held for 1 year

12. APPOINTMENT
1)LEAD MANAGER
2)INTERMEDIARIES
3)COMPLIANCE OFFICERS

13. i. PRICING
1) Disclosure of price/ price band issue
There are two types
i) Fixed price issue : The price is disclosed in prospectus
(offer documents)
ii) Book building issue
1)Price Band / floor price is disclosed in Red herring
prospectus
2) Price Band/ Floor Price can be disclosed in news paper
i.e i)Two days before opening of issue in case of IPO
ii)One day before opening of issue in case of FPO

14. PRICING
Differential Price: As per SEBI differential pricing is not allowed below are the
exceptions:
1)If the issue is fixed price issue: max 10% discount can be given to retail
individual investors or retail individual shareholder and employees.
2) If the issue is thought book building:
i)Regular book building the discount should not be given to anchor investor
ii) opted for book building offer not more 10 % discount can be given to
employees
3) Composite issue : In case of FPO, an additional condition in case of public
issue , the price of public issue may be different from price offered in rights
issue and justification for such price shall be given in the offer documents

15. OFFER DOCUMENTS
1) Filing of Draft offer documents and offer documents
Step 1: Companies(Lead Manager) fil draft offer Document ( 3 copies) to SEBI with Due
diligence certificate and fees , if issue is of convertible debt instruments , due diligence
certificate of debenture trustee
Step 2: Draft offer documents to Stock Exchange with details of promoter
Step 3: SEBI may specify changes or issue observations, within 30 days of filing DOD
Step 4: The lead merchant banker shall carry out such changes and comply with the
observation issued by SEBI, before registering with registrar of Companies or an
appropriate authority.

16. OFFER DOCUMENTS
2) Draft offer document and offer document to be available to the public for within 21
days after filing draft offer document to SEBI invite comments from public.
The issuer shall, within 2 days of filing the draft offer document with SEBI make public
announcement in one English national daily, one Hindi national daily, one regional
language newspaper where the registered office of the issuer is situated.
After 21 days the comments if any, are sent to SEBI
The issuer and the lead manager shall ensure that the offer documents are hosted on
the websites of regulators.
1)SE
2)SEBI
3)MB

17. PRE- ISSUE ADVERTISEMENT
1)When to be issued ?
After receiving observation or Changes from SEBI
Before opening of the issue
2) What to advertise?
Offer document
3) Where to Advertise?
English newspaper
Hindi national newspaper
Regional national newspaper

18. UNDERWRITING
There are two types of underwriting issue:
1) Fixed price Issue
2) Book building issue
1)Fixed price issue : the underwriters shall be appointed according
with the SEBI ( underwriters) Regulation, 1993

19. UNDERWRITING
2) Book Building Issue:
i) The issue shall be under written by lead managers and syndicate
members
Note: Issuer should enter in to the underwriting agreement with syndicate
members and lead managers shall indicate the no of shares to be
underwritten and predetermine price.
Final Responsibility is of Lead manager.
ii) However, at least 75% of net offer to public is proposed to be
compulsorily allotted to QIB’s and such portion cannot be underwritten
iii) Where the issue is underwritten, the underwriting obligation should at
least to the extent of minimum subscription as specified by SEBI

20. PROMOTERS CONTRIBUTION
1) Minimum Promoter Contribution
In case of
IPO
20% of Post issue Capital
In case of
FPO
20% of Proposed issue or 20% of Post issue Capital
In case of
Composite
Issue
20% of Proposed issue or 20% of Post issue Capital

21. NON- APPLICABILITY OF MINIMUM- PROMOTER
CONTRIBUTION
There are conditions to be complied:
CASE 1 Case 2 Case 3
If there are no
identifiable
Promoter
Shares are
Frequently traded
for last 3 years
Company has
dividend payment
records of last 3
years

22. SECURITIES INELIGIBLE FOR MINIMUM PROMOTER
CONTRIBUTION
Securities
acquired in
previous 3 years
For consideration other cash
and involved revaluation of
assets or capitalization of
intangible assets
Resulting from bonus issue
out of:
1)Revaluation Reserve
2)Unrealized Gain
3)Securities Ineligible for
Minimum promoter
contribution
Securities
acquired in
previous 1 year
At aprice lower than the
price issued in IPO
2) Securities pledged with
creditors
At a price lower than the
issue price [if the company
formed by conversion of
partnership/LLP

23. LOCK IN PERIOD
For Promoter
Minimum Contribution : 3 years
Excess Contribution: 1year
For other than promoter
Lock in period of 1 year

24. ISSUE PERIOD
1) Security Deposit: 1% of Issue Size to Stock Exchange
2) Opening of issue:
i) within 12 months from the date of receipt of observation from SEBI
ii) After 3 days from the registration of offer documents with ROC
3) Minimum : 3 days
Maximum: 10 days
Note: In case of revision of Price band, the period extends by 3 days subject
to maximum 10 days
4) Minimum Application: 10000- 15000
5) ASBA: Application will be received as per ASBA
6) IPO grading(optional) and Prohibition to give incentives

25. MINIMUM SUBSCRIPTION
1) The Minimum subscription to be received to be received in
an issue shall be not less than 90% of the offer through offer
documents.
2) In case of IPO, the minimum subscription to be received
shall be subject to allotment of minimum number of specified
securities to public at least 25% of an offer documents

26. OVERSUBSCRIPTION
In case of oversubscription, an allotment of not more than 1% of
the net offer to the public for the purpose of making allotment
in minimum lots

27. ALLOTMENT
1) THE issuer shall not make an allotment pursuant to a public
issue if the number of prospective allottees is less than one
thousand .
2) The allotment of specified securities to others than retail
individual investors and anchor investors shall be on
proportionate basis
3) The allotment of specified securities to each retail
individual investor shall not be less than the minimum bid lot

28. POST ISSUE ADVERTISEMENT
1)When to issue advertisement?
It should be within 10 days from completion of all the
formalities
2) What to advertise?
All the details relating to allotment [ basis of allotment, date of
dispatch of refund, no of successful allotments
3) Where to advertise?
English newspaper
Hindi newspaper
Regional newspaper

29. THANKYOU