(Updated till May 8, 2006 )

SECURITIES AND EXCHANGE BOARD OF INDIA

(DISCLOSURE AND INVESTOR PROTECTION) GUIDELINES, 2000

CONTENTS

Chapters

Chapter I : Preliminary
Chapter II : Eligibility Norms for Companies Issuing Securities
Chapter III : Pricing by Companies Issuing Securities
Chapter IV : Promoters ’ Contribution and Lock-In Requirements
Part I : Promoters ’ Contribution
Part II : Lock-In Requirements
Part III : Other Requirements in Respect of Lock-In
Chapter V : Pre -Issue Obligations
Chapter VI : Contents of Offer Document
Section I : Contents of the Prospectus
Section II : Contents of Abridged Prospectus
Section III : Contents of the Letter of Offer
Chapter VIA : Issue of Indian Depository Receipts (IDRs)
Chapter VII : Post-Issue Obligations
Chapter VIII : Other Issue Requirements
Chapter VIIIA : Green Shoe Option
Chapter IX : Guidelines on Advertisement
Chapter X : Guidelines for Issue of Debt Instruments
Chapter XI : Guidelines on Book Building
Chapter XIA : Guidelines on Initial Public Offers through the Stock Exchange On-Line
System (e-IPO).
Chapter XII : Guidelines for Issue of Capital by Designated Financial Institutions
Chapter XIIA : Shelf Prospectus
Chapter XIII : Guidelines for Preferential Issues
Chapter XIIIA : Guidelines for Qualified Institutions Placement
Chapter XIV : Guidelines for OTCEI Issues
Chapter XV : Guidelines for Bonus Issues
Chapter XVI : Operational Guidelines
Chapter XVII : Miscellaneous

Schedules

Schedule I : Memorandum of Understanding between the Lead Merchant Banker to

the Issue and the Issuer Company
Schedule II : Interse Allocation of Responsibilities
Schedule III : Format of Due Diligence Certificate to be given by Lead Merchant
Banker(s) alongwith Draft Offer Document
Schedule IIIA : Format of Due Diligence Certificate to be given by the Debenture Trustee
before Opening of the Issue
Schedule IV : Format for Due Diligence Certificate at the time of filing the Offer
Document with ROC
Schedule V : Format for Due Diligence Certificate at the time of Opening of the Issue
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Schedule VI : Format for Due Diligence Certificate after the Issue has opened but
before it closes for Subscription.
Schedule VII : Mandatory Collection Centres
Schedule VIIA : Order of Presentation of Disclosures in Prospectus
Schedule VIII : Promoters’ Contribution and Lock-In
Schedule IX : Promoters’ Contribution and Lock-In in respect of Promoters
Schedule X : Statement of Profits and Losses
Schedule XI : Statement of Assets and Liabilities
Schedule XII : Tax Shelter Statement
Schedule XIII : Capitalisation S tatement
Schedule XIV : Form of Auditor’s Certificate regarding Profit Forecast
Schedule XV : Basis for Issue Price
Schedule XVI : Post Issue Monitoring Reports
Schedule XVII : Underwriting Devolvement Statement
Schedule XVIII : Illustration Explainin g the Procedure Of Allotment
Schedule XVIIIA : Illustration Explaining the Minimum Application Size
Schedule XIX : Format of the Report to be submitted by the Monitoring Agency
Schedule XIX-A : Illustration Regarding Allotment to QIBs
Schedule XX : Clarificatory Examples
Schedule XXA : Formats of Issue Advertisements
Schedule XXI : Book Building - Model Time Frame
Schedule XXIA : Disclosures in Placement Document
Schedule XXII : Jurisdiction of Regional Offices/ Head Office of the Board
Schedule XXIII : Format for Submitting Draft and Final Offer Document on a Computer
Floppy
Schedule XXIIIA : Information to be submitted with Soft Copy of Draft and Final Offer
Documents
Schedule XXIV : Application Form for Issue of No Objection Certificate for Release of 1%
Deposit placed with the Designated Stock Exchange (to be submitted to
the Board on Issuer Company's Letter Head)
Schedule XXV : Proforma for Sending Responses to SEBI
Schedule XXVI : Additional Information for Renewal of Registration as Merchant Banker
Schedule XXVII : Format for Half Yearly Report to be submitted b y Merchant Bankers
Schedule XXVIII : Contents of the Advertisement to be issued in terms of Clause 8.3.5.4
Schedule XXIX : Final Report for Green Shoe Option

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CHAPTER I

PRELIM INARY

1
(1.1) Short title, commencement, etc.

(a) These Guidelines have been issued by the Securities and Exchange Board of
India under Section 11 of the Securities and Exchange Board of India Act, 1992.

(b) These Guidelines may be called the Securities and Exchange Board of India
(Disclosure and Investor Protection) Guidelines, 2000.

(c) These Guidelines shall come into force from the date specified by the Board.

1.2 Definitions

1.2.1 In these Guidelines, unless the context otherwise requires;

2
(ia) “Abridged Letter of Offer” in relation to a rights issue means the abridged
form of a letter of offer which satisfies the minimum requirements laid down in
Section IV of Chapter VI of the Guidelines);

3
(ib)) “Abridged Prospectus” means the memorandum as prescribed in Form 2A
under Sub-section (3) of Section 56 of the Companies Act, 1956;

ii) “Act” means the Securities and Exchange Board of India Act, 1992 (15 of 1992);

iii) “Advertisement” includes notices, brochures, pamphlets , circulars, show cards,

catalogues, hoardings, placards , posters, insertions in newspaper, pictures, films,
cover pages of offer documents or any other print medium, radio, television
programmes through any electronic medium;

iv) “Board” means the Securities and Exchange Board of India established under
provisions of Section 3 of the Act;

v) “Book Building” means a process undertaken by which a demand for the

securities proposed to be issued by a body corporate is elicited and built up and
the price for 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;

1
Renumbered clause 1 as “clause 1.1”, vide SEBI Circular No. SEBI/CFD/DIL/DIP/14/2005/ 25/1 dated January 25, 2005.

2
Inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/19/2006/31/3 dated March 31, 2006.

3
Renumbered sub-clause (i) as “clause (ib)”, vide SEBI Circular No. SEBI/CFD/DIL/DIP/19/2006/31/3 dated March 31,
2006.
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vi) “Collection Centre” means a place where the application for subscribing to the
public or rights issue is collected by the Banker to an Issue on behalf of the
issuer company;

vii) “Company” means the Company defined in Section 3 of the Companies Act,
1956;

viii) “Composite Issues” means an issue of securities by a listed company on a

public cum rights basis offered through a single offer document wherein the
allotment for both public and rights components of the issue is proposed to be
made simultaneously;

ix) “Credit Rating Agency” means a body corporate registered under Securities
and Exchange Board of India (Credit Rating Agencies) Regulations, 1999;

x) “Designated Financial Institution” means the public financial institution

included in or notified under Section 4A of the Companies Act, Industrial
Development Corporation established by State Governments and financial
institutions approved under Section 36(1)(viii) of Income Tax Act, 1961;

xi) “Debt-Instrument” means an instrument which creates or acknowledges

indebtedness, and includes debenture, stock, bonds and such other securities
of a body corporate, whether constituting a charge on the assets of the body
corporate or not;

xii) “Depository” means a body corporate registered under Securities and

Exchange Board of India (Depositories and Participants) Regulations, 1996;

4
(xii-a) “Designated Stock Exchange” means a stock exchange in which securities
of the company are listed or proposed to be listed and which is chosen by the
company for purposes of a particular issue under these guidelines.

Provided that where any of such stock exchanges have nationwide trading
terminals, the company shall choose one of them as the designated stock
exchange.

Provided further that the company may choose a different exchange as a

designated stock exchange for any subsequent issue, subject to the above
clause.)

5
(xiib) “Employee” means
a) a permanent employee of the company working in India or out of India; or
b) a director of the company, whether a whole time director, part time director or
otherwise;
c) an employee as defined in sub-clauses (a) or (b) of a subsidiary, in India or out
of India, or of a holding company of the company.)
4
Inserted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003.

5
Inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/13/2004/28/5 dated May 28, 2004.
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xiii) “Firm Allotment” means allotment on a firm basis in public issues by an

issuing company made to Indian and Multilateral Development Financial
Institutions, Indian Mutual Funds, Foreign Institutional Investors including non-
resident Indians and overseas corporate bodies and permanent/ regular
employees of the issuer company.

6
(xiii-a) “Green Shoe Option” means an option of allocating shares in excess of the
shares included in the public issue and operating a post-listing price stabilizing
mechanism in accordance with the provisions of Chapter VIII-A of these
Guidelines, which is granted to a company to be exercised through a
Stabilising Agent.)

xiv) “Guidelines” means Securities and Exchange Board of India (Disclosure and
Investor Protection) Guidelines, 1999 and includes instructions issued by the
Board.

xv) “Infrastructure Company” means, a company wholly engaged in the

business of developing, maintaining and operating infrastructure facility.

xvi) “Infrastructure Facility” means the “infrastructure facility” within the meaning
of Section 10(23G)(c) of Income Tax Act, 1961.

xvii) “Issuer Company” means a company which has filed offer documents with
the Board for making issue of securities in terms of these guidelines.

xviii) “Listed Company” means a company which has any of its securities offered
through an offer document listed on a recognised stock exchange and also
includes Public Sector Undertakings whose securities are listed on a recognised
stock exchange.

xix) “Merchant Banker” means an entity registered under Securities and Exchange
Board of India (Merchant Bankers) Regulations, 1992;

7
(xix a) “Mutual fund” means a mutual fund registered with the Board under the SEBI
(Mutual Funds) Regulations, 1996.)

8 9
(xix b)) (“Networth” means aggregate of value of the paid up equity capital and free
reserves (excluding reserves created out of revaluation) reduced by the

6
Inserted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003.

7
Inserted vide SEBI/CFD/DIL/DIP/16/2005/19/9 dated September 19, 2005.

8
Renumbered sub-clause (xix a) as “sub-clause (xix b)”, vide SEBI Circular No. SEBI/CFD/DIL/DIP/16/2005/19/9 dated
September 19, 2005.

9
Substituted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 for the following:
“"networth" means aggregate of value of the paid up equity capital and free reserves (excluding reserves created out of
revaluation) reduced by the aggregate value of accumulated losses and deferred expenditure not written off (including
miscellaneous expenses not written off)”.

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aggregate value of accumulated losses and deferred expenditure not written

off (including miscellaneous expenses not written off) as per the audited
balance sheet.)

xx) “Offer Document” means Prospectus in case of a public issue or offer for sale
and Letter of Offer in case of a rights issue.

xxi) “Offer for Sale” means offer of securities by existing shareholder(s) of a

company to the public for subscription, through an offer document.

xxii) “Preferential Allotment” means an issue of capital made by a body corporate in

pursuance of a resolution passed under Sub -section (1A) of Section 81 of the
Companies Act, 1956.

xxiii) “Public Issue” means an invitation by a company to public to subscribe to the

securities offered through a prospectus;

xxiv) “Public Financial Institutions” means institutions included in or notified for the
purposes of Section 4A of the Companies Act, 1956.

10
(xxiv a) “Retail Individual Investor” means an investor who applies or bids for
securities of or for a value of not more than 11(Rs.1,00,000/-).)

xxv) “Rights Issue” means an issue of capital under Sub-section (1) of Section 81 of
the Companies Act, 1956, to be offered to the existing shareholders of the
company through a Letter of Offer.

xxvi) “Schedule ” means schedule annexed to these Guidelines.

12
(xxvi-a) “Shelf Prospectus” means a shelf prospectus within the meaning of clause
(b) of the Explanation to Section 60A of the Companies Act, 1956.)

xxvii) “Stock Exchange” means a stock exchange which is for the time being
recognised under Section 4 of the Securities Contracts (Regulation) Act, 1956.

xxviii) “Underwriting” means an agreement with or without conditions to subscribe to

the securities of a body corporate when the existing shareholders of such body
corporate or the public do not subscribe to the securities offered to them.

xxix) “Unlisted Company” means a company which is not a listed company.

Initially inserted vide SEBI Circular No. DIP (Compendium) Circular No. 3 dated August 04, 2000.

10
Inserted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003.

11
Substituted vide SEBI Circular No. SEBI/CFD/DIL/DIP/15/2005/29/3 dated March 29, 2005 for the letters and figures
“Rs. 50,000/-“.

12
Inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/12/2004/8/4 dated April 8, 2004.
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13
(1.3) All other words and expressions used but not defined in these Guidelines, but
defined in the Act or in the Companies Act, 1956 or in Securities Contracts
(Regulation) Act, 1956 and / or the Rules and the Regulations made thereunder,
shall have the meanings respectively assigned to them in such Acts or the Rules
or the Regulations made thereunder or any statutory modification or re-
enactment thereto, as the case may be.

1.4 Applicability of the Guidelines

i) These Guidelines shall be applicable to all public issues by listed and unlisted
companies, all offers for sale and rights issues by listed companies whose equity
share capital is listed, except in case of rights issues where the aggregate value
of securities offered does not exceed Rs.50 lacs.

14
(Provided that in case of the rights issue where the aggregate value of the
securities offered is less than Rs.50 Lakhs, the company shall prepare the
letter of offer in accordance with the disclosure requirements specified in these
guidelines and file the same with the Board for its information and for being put
on the SEBI website.)

ii) Unless otherwise stated, all provisions in these guidelines applicable to public
issues by unlisted companies shall also apply to offers for sale to the public by
unlisted companies.

13
Renumbered “clause 1.3.1” as “clause 1.3” vide SEBI Circular No. SEBI/CFD/DIL/DIP/14/2005/25/1 dated January 25,
2005.

14
Inserted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003.
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CHAPTER II

ELIGIBILITY NORMS FOR COMPANIES ISSUING SECURITIES

2.0 Conditions for issue of securities

15
(The companies issuing securities offered through an offer document shall
satisfy the following at the time of filing the draft offer document with SEBI and
also at the time of filing the final offer document with the Registrar of Companies/
Designated Stock Exchange:)

2.1 Filing of offer document

2.1.1 No company shall make any issue of a public issue of securities, unless a draft
prospectus has been filed with the Board, through an eligible Merchant Banker,
atleast 21 days prior to the filing of Prospectus with the Registrar of Companies
(ROCs).

Provided that if, within 21 days from the date of submission of draft
Prospectus, the Board specifies changes, if any, in the draft Prospectus
(without being under any obligation to do so), the issuer or the Lead Merchant
banker shall carry out such changes in the draft prospectus before filing the
prospectus with ROCs.

16
2.1.2 (No listed company shall make any issue of security through a rights issue
where the aggregate value of securities, including premium, if any, exceeds
Rs.50 lacs, unless the letter of offer is filed with the Board, through an eligible
Merchant Banker, at least 21 days prior to the filing of the Letter of Offer with
Regional Stock Exchange (RSE).

Provided that if, within 21 days from the date of filing of draft letter of offer, the
Board specifies changes, if any, in the draft letter of offer, (without being under
any obligation to do so), the issuer or the Lead Merchant banker shall carry
out such changes before filing the draft letter of offer with RSE.)

2.1.3 Companies barred not to issue security

No company shall make an issue of securities if the company has been

prohibited from accessing the capital market under any order or direction
passed by the Board.

15
Substituted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 for the following:
“The companies issuing securities offered through an offer document, shall, satisfy the following:”
16
Substituted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 for the following:
“No listed company shall make any issue of security through a rights issue where the aggregate value of securities, including
premium, if any, exceeds Rs.50 lacs, unless the letter of offer is filed with the Board, through an eligible Merchant Banker, at
least 21 days prior to the filing of the Letter of Offer with Regional Stock Exchange (RSE).

Provided that if, within 21 days from the date of filing of draft letter of offer, the Board specifies changes, if any, in the
draft letter of offer, (without being under any obligation to do so), the issuer or the Lead Merchant banker shall carry out
such changes before filing the draft letter of offer with RSE.”
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2.1.4 Application for listing

No company shall make any public issue of securities unless it has made an
application for listing of those securities in the stock exchange (s).

2.1.5 Issue of securities in dematerialised form

2.1.5.1 No company shall make public or rights issue or an offer for sale of securities,
unless :

(a) 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

(b) the company gives an option to subscribers/ shareholders/ investors to receive

the security certificates or hold securities in dematerialised form with a
depository.

Explanation:

A “depository” shall mean a depository registered with the Board under the
Securities and Exchange Board of India (Depositories and Participants)
Regulations, 1996.

17
2.2 (Initial Public Offerings by Unlisted Companies)

18
2.2.1 (An unlisted company may make an initial public offering (IPO) of equity
shares or any other security which may be converted into or exchanged with
equity shares at a later date, only if it meets all the following conditions:

17
Substituted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 for the following:
“Public Issue by Unlisted Companies”.
18
Substituted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 for the following:
“2.2.1 An unlisted company shall make a public issue of any equity shares or any security convertible into equity shares
at a later date subject to the following:-
i.) It has a pre-issue networth of not less than Rs.1 crore in three (3) out of preceding five (5) years, with a minimum
networth to be met during immediately preceding two (2) years; and

ii.) It has a track record of distributable profits in terms of section 205 of the Companies Act, 1956, for at least three
(3) out of immediately preceding five (5) years.

Provided that the issue size (i.e. offer through offer document + firm allotment + promoters’ contribution through
the offer document) does not exceed five (5) times its pre-issue networth as per the last available audited
accounts, either at the time of filing draft offer document with the Board or at the time of opening of the issue”.

Prior to the above, substituted vide SEBI Circular No. DIP (Compendium) Circular No. 3 dated August 04, 2000 for the
following:
"2.2.1 No unlisted company shall make a public issue of any equity share or any security convertible at a later date into
equity share unless the company has;-
i.) a track record of distributable profits in terms of section 205 of Companies Act, for at least three (3) out of
immediately preceding five (5) years; and

ii.) a pre-issue networth of not less than Rupees One crore in three (3) out of preceding five (5) years, with the
minimum networth to be met during immediately preceding two (2) years.”
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(a) The company has net tangible assets of at least Rs. 3 crores in each of the
preceding 3 full years (of 12 months each), of which not more than 50% is held
in monetary assets:

Provided that if more than 50% of the net tangible assets are held in
monetary assets, the company has made firm commitments to deploy such
excess monetary assets in its business/project;

(b) The company has a track record of distributable profits in terms of Section 205
of the Companies Act, 1956, for at least three (3) out of immediately preceding
five (5) years;

Provided further that extraordinary items shall not be considered for

calculating distributable profits in terms of Section 205 of Companies Act,
1956;

(c) The company has a net worth of at least Rs. 1 crore in each of the preceding 3
full years (of 12 months each);

(d) In case the company has changed its name within the last one year, atleast
50% of the revenue for the preceding 1 full year is earned by the company
from the activity suggested by the new name; and

(e) The aggregate of the proposed issue and all previous issues made in the
same financial year in terms of size (i.e., offer through offer document + firm
allotment + promoters’ contribution through the offer document), does not
exceed five (5) times its pre-issue networth as per the audited balance sheet of
the last financial year.)

19
2.2.2 (An unlisted company not complying with any of the conditions specified in
Clause 2.2.1 may make an initial public offering (IPO) of equity shares or any

19
Substituted vide SEBI/CFD/DIL/DIP/Circular No . 11 dated August 14, 2003 for the following:
“2.2.2 An unlisted company can make a public issue of equity shares or any security convertible into equity shares at a
later date, only through the book-building process if ,
i.) it does not comply with the conditions specified in clause 2.2.1 above, or,
ii.) its proposed issue size exceeds five times its pre-issue networth as per the last available audited accounts either
at the time of filing draft offer document with the Board or at the time of opening of the issue

Provided that sixty percent (60%) of the issue size shall be allotted to the Qualified Institutional Buyers (QIBs), failing
which the full subscription monies shall be refunded.

Explanation 1:
i.) Profits emanating only from the information technology business or activities of the company, shall be considered
for the purposes of computation of the track record of distributable profits in following cases:
a. for companies in "Information Technology" sector or proposing to raise moneys for projects in "information
technology" sector,
b. for companies whose name suggests that they are engaged in information technology activities / business, etc.
viz. the company’s name containing the words ‘software, hardware, info, infotech, .com, informatics,
technology, computer, information, etc.;

ii.) In case of partnership firms which have since been converted into companies, the track record of distributable
profits of the firm shall be considered only if the financial statements of the partnership business for the said years
conform to and are revised in the format prescribed for companies under the Companies Act, 1956 and also
comply with the following:
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a. adequate disclosures are made in the financial statements as required to be made by the companies as per
Schedule VI of the C ompanies Act, 1956;
b. the financial statements shall be duly certified by a Chartered Accountant stating that:
I. the accounts as revised or otherwise and that the disclosures made are in accordance with the provisions of
Schedule VI of the Companies Act, 1956; and
II. the accounting standards of the Institute of Chartered Accountants of India(ICAI) have been followed and that
the financial statements present a true and fair picture of the firm’s accounts.

iii) the lead merchant banker shall also verify and confirm that the financial statements furnished on behalf of the
partnership firm are in accordance with the Accounting Standards prescribed by the ICAI.

iv) In case of an unlisted company formed out of a division of an existing company, the track record of distribut able
profits of the division spun off shall be considered only if the requirements regarding financial statements as
specified for partnership firms in clause (ii) above are complied with.

Explanation 2: For the purposes of clause 2.2 above, the term -

i.) "Three years out of immediately preceding five years", shall mean that at least three (3) audited accounts for a
period of not less than thirty six (36) months are available for computation of the minimum track record of three (3)
years of distributable profits.

ii.) "Qualified Institutional Buyer" shall mean -

a. public financial institution as defined in section 4A of the Companies Act, 1956;
b. scheduled commercial banks;
c. mutual funds;
d. foreign institutional investor registered with SEBI;
e. multilateral and bilateral development financial institutions;
f. Venture capital funds registered with SEBI.)
19
g. (Foreign Venture capital investors registered with SEBI.)
19
h. (State Industrial Development Corporations)

iii.) "Information Technology" shall comprise the following activities:

a. Production of computer software i.e. any representation of instruction, data, sound or image including source code
and object code, recorded in a machine readable form, and capable of being manipulated or providing interactivity
to a us er, by means of an automatic data processing machine.
b. Information technology services i.e. any service which results from the use of any information technology software
over a system of information technology products for realizing value addition and will consist of (I) IT software
including data processing services (II) Consumer systems, communication and network services and (III) other IT
related services.
c. manufacturing of information technology hardware
d. Manufacturing of information technology products i.e. computer systems, communications and network products
and peripherals and subsystems.
e. Manufacturing of information technology components i.e. active and passive electronic components, plastic, metal,
non-metal, parts and sub assemblies of IT products.
f. computer education and training
g. computer maintenance
h. computer consultancy
i. e-commerce / internet related activities.”

Prior to the above, sub-clauses (g) and (h) of sub-clause (ii) of Explanation 2 were inserted vide SEBI Circular No.
RMB (Compendium) Series Circular No. 1 (2001- 2002) dated July 17, 2001 for the following:
“g) Foreign Venture Capital investors registered with SEBI
h) State Industrial Development corporations”

Prior to the above, clause 2.2.2 was substituted vide SEBI Circular No. DIP (Compendium) Circular No. 3 dated August
04, 2000 for the following:
“2.2.2 An unlisted company which does not satisfy the requirement specified in Clause 2.2.1 above, can make a public issue
of equity share capital or any security convertible at later date into equity share capital, provided a public financial
institution or a scheduled commercial bank:-
a) has appraised the project to be financed through the proposed offer to the public; and ;

b) not less than 10% of the project cost is financed by the said appraising bank or institution by way of loan, equity,
participation in the issue of security in the proposed issue or combination of any of them.

c) the appraising bank or institution shall bring in the minimum specified contribution at least one day before the opening
of the public issue.

Explanation:
For the purpose of the term 'track record':
(A) At least three (3) audited accounts shall be available comprising not less than thirty six (36) months for determining the
minimum track record of three (3) years,
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other security which may be converted into or exchanged with equity shares at
a later date, only if it meets both the conditions (a) and (b) given below:

(a) (i) The issue is made through the book-building process, with at least 20(50% of
net offer to public) being allotted to the Qualified Institutional Buyers (QIBs),
failing which the full subscription monies shall be refunded.
OR
(a) (ii) The “project” has at least 15% participation by Financial Institutions/
Scheduled Commercial Banks, of which at least 10% comes from the
appraiser(s). In addition to this, at least 10% of the issue size shall be allotted
to QIBs, failing which the full subscription monies shall be refunded
AND
(b) (i) The min imum post-issue face value capital of the company shall be Rs. 10
crores.
OR
(b) (ii) There shall be a compulsory market-making for at least 2 years from the date
of listing of the shares , subject to the following:

21
(a) Market makers undertake to offer buy and sell quotes for a minimum depth
of 300 shares;

22
(b) Market makers undertake to ensure that the bid-ask spread (difference
between quotations for sale and purchase) for their quotes shall not at any
time exceed 10%:

(B) In case of companies in the information technology sector, the track record of distributable profits shall be considered
for the purpose of eligibility requirements only if the profits are emanating from the information technology business or
activities.

(C) In case of partnership firms which have since been converted into companies, the track record of distributable profits of
the firm shall be considered for the purpose of eligibility requirements if, the financial statements for the respective year s
pertaining to partnership business conform to and are revised in a format identical to that required for companies and
also comply with the following:
(i) adequate disclosures are made in the financial statements similar to that of companies as specified in Schedule VI of
the Companies Act, 1956, and the financial statements shall be duly certified by a Chartered Accountant stating
unequivocally that:
(a) the accounts as revised or otherwise and disclosures made are in line with the provision of Schedule VI of the
Companies Act, 1956; and

(b) the accounting standards of the Institute of Chartered Accountants of India (ICAI) have been followed and that the
financial statements present a true and fair picture of the firm's accounts,

(ii) the lead merchant banker shall also conform that the financial statements furnished on behalf of the Partnership firms
are in accordance with accounting standards prescribed by the ICAI.

(D) In case of an unlisted company formed out of a division of an exiting company, the track record of distributable
profits of the division spun off shall be considered for the purpose of eligibility criteria if the requirements regarding
financial statements as specified for partnership firms in clause (C) above are complied with."

20
Substituted vide SEBI Circular No. SEBI/CFD/DIL/DIP/16/2005/19/9 dated September 19, 2005 for the letters and
figures “50% of the issue size”.

21
Numbered the bulleted sub-clause, vide SEBI Circular No. SEBI/CFD/DIL/DIP/14/2005/25/1 dated January 25, 2005.

22
Numbered the bulleted sub-clause, vide SEBI Circular No. SEBI/CFD/DIL/DIP/14/2005/25/1 dated January 25, 2005.
Page 12 of 332
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23
(c) The inventory of the market makers on each of such stock exchanges, as
on the date of allotment of securities, shall be at least 5% of the proposed
issue of the company.)

24
(2.2.2A An unlisted public company shall not make an allotment pursuant to a public
issue or offer for sale of equity shares or any security convertible into equity
shares unless, in addition to satisfying the conditions mentioned in Clause
2.2.1 or 2.2.2 as the case may be, the prospective allottees are not less than
one thousand (1000) in number.)

25
(2.2.2B For the purposes of clauses 2.2.1 and 2.2.2 above:

(i) ”Net Tangible Assets” shall mean the sum of all net assets of the company,
excluding ‘intangible assets’, as defined in Accounting Standard 26 (AS 26)
issued by the Institute of Chartered Accountants of India .

(ii) “Project” means the object for which the monies proposed to be raised to cover
the objects of the issue.

(iii) In case of partnership firms which have since been converted into companies,
the track record of distributable profits of the firm shall be considered only if the
financial statements of the partnership business for the said years conform to
and are revised in the format prescribed for companies under the Companies
Act, 1956 and also comply with the following:

a. adequate disclosures are made in the financial statements as required to be

made by the companies as per Schedule VI of the Companies Act, 1956;

b. the financial statements shall be duly certified by a Chartered Accountant

stating that:

I. the accounts as revised or otherwise and the disclosures made are in

accordance with the provisions of Schedule VI of the Companies Act,
1956; and

II. the accounting standards of the Institute of Chartered Accountants of

India (ICAI) have been followed and that the financial statements present
a true and fair pictu re of the firm’s accounts.

(iv) In case of an unlisted company formed out of a division of an existing

company, the track record of distributable profits of the division spun off shall
be considered only if the requirements regarding financial statements as
specified for partnership firms in sub-clause (iv) above are complied with.

23
Numbered the bulleted sub-clause, vide SEBI Circular No. SEBI/CFD/DIL/DIP/14/2005/25/1 dated January 25, 2005.

24
Inserted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003.

25
Inserted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003.
Page 13 of 332
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(v) “Qualified Institutional Buyer” shall mean:

a. public financial institution as defined in section 4A of the Companies Act, 1956;

b. scheduled commercial banks;
c. mutual funds;
d. foreign institutional investor registered with SEBI;
e. multilateral and bilateral development financial institutions;
f. venture capital funds registered with SEBI;
g. foreign venture capital investors registered with SEBI;
h. state industrial development corporations;
i. insurance companies registered with the Insurance Regulatory and
Development Authority (IRDA);
j. provident funds with minimum corpus of Rs. 25 crores ;
k. pension funds with minimum corpus of Rs. 25 crores).

2.2.3 Offer for sale

26
2.2.3.1 (An offer for sale shall not be made of equity shares of a company or any
other security which may be converted into or exchanged with equity shares of
the company at a later date, unless the conditions laid down in clause 2.2.1 or
2.2.2, as the case may be and in clause 2.2.2A, are satisfied.)

2.2.4 Offer for sale can also be made if provisions of clause 2.2.2 are complied at the
time of submission of offer document with Board.

2.3 Public Issue by Listed Companies

27
2.3.1 (A listed company shall be eligible to make a public issue of equity shares or
any other security which may be converted into or exchanged with equity
shares at a later date:

26
Substituted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 for the following:
“A company, whose equity shares or any security convertible at later date into equity shares are offered through an
offer for sale, shall comply with the provisions of Clause 2.2.”.

Prior to the above, substituted vide SEBI Circular No. DIP (Compendium) Circular No. 3 dated August 04, 2000 for the
following:
"A company, whose equity share or any security convertible at later date into equity shares are offered through an offer
for sale, has to comply with the provisions of Clause 2.2.1 or Clause 2.2.2".

27
Substituted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 for the following:
“A listed company shall be eligible to make a public issue of equity shares or any security convertible at later date into
equity share.

Provided that the issue size (i.e. offer through offer document + firm allotment + promoters’ contribution through the
offer document) does not exceed five (5) times its pre-issue networth as per the last available audited accounts either at
the time of filing draft offer document with the Board or at the time of opening of the issue.”

Prior to the above, substituted vide SEBI Circular No. DIP (Compendium) Circular No. 3 dated August 04, 2000 for the
following:
"2.3.1 A listed company shall be eligible to make a public issue of equity shares or any security convertible at later date
into equity share.
Provided that, if as a result of the proposed issue, networth of the company becomes more than five times the
networth prior to the issue, the company shall satisfy either the provisions of Clause 2.2.1 or Clause 2.2.2, before it
can make the proposed public issue.

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Provided that the aggregate of the proposed issue and all previous issues
made in the same financial year in terms of size (i.e., offer through offer
document + firm allotment + promoters’ contribution through the offer
document), issue size does not exceed 5 times its pre -issue networth as per
the audited balance sheet of the last financial year.

Provided 28(further) that in case there is a change in the name of the issuer
company within the last 1 year (reckoned from the date of filing of the offer
document), the revenue accounted for by the activity suggested by the new
name is not less than 50% of its total revenue in the preceding 1 full-year
period.)

29
2.3.2 (A liste d company which does not fulfill the conditions given in the provisos to
Clause 2.3.1 above shall be eligible to make a public issue, subject to
complying with the conditions specified in clause 2.2.2 .)

30
2.3.3 (Deleted)

2.4 Exemption from Eligibility Norms

2.4.1 The provisions of clauses 31(2.2 and 2.3) shall not be applicable in case of:

i) a banking company including a Local Area Bank (hereinafter referred to as

Private Sector Banks) set up under sub-section (c) of Section 5 of the Banking

28
Inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/14/2005/25/1 dated January 25, 2005.

29
Substituted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 for the following:
“A listed company which does not fulfill the condition given in the proviso to clause 2.3.1 above, shall be eligible to
make a public issue only through the book building process.

Provided that sixty percent (60%) of the issue size shall be allotted to the Qualified Institutional Buyers (QIBs), failing
which the full subscription monies shall be refunded.”

Prior to the above, substituted vide SEBI Circular No. DIP (Compendium) Circular No. 3 dated August 04, 2000 for the
following:
“2.3.2 Public issue by listed companies which has changed its name to indicate as if it was engaged in the business /
activities in information technology sector during a period of three years prior to filing of offer document with the
Board, shall be eligible to make a public issue of equity share or securities convertible at a later date into equity share,
if;
(a) (i) it has a track record of distributable profits in terms of Section 205 of Companies Act, for at least three (3) out of
immediately preceding five (5) years from the information technology business / activities, and

(ii) it has a pre-issue networth of not less than Rs.One Crore in three (3) out of preceding five (5) years, with the
minimum networth to be met during immediately preceding two (2) years.

(b) if the company does not satisfy the requirements specified in clause (a) above, it can make a public issue provided that
it satisfies the requirements laid down in sub -clauses (a), (b) and (c ) of clause 2.2.2."

30
Omitted the following vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003:
“A listed company which has changed its name so as to indicate that it is a company in the information technology
sector as defined in Clause ‘iii’ of Explanation 2 of Clause 2.2.1, during a period of three years prior to filing of offer
document with the Board, shall comply with the requirements of Clause 2.2 for unlisted companies, before it can make
a public issue of equity shares or securities convertible at a later date into equity shares.”

31
Substituted vide SEBI Circular No. DIP (Compendium) Circular No. 3 dated A ugust 04, 2000 for "2.2.1, 2.2.2 and 2.3.1".
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Regulation Act, 1949 and which has received license from the Reserve Bank
of India; or

ii) a corresponding new bank set up under the Banking Companies (Acquisition
and Transfer of Undertaking) Act, 1970 Banking Companies (Acquisition and
Transfer of Undertaking) Act, 1980, State Bank of India Act 1955 and State
Bank of India (Subsidiary Banks) Act, 1959 (hereinafter referred to as “public
sector banks”);

iii) an infrastructure company:

32
a) (whose project has been appraised by a Public Financial Institution (PFI) or
Infrastructure Development Finance Corporation (IDFC) or Infrastructure
Leasing and Financing Services Ltd. (IL&FS) or a bank which was earlier a
PFI; and)

b) not less than 5% of the project cost is financed by any of the institutions referred
to in sub-clause (a), jointly or severally, irrespective of whether they appraise
the project or not, by way of loan or subscription to equity or a combination of
both;

iv) rights issue by a listed company.

Explanation: 33(Deleted)

2.5 Credit Rating for Debt Instruments

34
(2.5.1A No issuer company shall make a public issue or rights issue of debt
instruments (whether convertible or not), unless the following conditions are
also satisfied, as on date of filing of draft offer document with SEBI and also
on the date of filing a final offer document with ROC/ Designated Stock
Exchange:

(i) credit rating of not less than investment grade is obtained from not less than
two credit rating agencies registered with SEBI and disclosed in the offer
document;

(ii) The company is not in the list of willful defaulters of RBI;

32
Substituted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 for the following:
“whose project has been appraised by a Public Financial Institution or Infrastructure Development Finance Corporation
(IDFC) or Infrastructure Leasing and Financing Services Ltd. (IL&FS) and”.
33
Omitted the following explanation vide SEBI Circular No. DIP (Compendium) Circular No. 3 dated August 04, 2000 for the
following:
"For the purposes of Clauses 2.2.1 and 2.3.1, “networth” shall mean aggregate of value of the paid up Equity capital
and Free Reserves (excluding reserves created out of revaluation) reduced by the aggregate value of accumulated
losses and deferred Expenditure not written off including miscellaneous expenses not written off)".

34
Substituted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 for the following:
“2.5.1 No public or rights issue of debt instrument (including convertible instruments) irrespective of their maturity or
conversion period shall be made unless credit rating from a credit rating agency is obtained and disclosed in the offer
document.”
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(iii) The company is not in default of payment of interest or repayment of principal

in respect of debentures issued to the public, if any, for a period of more than 6
months.

2.5.1B An issuer company shall not make an allotment of non-convertible debt

instrument pursuant to a public issue if the proposed allottees are less than
fifty (50) in number. In such a case the company shall forthwith refund the
entire subscription amount received. If there is a delay beyond 8 days after the
company becomes liable to pay the amount, the company shall pay interest
@15% p.a. to the investors .)

35
2.5.2 (Where credit ratings are obtained from more than two credit rating agencies,
all the credit rating/s, including the unaccepted credit ratings, shall be
disclosed.)

36
2.5.3 (Delete d.)

2.5.4 All the credit ratings obtained during the three (3) years preceding the pubic or
rights issue of debt instrument (including convertible instruments) for any listed
security of the issuer company shall be disclosed in the offer document.

2.6 Outstanding Warrants or Financial Instruments

2.6.1 No unlisted company shall make a public issue of equity share or any security
convertible at later date into equity share, if there are any outstanding financial
instruments or any other right which would entitle the existing promoters or
shareholders any option to receive equity share capital after the initial public
offering.

2.7 Partly Paid -up Shares

2.7.1 No company shall make a public or rights issue of equity share or any security
convertible at later date into equity share, unless all the existing partly paid-up
shares have been fully paid or forfeited in a manner specified in clause 8.6.2.

37
(2.8 Means of Finance

No company shall make a public or rights issue of securities unless firm

arrangements of finance through verifiable means towards 75% of the stated

35
Substituted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 for the following:
“Where credit rating is obtained from more than one credit rating agencies, all the credit rating/s, including the
unaccepted credit ratings, shall be disclosed.”

36
Omitted the following vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003:
“For a public and rights issue of debt-securities of issue size greater than or equal to Rs.100 crores, two ratings from
two different credit rating agencies shall be obtained.”

37
Inserted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003.
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means of finance, excluding the amount to be raised through proposed Public/

Rights issue, have been made.)

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CHAPTER III

PRICING BY COMPANIES ISSUING SECURITIES

3.0 The companies eligible to make public issue can freely price their equity shares
or any security convertible at later date into equity shares in the following cases:

3.1 Public/ Rights Issue by Listed Companies

3.1.1 A listed company whose equity shares are listed on a stock exchange, may
freely price its equity shares and any security convertible into equity at a later
date, offered through a public or rights issue.

3.2 Public Issue by Unlisted Companies

3.2.1 An unlisted company eligible to make a public issue and desirous of getting its
securities listed on a recognised stock exchange pursuant to a public issue, may
freely price its equity shares or any securities convertible at a later date into
equity shares.

38
(3.2A) Infrastructure company

39
(3.2A.1 ) An eligible infrastructure company shall be free to price its equity shares,
subject to the compliance with the disclosure norms as specified by SEBI from
time to time.

3.3 Initial public Issue by Banks

3.3.1 The banks (whether public sector or private sector) may freely price their issue of
equity shares or any securities convertible at a later date into equity share,
subject to approval by the Reserve Bank of India.

3.4 Differential Pricing

3.4.1 Any unlisted company or a listed company making a public issue of equity shares
or securities convertible at a later date into equity shares, may issue such
securities to applicants in the firm allotment category at a price different from the
price at which the net offer to the public is made , provided that the price at which
the security is being offered to the applicants in firm allotment category is higher
than the price at which securities are offered to public.

Explanation:

The net offer to the public means the offer made to the Indian public and does
not include firm allotments or reservations or promoters’ contributions.

38
Numbered vide SEBI Circular No. SEBI/CFD/DIL/DIP/14/2005/25/1 dated January 25, 2005.

39
Renumbered clause “3.2.3” as 3.2A.1, vide SEBI Circular No. SEBI/CFD/DIL/DIP/14/2005/25/1 dated January 25, 2005.
Page 19 of 332
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3.4.2 A listed company making a composite issue of capital may issue securities at
differential prices in its public and rights issue.

3.4.3 In the public issue which is a part of a composite issue, differential pricing as per
sub-clause 3.4.1 above isalso permissible.

3.4.4 Justification for the price difference shall be given in the offer document for sub-
clauses 3.4.1 and 3.4.2.

3.5 Price Band

3.5.1 Issuer company can mention a price band of 20% (cap in the price band should
not be more than 20% of the floor price) in the offer documents filed with the
Board and actual price can be determined at a later date before filing of the offer
document with ROCs.

3.5.2 If the Board of Directors has been authorised to determine the offer price within a
specified price band such price shall be determined by a Resolution to be passed
by the Board of Directors.

40
3.5.3 (The Lead Merchant Bankers shall ensure that in case of the listed companies,
a 48 hours notice of the meeting of the Board of Directors for passing resolution
for determination of price is given to the Designated Stock Exchange.)

41
(3.5.4 In case of public issue by listed issuer company, issue price or price band may
not be disclosed in the draft prospectus filed with the Board.)

42
(3.5.5 In case of a rights issue, issue price or price band may not be disclosed in the
draft letter of offer filed with the Board. The issue price may be determined
anytime before fixation of the record date, in consultation with the Designated
Stock Exchange.)

43
(3.5.6) The final offer document shall contain only one price and one set of financial
projections, if applicable.

3.6 Payment of Discounts/ Commissions, etc .

3.6.1 No payment, direct or indirect in the nature of a discount, commission, allowance

or otherwise shall be made either by the issuer company or the promoters in any

40
Substituted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 for the following:
“The Lead Merchant Bankers shall ensure that in case of the listed companies, a 48 hours notice of the meeting of the
Board of Directors for passing resolution for determination of price is given to the regional Stock Exchange.”

41
Inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/19/2006/31/3 dated March 31, 2006.

42
Inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/19/2006/31/3 dated March 31, 2006.

43
Renumbered clause 3.5.4 as “clause 3.5.6”, vide SEBI Circular No. SEBI/CFD/DIL/DIP/19/2006/31/3 dated March 31,
2006.
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public issue, to the persons who have received firm allotment in such public
issue.

3.7 Freedom to determine the denomination of shares for public / rights issues
and to change the standard denomination

44
3.7.1 (An eligible company shall be free to make public or rights issue of equity
shares in any denomination determined by it in accordance with Sub-section
(4) of Section 13 of the Companies Act, 1956 and in compliance with the
following and other norms as may be specified by SEBI from time to time:

i. In case of initial public offer by an unlisted company,

a. if the issue price is Rs . 500/- or more, the issuer company shall have a
discretion to fix the face value below Rs. 10/- per share subject to the condition
that the face va lue shall in no case be less than Rs. 1 per share;

b. if issue price is less than Rs . 500 per share, the face value shall be Rs. 10/-
per share;

ii. The disclosure about the face value of shares (including the statement about
the issue price being “X” times of the face value) shall be made in the
advertisement, offer documents and in application forms in identical font size
as that of issue price or price band.)

3.7.2 The companies which have already issued shares in the denomination of Rs.10/-
or Rs.100/- may chang e the standard denomination of the shares by splitting or
consolidating the existing shares.

3.7.3 The companies proposing to issue shares in any denomination or changing the
standard denomination in terms of clause 3.7.1 or 3.7.2 above shall comply with
the following:

(a) the shares shall not be issued in the denomination of decimal of a rupee;

(b) the denomination of the existing shares shall not be altered to a denomination of
decimal of a rupee;

(c) at any given time there shall be only one denomination for the shares of the
company;

(d) the companies seeking to change the standard denomination may do so after
amending the Memorandum and Articles of Association, if required;

44
Substituted vide SEBI Circular No. SEBI/CFD/DIL/DIP/13/2004/28/5 dated May 28, 2004 for the following:
“An eligible company shall be free to make public or rights issue of equity shares in any denomination determined by it
in accordance with sub-section (4) of section 13 of the Companies Act, 1956 and in compliance with the norms as
specified by SEBI in circular no.SMDRP/POLICY/CIR-16/99 dated June 14, 1999 and other norms as may be specified
by SEBI from time to time.”
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(e) the company shall adhere to the disclosure and accounting norms specified by
SEBI from time to time.

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CHAPTER IV

PROMOTERS’ CONTRIBUTION AND LOCK-IN REQUIREMENTS

PART I – PROMOTERS’ CONTRIBUTION

4.0 Promoters’ contribution in any public issue shall be in accordance with the
following provisions:

4.1 Promoters’ Contribution in a Public Issue by Unlisted Companies

4.1.1 In a public issue by an unlisted company, the promoters shall contribute not
less than 20% of the post issue capital.

45
4.1.2 (Deleted)

4.2 Promoters’ Shareholding in Case of Offers for Sale

4.2.1 The promoters’ shareholding after offer for sale shall not be less than 20% of
the post issue capital.

4.3 Promoters’ Contribution in Case of Public Issues by Listed Companies

4.3.1 In case of public issues by listed companies, the promoters shall participate
either to the extent of 20% of the proposed issue or ensure post-issue share
holding to the extent of 20% of the post- issue capital.

4.4 Promoters’ Contribution in Case of Composite Issues

4.4.1 In case of composite issues of a listed company, the promoters’ contribution

shall at the option of the promoter(s) be either 20% of the proposed public
issue or 20% of the post-issue capital.

4.4.2 Rights issue component of the composite issue shall be excluded while
calculating the post-issue capital.

46
4.5 (Deleted)
45
Omitted the following clause vide SEBI Circular No. RMB (Compendium) Series Circular No. 2 (1999- 2000) dated
February 16, 2000:
"For unlisted companies eligible to bring out public issue at premium in accordance with Clause 3.2.2 in Chapter III, the
promoters shall contribute not less than 50% of the post issue capital of the issuer company."

46
Omitted the following clauses vide SEBI Circular No. RMB (Compendium) Series Circular No. 2 (1999-2000) dated
February 16, 2000:
"4.5 Promoters contribution in case of public issues by infrastructure companies

4.5.1 For unlisted infrastructure companies eligible to bring out public issues at premium in accordance with Clause
3.2.3 of Chapter III, the promoters alongwith equipment suppliers and other strategic investors shall contribute
not less than 50% of the post issue capital of the issuer company at the same or higher price than the price at
which the securities are being offered to the public.

4.5.2 The contribution by equipment suppliers and other strategic investors shall be eligible to be treated as promoters
contribution."
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4.6 Securities Ineligible for Computation of Promoters’ Contribution

4.6.1 Where the promoters of any company making an issue of securities have
acquired equity during the preceding three years, before filing the offer
documents with the Board, such equity shall not be considered for computation
of promoters contribution if it is;

(i) acquired for consideration other than cash and revaluation of assets or
capitalisation of intangible assets is involved in such transaction(s); or

(ii) resulting from a bonus issue, out of revaluation reserves or reserves without
accrual of cash resources;

4.6.2 In case of public issue by unlisted companies, securities which have been
issued to the promoters during the preceding one year, at a price lower than
the price at which equity is being offered to public shall not be eligible for
computation of promoters’ contribution.

Provided that the shares for which the difference between the offer price and
the issue price for these shares is brought in by the promoters shall be
considered eligible subject to issuer company complying with the applicable
provisions of the Companies Act, 1956 (such as passing of revised resolution
by shareholders or issuer’s Board, filing of revised return of allotment with
ROC, etc.)

4.6.3 In respect of companies formed by conversion of partnership firms, where the

partners of the erstwhile partnership firm and the promoters of the converted
company are the same and there is no change in management, the shares
allotted to the promoters during previous one year out of the funds brought in
during that period shall not be considered eligible for computation of promoters
contribution unless such shares have been issued at the same price at which
the public offer is made.

Provided that if the partners’ capital existed in the firm for a period of more
than one year on a continuous basis, the shares allotted to promoters against
such capital shall be considered eligible.

4.6.4 In respect of Clauses 4.6.1, 4.6.2 and 4.6.3, such ineligible shares acquired in
pursuance to a scheme of merger or amalgamation approved by a High Court
shall be eligible forcomputation of promoters’ contribution.

4.6.5 For the purposes of computing the promoters ’ contribution referred to in

Clauses 4.1.1, 4.1.2, 4.2.1, 4.3.1, 4.4.1 & 4.5.1 above, minimum contribution of
Rs.25000 per application from each individual and minimum contribution of
Rs.1 lac from firms and companies (not being business associates like dealers
and distributors), shall be eligible to be considered towards promoters’
contribution.

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4.6.6 No securities forming part of promoters ’ contribution shall consist of any

private placement made by solicitation of subscription from unrelated persons
either directly or through any intermediary.

4.6.7 The securities for which a specific written consent has not been obtained from
the respective shareholders for inclusion of their subscription in the minimum
promoters’ contribution subject to lock-in shall not be eligible for promoters’
contribution.

4.7 Computation of Promoters’ Contribution in Case of Issue of Convertible

Security

4.7.1 In case of any issue of convertible security by a company, the promoters shall
have an option to bring in their subscription by way of equity or by way of
subscription to the convertible security being offered through the proposed
issue so that the total promoters ’ contribution shall not be less than the
required minimum contribution referred to in Clauses 4.1.1, 4.1.2, 4.2.1, 4.3.1,
4.4.1 & 4.5.1 above.

Provided that, if the conversion price of emerging equity is not pre-determined

and the same has not been specified in the offer document (instead a formula
for conversion price is indicated), the promoters shall not have the said option
and shall contribute by subscribing to the same instrument.

4.7.2 In case of any issue of security convertible in stages either at par or premium
(conversion price being predetermined), the promoters’ contribution in terms of
equity share capital shall not be at a price lower than the weighted average
price of the share capital arising out of conversion.

Explanation: For the purposes of clause 4.7.2,

(a) ”weights” means the number of equity shares arising out of conversion of
security into equity at various stages.

(b) ”price” means the price of equity shares on conversion arrived at after taking
into account predetermined conversion price at various stages.

4.7.3 The promoters ’ contribution shall be computed on the basis of post-issue

capital assuming full proposed conversion of such convertible security into
equity.

Provided that where the promoter is contributing through the same optional
convertible security as is being offered to the public, such contribution shall be
eligible as promoters’ contribution only if the promoter(s) undertakes in writing
to accept full conversion.

4.8 Promoters’ Participation in Excess of the Required Minimum

Contribution to be Treated as Preferential Allotment

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4.8.1 In case of a listed company, participation by promoters in the proposed public

issue in excess of the required minimum percentage referred in Clauses 4.3.1
and 4.4.1 shall attract the pricing provisions of Guidelines on preferential
allotment, if the issue price is lower than the price as determined on the basis
of said preferential allotment guidelines.

4.9 Promoters’ Contribution to be brought in before Public Issue Opens

4.9.1 Promoters shall bring in the full amount of the promoters’ contribution including
premium at least one day prior to the issue opening date 47(which shall be kept
in an escrow account with a Scheduled Commercial Bank and the said
contribution/ amount shall be released to the company along with the public
issue proceeds.)

48
(Provided that, where the promoters’ contribution has been brought prior to
the public issue and has already been deployed by the company, the company
shall give the cash flow statement in the offer document disclosing the use of
such funds received as promoters’ contribution.)

Provided 49(further) that where the promoters ’ minimum contribution exceeds

Rs.100 crores, the promoters shall bring in Rs.100 crores before the opening
of the issue and the remaining contribution shall be brought in by the
promoters in advance on pro-rata 50(basis) before the calls are made on public.

4.9.2 The company’s board shall pass a resolution allotting the shares or convertible
instruments to promoters against the moneys received.

4.9.3 A copy of the resolution alongwith a Chartered Accountants’ Certificate

certifying that the promoters ’ contribution has been brought in shall be filed
with the Board before opening of the issue.

4.9.4 The certificate of the Chartered Accountants shall also be accompanied by a

list of names and addresses of friends, re latives and associates who have
contributed to the promoters’ quota along with the amount of subscription
made by each of them.

4.10 Exemption from Requirement of Promoters’ Contribution

4.10.1 The requirement of promoters’ contribution shall not be applicable:

47
Inserted vide SEBI Circular No. DIP (Compendium) Circular No. 3 dated August 04, 2000.

48
Inserted vide SEBI Circular No. DIP (Compendium) Circular No. 3 dated August 04, 2000.

49
Inserted vide SEBI Circular No. DIP (Compendium) Circular No. 3 dated August 04, 2000.

50
Inserted vide SEBI Circular No. DIP (Compendium) Circular No. 3 dated August 04, 2000.
Page 26 of 332
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(a) 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.

Provided that if the promoters participate in the proposed issue to the extent
greater than higher of the two options available as per Clauses 4.3.1 and 4.4.1
above, the subscription in excess of such percentage shall attract pricing
guidelines on preferential issue, if the issue price is lower than the pric e as
determined on the basis of said guidelines on preferential issue.

(b) in case of companies where no identifiable promoter or promoter group exists.

(c) in case of rights issues.

Provided 51(that) in case of (a) and (c) above, the promoters shall disclose
their existing shareholding and the extent to which they are participating in the
proposed issue, in the offer document.

PART II - LOCK-IN REQUIREMENTS

4.11 Lock in of Minimum Specified Promoters’ Contribution in Public Issues

4.11.1 In case of any issue of capital to the public the minimum promoters ’
contribution (as per clause 4.1, 4.2, 4.3, 4.4 & 4.5) shall be locked in for a
period of 3 years.

4.11.2 The lock-in shall start from the date of allotment in the proposed public issue
and the last date of the lock-in shall be reckoned as three years from the date
of commencement of commercial production or the date of allotment in the
public issue whichever is later.

Explanation:

The expression "Date of commencement of commercial production" means the

last date of the month in which commercial production in a manufacturing
company is expected to commence as stated in the offer document.

4.12 Lock-in of Excess Promoters’ Contribution

4.12.1 In case of a public issue by unlisted company, if the promoters’ contribution in

the proposed issue exceeds the required minimum contribution, such excess
contribution shall also be locked in for a period of 52(one year).

4.12.2 In case of a public issue by a listed company, participation by promoters in the

proposed public issue in excess of the required minimum percentage shall also

51
Inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/14/2005/25/1 dated January 25, 2005.

52
Substituted vide SEBI Circular No. DIP (Compendium) Circular No. 3 dated August 04, 2000 for "3 years".
Page 27 of 332
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be locked-in for a period of 53(one year) as per the lock-in provisions as

specified in Guidelines on Preferential issue.

Provided that excess promoters’ contribution as per Clause 4.10.1(a) of Part I

of this Chapter shall not be subject to lock-in.

4.12.3 In case shortfall in the firm allotment category is met by the promoter as
specified in clause 8.5(e), such subscription shall be locked in for a period of
54
(one year).

4.13 Securities Issued Last to be Locked-in First

4.13.1 The securities forming part of promoters’ contribution as specified in Clauses

4.1.1, 4.1.2, 4.2.1, 4.3.1, 4.4.1 & 4.5.1 of Part I of this Chapter and issued last
to the promoters shall be locked in first for the specified period.

Provided that the securities issued to the financial institutions appearing as

promoters, if issued last, shall not be locked-in before the shares allotted to the
other promoters.

4.14 Lock-in of pre-issue share capital of an unlisted company

55
4.14.1 (The entire pre-issue capital, other than that locked-in as minimum
promoters’ contribution, shall be locked-in for a period of one year from the
date of allotment.

Provided that where shares held by promoter(s) are lent to the SA under
clause 8A.7, they shall be exempted from the lock in requirements specified
above for the period starting from the date of such lending and ending on the
date on which they are returned to the same lender(s) under clause 8A.13 or
under clause 8A.15, as the case may be.)

56
4.14.2 (Clause 4.14.1 shall not be applicable to:

53
Substituted vide SEBI Circular No. DIP (Compendium) Circular No. 3 dated August 04, 2000 for the words "three years".

54
Substituted vide SEBI Circular No. DIP (Compendium) Circular No. 3 dated August 04, 2000 for the words "three years".
55
Substituted vide SEBI Circular No. SEBI/CFD/DIL/DIP/19/2006/31/3 dated March 31, 2006 for the following:
“The entire pre-issue share capital, other than that locked-in as promoters’ contribution, shall be locked-in for a period of
one year from the date of commencement of commercial production or the date of allotment in the public issue,
whichever is later.

Provided that where shares held by promoter(s) are lent to the SA under clause 8A.7, they shall be exempted from the
lock in requirements specified above, for the period starting from the date of such lending to the date when they are
returned to the same promoter(s) under clause 8A.13 or under clause 8A.15, as the case may be.”

Prior to the above , clause 4.14.1 was substituted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 for
the following:
“The entire pre-issue share capital, other than that locked-in as promoters’ contribution, shall be locked-in for a period of
one year from the date of commencement of commercial production or the date of allotment in the public issue,
whichever is later.”
56
Substituted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 for the following:
“4.14.2 Clause 4.14.1 shall not be applicable to the pre-issue share capital)
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(i) pre-issue share capital held by Venture Capital Funds and Foreign Venture
Capital Investors registered with the Board. However, the same shall be
locked-in as per the provisions of the SEBI (Venture Capital Funds)
Regulations, 1996 and SEBI (Foreign Venture Capital Investors) Regulations,
2000 and any amendments thereto;

(ii) pre-issue share capital held for a period of at least one year at the time of filing
draft offer document with the Board and being offered to the public through
offer for sale;

(iii) pre-IPO shares held by employees other than promoters, which were issued
under employee stock option or employee stock purchase scheme of the
issuer company before the IPO. However the same is subject to the issuer
company complying with the requirements laid down in Clause 22.4 of SEBI
(Employee Stock Option Scheme and Employee Stock Purchase Scheme)
Guidelines, 1999.)

57
(4.14A Lock-in of securities issued on firm allotment basis

Securities issued on firm allotment basis shall be locked-in for a period of one
year from the date of commencement of commercial production or the date of
allotment in the public issue, whichever is later.)

PART III - OTHER REQUIREMENTS IN RESPECT OF LOCK-IN

56
(i) (held by Venture Capital Funds and Foreign Venture Capital Investors registered with the Board. However, the
same shall be locked-in as per the provisions of the SEBI (Venture Capital Funds) Regulations, 1996 and SEBI
(Foreign Venture Capital Investors) Regulations, 2000 and any amendments thereto
(ii) held for a period of at least one year at the time of filing draft offer document with the Board and being offered to
the public through offer for sale.)”

Prior to the abo ve, sub-clause (i) of clause 4.14.2 was substituted vide SEBI Circular No. RMB (Compendium) Series
Circular No. 1 (2001- 2002) dated July 17, 2001.

Prior to the above amendments made (vide footnotes 55 and 56), clauses 4.14.1 and 4.14.2 were substituted vide
SEBI Circular No. DIP (Compendium) Circular No. 3 dated August 04, 2000 for the following:
“4.14.1 Any security issued to promoters or other shareholders, out of revaluation of assets or capitalisation of
intangible assets, within a period of 3 preceding years from the date of filing of offer documents with the Board,
shall be locked-in for a period of 3 years from the date of allotment of the proposed issue of capital.

4.14.2 Any security to promoters or other shareholders, issued by way of bonus out of revaluation reserves, within a
period of 3 preceding years, shall be locked-in for a period of 3 years from the date of allotment of the proposed
issue of capital.

4.14.3 In case of unlisted companies, any security issued to promoter or to any other shareholder, during the preceding
one year, at a price lower than the price at which equity is being offered to public shall be locked-in for a period
of 3 years from the date of allotment of the proposed issue of capital.”
57
Substituted vide SEBI Circular No . DIP (Compendium) Circular No. 3 dated August 04, 2000 for the following clause:
“Lock-in of pre issue share capital of an unlisted company
Where an unlisted company eligible to make a public issue and desirous of getting its securities listed on a recognised
stock exchange pursuant to a public issue has issued shares to any person within six (6) months prior to the date of
opening of the public issue at a price lower than the price at which equity is being offered/issued to public, the entire
share capital (except shares issued to venture capitalists and employees of the company) existing prior to public issue
shall be locked in for a period of six (6) months from the date of trading of the shares on the regional stock exchange.
Provided, the lock-in would not apply to the shares (other than shares issued to promoters, friends, relatives and
associates) if the same were issued more than 6 months prior to the date of opening of the public issue and are offered
under offer for sale."
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4.15 Pledge of Securities Forming Part of Promoters Contribution

4.15.1 Locked-in Securities held by promoters may be pledged only with banks or
financial institutions as collateral security for loans granted by such banks or
financial institutions, provided the pledge of shares is one of the terms of
sanction of loan.

4.16 Inter-se Transfer of Securities Amongst Promoters

58
4.16.1 (Inter-se Transfer of Locked- in Securities

a) Shares held by the person other than the promoters, prior to Initial Public
Offering (IPO), which are locked in as per Clause 4.14 of these Guidelines,
may be transferred to any other person holding shares which are locked in as
per clause 4.14 of these Guidelines subject to continuation of lock-in in the
hands of transferees for the remaining period and compliance of Securities
and Exchange Board of India (Substantial Acquisition of shares and
Takeovers) Regulations, 1997, as applicable.

b) Shares held by promoter(s) which are locked in as per the relevant provisions
of this chapter, may be transferred to and amongst promoter/ promoter group
or to a new promoter or persons in control of the company, subject to
continuation of lock-in in the hands of transferees for the remaining period and
compliance of Securities and Exchange Board of India (Substantial Acquisition
of shares and Takeovers) Regulations, 1997, as applicable.’)

4.17 Inscription of Non-Transferability

4.17.1 The securities which are subject to lock-in shall carry inscription `non
transferable’ along with duration of specified non-transferable period
mentioned in the face of the security certificate.

Initially inserted vide SEBI Circular No. RMB (Compendium) Series Circular No. 2 (1999 – 2000) dated February 16,
2000.

58
Substituted vide SEBI Circular No. RMB (Compendium) Series 2003- 2004 Circular No. 9 dated May 2, 2003 for the
following clause:
“Transfer of locked-in securities amongst promoters as named in the offer document, can be made subject to the lock-in
being applicable to the transferees for the remaining period of lock in.”
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CHAPTER V

PRE- ISSUE OBLIGATIONS

5.0 The pre-issue obligations are detailed below:

5.1 The lead merchant banker shall exercise due diligence.

5.1.1 The standard of due diligence shall be such that the merchant banker shall
satisfy himself about all the aspects of offering, veracity and adequacy of
disclosure in the offer documents.

5.1.2 The liability of the merchant banker as referred to clause 5.1.1 shall continue
even after the completion of issue process.

5.2 The lead merchant banker shall pay requisite fee in accordance with regulation
24A of Securities and Exchange Board of India (Merchant Bankers) Rules and
Regulations, 1992 along with draft offer document filed with the Board.

5.3 Documents to be submitted along with the Offer Document by the Lead
Manager

5.3.1 Memorandum of Understanding (MOU)

5.3.1.1 No company shall make an issue of security through a public or rights issue
unless a Memorandum of Understanding has been entered into between a
lead merchant banker and the issuer company specifying their mutual rights,
liabilities and obligations relating to the issue.

5.3.1.2 The MOU shall contain such clauses as are specified at Schedule I and such
other clauses as considered necessary by the lead merchant banker and the
issuer company.

Provided that the MOU shall not contain any clause whereby the liabilities
and obligations of the lead merchant banker and issuer company under the
Companies Act, 1956 and Securities and Exchange Board of India (Merchant
Bankers) Rules and Regulations, 1992 are diminished in any way.

5.3.1.3 The Lead Merchant Banker responsible for drafting of the offer documents
shall ensure that a copy of the MOU entered into with the issuer company is
submitted to the Board along with the draft offer document.

5.3.2 Inter-se Allocation of Responsibilities

5.3.2.1 In case a public or rights issue is managed by more than one Merchant Banker
the rights, obligations and responsibilities of each merchant banker shall be
demarcated as specified in Schedule II.

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5.3.2.2 In case of under subscription at an issue, the Lead Merchant Banker

responsible for underwriting arrangements shall invoke underwriting
obligations and ensure that the underwriters pay the amount of devolvement
and the same shall be incorporated in the inter-se allocation of responsibilities
(Schedule II) accompanying the due diligence certificate submitted by the Lead
Merchant Banker to the Board .

5.3.3 Due Diligence Certificate

5.3.3.1 The lead merchant banker, shall furnish to the Board a due diligence certificate
as specified in Schedule III along with the draft prospectus .

59
(5.3.3.1A In case of a debenture issue, the lead merchant banker shall also furnish to
the Board a due diligence certificate given by the debenture trustee in the
format specified in Schedule IIIA along with the draft offer document.)

5.3.3.2 In addition to the due diligence certificate furnished along with the draft offer
document, the Lead Merchant Banker shall also:

60
((ia) where provisos to clause 6.3 or clause 6.39 are applicable, certify that the
issuer company is complying with conditions (a) and (b) laid down in 1 st
proviso to clause 6.3 or with conditions (a) and (b) laid down in 1st proviso to
clause 6.39, as the case may be);

61
((ib)) certify that all amendments suggestion or observations made by Board have
been incorporated in the offer document;

(ii) furnish a fresh "due diligenc e" certificate at the time of filing the prospectus
with the Registrar of Companies as per the format specified at Schedule IV.

(iii) furnish a fresh certificate immediately before the opening of the issue that no
corrective action on its part is needed as per the format specified at Schedule
V.

(iv) furnish a fresh certificate after the issue has opened but before it closes for
subscription as per the format specified at Schedule VI.

62
(5.3.3.3 The Lead Managers who are responsible for conducting due diligence exercise
with respect to contents of the offer document, as per inter-se allocation of
responsibilities shall sign due diligence certificate

59
Inserted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003.

60
Inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/19/2006/31/3 dated March 31, 2006.

61
Renumbered sub-clause (i) as “clause (ib)”, vide SEBI Circular No. SEBI/CFD/DIL/DIP/19/2006/31/3 dated March 31,
2006.

62
Inserted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003.
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5.3.4 Certificates Signed by the Company Secretary or Chartered Accountant,

in Case of Listed Companies Making Further Issue of Capital

5.3.4.1 The Lead Merchant Banker shall furnish the following certificates duly signed
by 63(Company Secretary) or Chartered Accountants along with the draft offer
documents:

(a) all refund orders of the previous issues were despatched within the prescribed
time and in the prescribed manner;

(b) all security certificates were despatched to the allottees within the prescribed
time and in the prescribed manner;

(c) the securities were listed on the Stock Exchanges as specified in the offer
documents.

5.3.5 Undertaking

5.3.5.1 The issuer shall submit an undertaking to the Board to the effect that
transactions in securities by the `promoter' the 'promoter group' and the
immediate relatives of the `promoters during the period between the date of
filing the offer documents with the Registrar of Companies or Stock Exchange
as the case may be and the date of closure of the issue shall be reported to
the Stock exchanges concerned within 24 hours of the transaction(s).

64
5.3.6 (List of Promoters’ Group and other Details

5.3.6.1 The issuer company shall submit to the Board the list of the persons who
constitute the Promoters’ Group and their individual shareholding.

5.3.6.2 The issuer company shall submit to the Stock Exchanges on which securities
are proposed to be listed, the Permanent Account Number, Bank Account
Number and Passport Number of the promoters at the time of filing the draft
offer document to them.)

5.4 Appointment of Intermediaries

5.4.1 Appointment of Merchant Bankers

65
5.4.1.1 (A Merchant Banker shall not lead manage the issue if he is a promoter or a
director or associate of the issuer company.

63
Substituted vide SEBI Circular No. DIP (Compendium) Circular No. 3 dated August 04, 2000 for the word "companies".

64
Substituted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 for the following:
5.3.6 List of Promoters’ Group

5.3.6.1 The issuer shall submit to the Board a list of persons who constitute the Promoters’ Group and their individual
shareholdings.”

65
Substituted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 for the following:
Page 33 of 332
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Provided that a merchant banker holding the securities of the issuer company
may lead manage the issue if;

a. the securities of the issuer company are listed or proposed to be listed on

the Over the Counter Exchange of India (OTCEI) and;

b. the Market Makers have either been appointed or are proposed to be

appointed as per the offer document.

Explanation: For the purposes of this clause, a merchant banker shall be

deemed to be an associate of the issuer if:

(i) either of them controls directly or indirectly, through itself, its subsidiary or
holding company, not less than 15 percent of the voting power of the
other; or

(ii) either of them, directly or indirectly, by itself or in combination with other

persons, exercises control over the other; or

(iii) There is a common director, excluding nominee director, amongst the

body corporate/ its subsidiary or holding company and the Merchant
Banker.

Provided that the expression ”control” shall have the same m eaning as defined
under clause (c) of Regulation 2 of SEBI (Substantial Acquisitions of Shares
and Takeovers) Regulations, 1997.)

66
5.4.2 (Deleted)

5.4.3 Appointment of Other Intermediaries

5.4.3.1 Lead Merchant Banker shall ensure that the other intermediaries being
appointed are duly registered with the Board, wherever applicable.

5.4.3.1.1 Before advising the issuer on the appointment of other intermediaries, the
Lead Merchant Banker shall independently assess the capability and the
capacity of the various intermediaries to carr y out assignment.

“Merchant Banker who is associated with the issuer company as a promoter or a director shall not to lead manage the
issue of the company.

Provided that the lead merchant banker holding the securities of the issuer company may lead manage the issue;
a. if the securities of the issuer company are listed or proposed to be listed on the Over the Counter Exchange of
India (OTCEI) and;
b the Market Makers have either been appointed or are proposed to be appointed as per the offer document.”
66
Omitted the following clause vide SEBI Circular No. SEBI/CFD/DIL/DIP/14/2005/25/1 dated January 25, 2005:
“5.4.2 Appointment of Co-managers

5.4.2.1 Lead Merchant Bankers shall ensure that the number of co-managers to an issue does not exceed the number
of Lead Merchant Bankers to the said issue and there is only one advisor to the issue.”
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5.4.3.1.2 The Lead Merchant Banker shall ensure that issuer companies enters into a
Memorandum of Understanding with the intermediary (ies) concerned
whenever required.

5.4.3.2 The Lead Merchant Banker shall ensure that Bankers to the Issue are
appointed in all the mandatory collection centres as specified in clause 5.9.

5.4.3.3 The Lead Merchant Banker shall not act as a Registrar to an issue in which it
is also handling the post issue responsibilities.

5.4.3.4 The Lead Merchant Bankers shall ensure that;

a the Registrars to Issue registered with the Board are appointed in all
public issues and rights issues;

b in case where the issuer company is a registered Registrar to an Issue, the

issuer shall appoint an independent outside Registrar to process its issue;

67
(c) Registrar to an issue which is associated with the issuer company as a
promoter or a director shall not act as Registrar for the issuer company.

68
(d) Where the number of applications in a public issue is expected to be large, the
issuer company in consultation with the lead merchant banker may associate
one or more Registrars registered with the Board for the limited purpose of
collecting the application forms at different centres and forward the same to
the designated Registrar to the Issue as mentioned the offer document. The
designated Registrar to the Issue shall, be primarily and solely responsible for
all the activities as assigned to them for the issue management.

5.5 Underwriting

5.5.1 The lead merchant banker shall satisfy themselves about the ability of the
underwriters to discharge their underwriting obligations.

5.5.2 The lead merchant banker shall:

a incorporate a statement in the offer document to the effect that in the opinion
of the lead merchant banker, the underwriters' assets are adequate to meet
their underwriting obligations;

b obtain Underwriters’ written consent before including their names as

underwriters in the final offer document.

67
Omitted the following vide SEBI Circular No. SEBI/CFD/DIL/DIP/14/2005/25/1 dated January 25, 2005 and numbered
the sub clause as “c” :
“The lead merchant banker shall ensure that”

68
Numbered the sub-clause as “d”, vide SEBI Circular No. SEBI/CFD/DIL/DIP/14/2005/25/1 dated January 25, 2005.
Page 35 of 332
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5.5.3 In respect of every underwritten issue, the lead merchant banker(s) shall
undertake a minimum underwriting obligation of 5% of the total underwriting
commitment or Rs.25 lacs whichever is less.

5.5.4 The outstanding underwriting commitments of a merchant banker shall not

exceed 20 times its networth at any point of time.

5.5.5 In respect of an underwritten issue, the lead merchant banker shall ensure that
the relevant details of underwriters are included in the offer document.

5.6 Offer Document to be Made Public

5.6.1 The draft offer document filed with the Board shall be made public for a period
of 21 days from the date of filing the offer document with the Board.

69
5.6.2 (The lead merchant banker shall,

i. while filing the draft offer document with the Board in terms of Clause 2.1, also
file the draft offer document with the stock exchanges where the securities are
proposed to be listed;

70
ii. (make copies of the draft offer document available to the public, host the
draft and final offer documents on the websites of the all the lead managers /
syndicate members associated with the issue and also ensure that the
contents of documents hosted on the websites are the same as that of their
printed versions.) 71(Further, where the issuer company is complying with
provisos to clause 6.3 or clause 6.39, as the case may be, the offer document
of the immediately preceding public or rights issue shall also be displayed on
the websites in a similar manner);

iii. obtain and furnish to the Board, an in-principle approval of the stock
exchanges for listing of the securities within 15 days of filing of the draft offer
document with the stock exchanges.)

5.6.3 Lead merchant banker or stock exchanges may charge an appropriate sum to
the person requesting for the copy of offer document.

72
(5.6A Pre – Issue Advertisement

69
Substituted vide SEBI Circular No. DIP (Compendium) Circular No. 3 dated August 04, 2000 for the following:
"The Lead Merchant Banker shall;
a. simultaneously file copi es of the draft offer document with the stock exchanges where the securities offered
through the issue are proposed to be listed.
b. make copies of offer document available to the public".
70
Substituted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 for the following:
“make copies of draft offer document available to the public”.
71
Inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/19/2006/31/3 dated March 31, 2006.
72
Inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/14/2005/25/1 dated January 25, 2005.

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5.6A.1 Subject to section 66 of the Companies Act, 1956, the issuer company shall
soon after receiving final observations, if any, on the draft prospectus or draft
Red Herring Prospectus from the Board, make an advertisement in an English
national Daily with wide circulation, one Hindi National newspaper and a
regional language news paper with wide circulation at the place where the
registered office of the issuer is situated, which shall be in the format and
contain the minimum disclosures as given in Part A of Schedule XX – A both in
case of fixed price issues as well as book built issues.)

73
(5.6B IPO Grading

5.6B.1 An unlisted company making an IPO of equity shares or any other security
which may be converted into or exchanged with equity shares at a later date
may opt to obtain grading for such an IPO from one or more credit rating
agencies.

5.6B.2 Where an issuer opts to obtain IPO grading under clause 5.6B.1, it shall
disclose all grades so obtained by it, including unaccepted grades, in the
prospectus and abridged prospectus.)

5.7 Despatch of Issue Material

5.7.1 The lead m erchant banker shall ensure that for public issues offer documents
and other issue materials are dispatched to the various stock exchanges,
brokers, underwriters, bankers to the issue, investors associations, etc. in
advance as agreed upon.

5.7.2 In the case of rights issues, lead merchant banker shall ensure that the
74
(abridged letters of offer) are dispatched to all shareholders at least one
week before the date of opening of the issue.

75
(Provided that where a specific request for letter of offer is received from
any shareholder, the Lead Merchant Banker shall ensure that the letter of offer
is made available to such shareholder.)

76
5.7.3 (Deleted)

5.8 No Complaints Certificate

73
Inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/21/2006/24/4 dated April 24, 2006.

74
Substituted vide SEBI Circular No. SEBI/CFD/DIL/DIP/19/2006/31/3 dated March 31, 2006 for the words “letters of
offer”.

75
Inserted vide SEBI Circular No. SEBI/ CFD/DIL/DIP/19/2006/31/3 dated March 31, 2006.

76
Omitted the following clause vide SEBI Circular No. RMB (Compendium) Series Circular No. 2 (1999- 2000) dated
February 16, 2000:
"after the prospectus a letter of offer has been filed with the Registrar of Companies or Stock Exchange, the printed
prospectus or letter of offer shall be forwarded to Board atleast 10 days prior to the issue opening date".
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5.8.1 After a period of 21 days from the date the draft offer document was made
public, the Lead Merchant Banker shall file a statement with the Board:

i) giving a list of complaints received by it;

ii) a statement by it whether it is proposed to amend the draft offer document or

not, and;

iii) highlight those amendments.

5.9 Mandatory Collection Centres

5.9.1 The minimum number of collection centres for an issue of capital shall be:

a) the four metropolitan centres situated at Mumbai, Delhi, Calcutta and Chennai

b) all such centres where the stock exchanges are located in the region in which
the registered office of the company is situated.

c) the regional division of collection centres is indicated in Schedule VII.

5.9.2 The issuer company shall be free to appoint as many collection centres as it
may deem fit in addition to the above minimum requirement.

5.10 Authorised Collection Agents

5.10.1 The issuer company can also appoint authorised collection agents in
consultation with the Lead Merchant Banker subject to necessary disclosures
including the names and addresses of such agents made in the offer
document.

5.10.2 The modalities of selection and appointment of collection agents can be made
at the discretion of the Lead Merchant Banker.

5.10.3 The lead merchant banker shall ensure that the collection agents so selected
are properly equipped for the purpose, both in terms of infrastructure and
manpower requirements.

5.10.4 The collection agents may collect such applications as are accompanied by
payment of application moneys paid by cheques, drafts and stock invests.

5.10.5 The authorised collection agent shall not collect application moneys in cash.

5.10.6 The applications collected by the collection agents shall be deposited in the
special share application account with designated scheduled bank either on
the same date or latest by the next working day.

5.10.7 The application forms along with duly reconciled schedules shall be forwarded
by the collection agent to the Registrars to the Issue after realisation of
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cheques and after weeding out the applications in respect of cheques return
cases, within a period of 2 weeks from the date of closure of the public issue.

77
5.10.8 (Deleted)

5.10.9 The offer documents and application forms shall specifically indicate that the
acknowledgement of receipt of application moneys given by the collection
agents shall be valid and binding on the issuer company and other persons
connected with the issue.

5.10.10 The investors from the places other than from the places where the mandatory
collection centres and authorised collection agents are located, can forward
their applications along with stockinvests to the Registrars to the Issue directly
by Registered Post with Acknowledgement Due.

5.10.11 The applications received through the registered post shall be dealt with by the
Registrars to the Issue in the normal course.

5.11 Advertisement for Rights Post Issues

5.11.1 The Lead Merchant Banker shall ensure that in case of a rights issue, an
advertisement giving the date of completion of despatch of letters of offer, shall
be released in at least in an English National Daily with wide circulation, one
Hindi National Paper and a Regional language daily circulated at the place
where registered office of the issuer company is situated at least 7 days before
the date of opening of the issue.

5.11.2 The advertisement referred to in clause 5.11.1 shall indicate the centres other
than registered office of the company where the shareholders or the persons
entitled to rights may obtain duplicate copies of composite application forms in
case they do not receive the original application form within a reasonable time
even after opening of the rights issue.

5.11.3 Where the shareholders have neither received the original composite
application forms nor are they in a position to obtain the duplicate forms, they
may make applications to subscribe to the rights on a plain paper.

5.11.4 The advertisement shall also contain a format to enable the shareholders to
make the application on a plain paper containing necessary particulars like
name, address, ratio of right issue, issue price, number of shares held, ledger
folio numbers, number of shares entitled and applied for, additional shares if
any, amount to be paid along with application, particulars of cheque, etc. to be
drawn in favour of the company Account - Rights issues.

5.11.5 The advertisement shall further mention that applications can be directly sent
by the shareholder through Registered Post together with the application

77
Omitted the following clause vide SEBI Circular No. SEBI/CFD/DIL/DIP/14/2005/25/1 dated January 25, 2005:
“5.10.8 The applications accompanied by stockinvests shall be sent directly by the collection agent to the Registrars
to the Issue along with the schedules within one week from the date of closure of the issue. “
Page 39 of 332
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moneys to the company's designated official at the address given in the

advertisement.

5.11.6 The advertisement may also invite attention of the shareholders to the fact that
the shareholders making the applications otherwise than on the standard form
shall not be entitled to renounce their rights and shall not utilise the standard
form for any purpose including renunciation even if it is received subsequently.

5.11.7 If the shareholder makes an application on plain paper and also in standard
form, he may face the risk of rejection of both the applications.

5.12 Appointment of Compliance Officer

5.12.1 An issuer company shall appoint a compliance officer who shall directly liaise
with the Board with regard to compliance with various laws, rules, regulations
and other directives issued by the Board and investors complaints related
matter.

5.12.2 The name of the compliance officer so appointed shall be intimated to the
Board.

5.13 Abridged Prospectus

5.13.1 The Lead Merchant Banker shall ensure the following:

i) Every application form distributed by the issuer Company or anyone else is

accompanied by a copy of the Abridged Prospectus.

ii) The application form may be stapled to form part of the Abridged Prospectus.
Alternatively, it may be a perforated part of the Abridged Prospectus.

iii) The Abridged Prospectus shall not contain matters which are extraneous to
the contents of the prospectus.

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iv) (The Abridged prospectus shall be printed in a font size as specified in
clause 6.16.1.)

v) Enough space shall be provided in the application form to enable the investors
to file in various details like name, address, etc.

79
(5.14 Agreements with depositories

5.14.1 The lead manager shall ensure that the issuer company has entered into
agreements with all the depositories for dematerialisation of securities. He

78
Substituted vide SEBI Circular No. SEBI/CFD/DIL/DIP/19/2006/31/3 dated March 31, 2006 for the following:
“The Abridged Prospectus shall be printed at least in point 7 size with proper spacing.”
79
Inserted Clause nos. 5.14 and 5.14.1 vide SEBI Circular No. RMB (Compendium) Series Circular No. 2 (1999- 2000)
dated February 16, 2000.

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shall also ensure that an option be given to the investors to receive allotment
of securities in dematerialised form through any of the depositories.)

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(5.15 Branding of securities

5.15.1 Securities may be branded describing their nature but not the quality.)

80
Inserted Clause nos. 5.15 and 5.15.1 vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003.
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CHAPTER VI

CONTENTS OF OFFER DOCUMENT

6.0 The Offer document shall contain the following:

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(SECTION I - CONTENTS OF THE PROSPECTUS

6.1 In addition to the disclosures specified in Schedule II of the Companies Act,

1956, the prospectus shall contain the following:

6.2 The prospectus shall contain all material information which shall be true and
adequate so as to enable the investors to make informed decision on the
investments in the issue.

6.3 The prospectus shall also contain the information and statements specified in
this chapter and shall as far as possible follow the order in which the
requirements are listed in this chapter and summarised in Schedule VIIA.

82
(Provided that in case of public issue by listed company, information in
terms of clauses 6.8.3.2 (a) and (j) and clause 6.9.5.8 and information in terms
of clause 6.10.3.1 in respect of entities not covered under section 370 (1)(B) of
the Companies Act 1956 may not be disclosed in the prospectus, if the
following conditions are fulfilled:

(a) The issuer company has been filing periodic statements in regard to
financial results and shareholding pattern with the Designated Stock
Exchange and Registrar of Companies for the last three years and such
statements are available on websites of the Designated Stock
Exchange/ on a common e - filing platform.

(b) The issuer company has in place an investor grievance handling

mechanism which includes meeting of ‘Shareholders’ / Investors’
Grievance Committee’ at frequent intervals, appropriate delegation of
power by the board of directors of the issuer company with regard to
share transfer and clearly laid out systems and procedures for timely
and satisfactory redressal of investor grievances.

(c) The Lead Merchant Banker has certified compliance of (a) and (b)
above.

Provided further that where the issuer company is complying with the
aforesaid proviso, it shall –

81
Substituted for Section I of Chapter VI, vide SEBI Circular No. SEBI/CFD/DIL/DIP/14/2005/25/1 dated January 25, 2005 .
The text of Section I, prior to this substitution, is given at the end of these Guidelines, after Schedule XXIX.

82
Inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/19/2006/31/3 dated March 31, 2006.
Page 42 of 332
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(a) furnish to the Board the following undertaking along with the draft
prospectus, which shall also be incorporated in the prospectus:

“We confirm that other than the disclosures made in the instant
prospectus, nothing material has changed in respect of disclosures
made by us at the time of our previous issue made on …………. .“

(b) make a copy of the offer document of the immediately preceding public
or rights issue, available to the public as specified under clause 5.6.2(ii)
and also as a document for public inspection.)

6.4 Cover Pages

6.4.1 The cover page paper shall be of adequate thickness (preferably minimum 100
gcm. quality).

6.4.2 Front Cover Pages

6.4.2.1 The front outside and inside cover pages of the prospectus shall be white and
no patterns or pictures shall be printed on these pages.

6.4.2.2 The front outside cover page of the prospectus shall contain the following
details only:

(a) Issue Details

(i) The word "Prospectus".

(ii) The name of the issuer company, its logo, its previous name if any, the
address of its registered office, along with its telephone number, fax number,
contact person, website address and e-mail address .

(iii) The nature, number, price and amount of the instruments offered and the issue
size, as may be applicable.

(iv) The following clause on ‘Risks in relation to the first issue’ (wherever
applicable) shall be incorporated in a box format in case of a initial public
issue:

"This being the first issue of the company, there has been no formal market for
the securities of the company. The face value of the shares is (-----) and the
issue price/ floor price/ price band is ‘X-times’ of the face value. The issue
price/ floor price/ price band (has been determined and justified by the Lead
Merchant Banker and the issuer company as stated under Justification of
Premium paragraph - in case of premium issue) should not be taken to be
indicative of the market price of the equity shares after the shares are listed.
No assurance can be given regarding an active or sustained trading in the
shares of the company nor regarding the price at which the equity shares will
be traded after listing."
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(v) The following clause on general risk shall be incorporated:

"Investment in equity and equity related securities involve a degree of risk and
investors should not invest any funds in this offer unless they can afford to take
the risk of losing their investment. Investors are advised to read the risk factors
carefully before taking an investment decision in this offering. For taking an
investment decision, investors must rely on their own examination of the issuer
and the offer including the risks involved. The securities have not been
recommended or approved by Securities and Exchange Board of India (SEBI)
nor does SEBI guarantee the accuracy or adequacy of this document."

Specific attention of investors shall be invited to the statement of ‘Risk factors’

by indicating their page number(s) in the ‘General Risks’.

(vi) The following clause on ‘Issuer’s Absolute Responsibility’ clause shall be

incorporated as under:

"The issuer, having made all reasonable inquiries, accepts responsibility for
and confirms that this offer document contains all information with regard to
the issuer and the issue, which is material in the context of the issue, that the
information contained in the offer document is true and correct in all material
aspects and is not misleading in any material respect, that the opinions and
intentions expressed herein are honestly held and that there are no other facts,
the omission of which make this document as a whole or any of such
information or the expression of any such opinions or intentions misleading in
any material respect."

(vii) The names, logos and addresses of all the Lead Merchant Bankers with their
titles who file the prospectus with the Board, along with their telephone
numbers, fax numbers, website addresses and e-mail addresses.

(viii) The name, logo and address of the Registrar to the Issue, along with its
telephone number, fax number, website addres s and e-mail address.

(ix) Issue Schedule:

a. Date of opening of the issue.

b. Date of closing of the issue.
c. Date of earliest closing of the issue.

(x) Credit Rating, if applicable.

83
((x-a) Statement indicating whether IPO grading has been opted for. If yes,
disclosure of all grades so obtained, including unaccepted grades, as

83
Inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/21/2006/19/4 dated April 19, 2006.
Page 44 of 332
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provided under clause 5.6B.2 and reference of the page number where details
of IPO grading, as provided under clause 6.8.2.9A, are given.)

(xi) Name/s of the stock exchanges where listing of the securities is proposed (and
the details of in -principle approval for listing obtained from these stock
exchanges ).

6.4.3 Back Cover Pages

6.4.3.1 The back inside cover page and back outside cover page shall be in white.

6.5 Table of Contents

6.5.1 Table of Contents shall appear immediately after the front inside cover page.

6.6 Definitions and Abbreviations

6.6.1 Conventional/ General Terms.

6.6.2 Offering-related Terms.

6.6.3 Company/ Industry-related Terms.

6.6.4 Abbreviations.

6.7 Risk Factors

6.7.1 The Risk factors, other than those specified in clauses 6.4.2.2 (a) (iv), (v) and
(vi), shall be printed in clear readable font (preferably of minimum point 10
size).

6.7.2 The Risk factors shall be classified as those which are specific to the project
and internal to the issuer company and those which are external and beyond
the control of the issuer company.

6.7.3 The Risk factors shall be determined on the basis of their materiality.

6.7.4 Materiality shall be decided taking the following factors into account:

6.7.4.1 Some events may not be material individually but may be found material
collectively.

6.7.4.2 Some events may have material impact qualitatively instead of quantitatively.

6.7.4.3 Some events may not be material at present but may be having material
impacts in future.

6.7.5 The Risk factors shall appear in the prospectus in the following manner:

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6.7.5.1 Risks envisaged by Management.

6.7.5.2 Proposals, if any, to address the risks.

6.7.6 Any ‘notes’ required to be given prominence shall appear immediately after the
Risk factors.

6.8 Introduction

6.8.1 Summary

6.8.1.1 Summary of the industry and business of the issuer company.

6.8.1.2 Offering details in brief.

6.8.1.3 Summary consolidated financial, operating and other data.

6.8.2 General Information

6.8.2.1 The name, address of registered office and the registration number of the
issuer company, along with the address of the Registrar of Companies where
the issuer company is registered.

6.8.2.2 The Board of Directors of the issuer company.

6.8.2.3 Brief details of the Chairman, Managing Director, Whole Time Directors, etc. of
the issuer company.

6.8.2.4 The names, addresses, telephone numbers, fax numbers and e-mail
addresses of the Company Secretary, Legal Advisor and Bankers to the
Company.

6.8.2.5 The name, address, telephone number, fax number and e-mail address of the
Compliance Officer.

6.8.2.6 The names, addresses, telephone numbers, fax numbers, contact person,
website addresses and e-mail addresses of the Merchant Bankers, Co-
Managers, Registrars to the Issue, Bankers to the Issue, Brokers to the Issue,
Syndicate members, etc.

6.8.2.7 The names, addresses, telephone numbers, fax numbers and e-mail
addresses of the auditors of the issuer company.

6.8.2.8 Statement of inter-se allocation of responsibilities among Lead Managers:

If more than one Merchant Banker is associated with the issue, the inter-se
allocation of responsibility of each Merchant Banker, as demarcated and
submitted to the Board in terms of clause 5.3.2, shall be disclosed in the
prospectus.
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6.8.2.9 Credit Rating (in case of debenture issues):

(a) The credit rating obtained from a credit rating agency for the proposed issue of
debt security, including convertible instruments.

(b) If the rating has been obtained from more than one credit rating agencies,
disclosures shall be made of all ratings including unaccepted rating.

(c) All the credit ratings obtained during the previous three years before filing of
the prospectus for any of its lis ted debt-securities at the time of accessing the
market through a rated debt-security shall be disclosed.

84
(6.8.2.9A IPO Grading:

(a) Name of the credit rating agency from which grading has been obtained for the
proposed IPO of equity shares or any other security which may be converted
into or exchanged with equity shares at a later date and the grading so
obtained, including unaccepted grades.

(b) If grading has been obtained from more than one credit rating agency,
disclosure shall be made of all the grades s o obtained, including unaccepted
grades.

(c) The rationale / description of the grading/s so obtained, as furnished by the

credit rating agency/ies.)

6.8.2.10 The names, addresses, telephone numbers, fax numbers, website addresses
and e-mail addresses of the trustees under debenture trust deed (in case of
debenture issue).

6.8.2.11 Name of the monitoring agency, if applicable, to be disclosed.

6.8.2.12 Where the project is being appraised, the name, address, telephone number
and e-mail address of the appraising entity.

6.8.2.13 Book building process in brief.

6.8.2.14 Details of Underwriting, if any:

(a) The names, addresses, telephone numbers, fax numbers and e-mail
addresses of the underwriters and the amount underwritten by them.

(b) Declaration by the Board of Directors of the issuer company that the
underwriters have sufficient resources to discharge their respective
obligations.

84
Inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/21/2006/24/4 dated April 24, 2006.
Page 47 of 332
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6.8.3 Capital Structure

6.8.3.1 The capital structure shall be presented in the following manner:

(a) Authorised, issued, subscribed and paid up capital (Number of instruments,

description and aggregate nominal value).

(b) Size of the present issue, giving separately promoters’ contribution, firm
allotment/ reservation for specified categories and net offer to public (Number
of instruments, description, aggregate nominal value and issue amount shall
be given in that order; Name(s) of group companies to be given, in case
reservation has been made for shareholders of the group companies;
Applicable percentages may be given in case of book built issue).

(c) Paid-up Capital:

(i) After the issue.

(ii) After conversion of securities (if applicable).

(d) Share Premium Account (before and after the issue).

6.8.3.2 After the details of capital structure, the following notes shall be incorporated:

(a) Share capital issued, giving details such as date of issue, number of shares,
face value, issue price, nature of allotment (rights, bonus, etc.), cumulative
capital, etc. Further, details of any share split, issue of shares otherwise then
for cash (with reasons thereof), any reduction in capital shall also be disclosed.

(b) Note relating to promoters' contribution and lock-in period, stating date of
allotment, date when made fully paid up, nature of allotment (rights, bonus,
etc.), number of securities, face value of securities, issue price of securities,
percentage of promoters’ contribution to total issued capital and the date up to
which the securities are locked-in. An illustrative format of promoters
contribution and lock-in is specified in Schedule VIII.

(c) Percentage of contribution by the promoters whose name is mentioned in the

prospectus as promoters as per clause 6.9.6.1 and the date up to which the
securities are locked-in. An illustrative format of promoters’ contribution whose
name figures in prospectus is specified in Schedule IX.

(d) Statement that promoters’ contribution has been brought in to the extent of not
less than the specified minimum lot and from persons defined as promoters
under the Guidelines.

(e) Statement that the promoters undertake to accept full conversion, if the
promoters’ contribution is in terms of the same optionally convertible security
as is being offered to the public.

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(f) Details of all ’buy-back’ and `stand by’ and similar arrangements for purchase
of securities by promoters, directors and lead merchant bankers shall be
disclosed.

(g) Statement that an over-subscription to the extent of 10% of the net offer to
public can be retained for the purpose of rounding off to the nearer multiple of
minimum allotment lot.

(h) A disclosure to the effect that the securities offered through this public/ rights
issue shall be made fully paid up or may be forfeited within 12 months from the
date of allotment of securities in the manner specified in clause 8.6.2 of these
Guidelines.

(i) A note stating that:

(i) Unsubscribed portion in any reserved category may be added to any other
reserved category.

(ii) The unsubscribed portion, if any, after such inter se adjustments amongst the
reserved categories shall be added back to the net offer to the public.

(iii) In case of under-subscription in the net offer to the public portion spillover to
the extent of under subscription shall be permitted from the reserved category
to the net public offer portion.

(j) Following details regarding major shareholders:

(i) Names of the ten largest shareholders as on the date of filing of the
prospectus with the Registrar of Companies.

(ii) Number of shares held by shareholders at (i) above including number of

shares which they would be entitled to upon exercise of warrant, option, rights
to convert a debenture, loan or other instrument.

(iii) Particulars as in (i) and (ii) above as on a date two years prior to the date of
filing the prospectus with the Registrar of Companies.

(iv) Particulars as in (i) and (ii) above as on a date ten days prior to the date of
filing of the prospectus with the Registrar of Companies.

(v) If the issuer company has made an initial public offering within the immediately
preceding two years, the above information shall be given separately indicating
the names of persons who acquired shares by subscriptions to the public issue
and those who acquired the shares by allotment on a firm basis or by private
placement.

(k) The details of:

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(i) the aggregate shareholding of the promoter group and of the directors of the
promoters, where the promoter is a company.

(ii) the aggregate number of securities purchased or sold by the promoters group
and the directors of the promoter during a period of six months preceding the
date on which the draft prospectus is filed with Board and to be updated by
incorporating the information in this regard till the time of filing the prospectus
with the Registrar of Companies.

(iii) the maximum and minimum price at which purchases and sales referred to in
(ii) above were made along with the relevant dates.

(l) In the event of it not being possible to obtain information regarding sales and
purchase of securities by any relative of the promoters, a statement to that
effect shall be made in the prospectus on the basis of the transfers recorded in
the books of the issuer company.

(m) Details of options granted or shares issued under any scheme of employees
stock option or employees stock purchase of issuer company.

Explanation I:

For the purpose of sub-clauses (k) and (l) above, the term 'Promoter' shall
include:

(a) the person or persons who are in over-all control of the company;

(b) the person or persons who are instrumental in the formulation of a plan or
programme pursuant to which the securities are offered to the public;

(c) the persons or persons named in the prospectus as promoters(s).

Provided that a director/ officer of the issuer company or person, if they are
acting as such merely in their professional capacity shall not be included in the
Explanation.

Explanation II:

'Promoter Group' shall include:

(a) the promoter;

(b) an immediate relative of the promoter (i.e., any spouse of that person, or
any parent, brother, sister or child of the person or of the spouse); and

(c) in case promoter is a company:

(i) a subsidiary or holding company of that company;

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(ii) any company in which the promoter holds 10% or more of the equity
capital or which holds 10% or more of the equity capital of the promoter;

(iii) any company in which a group of individuals or companies or

combinations thereof who holds 20% or more of the equity capital in that
company also holds 20% or more of the equity capital of the issuer
company; and

(d) in case the promoter is an individual:

(i) any company in which 10% or more of the share capital is held by the
promoter or an immediate relative of the promoter or a firm or HUF in
which the promoter or any one or more of his immediate relative is a
member;

(ii) any company in which a company specified in (i) above, holds 10% or
more, of the share capital;

(iii) any HUF or firm in which the aggregate share of the promoter and his
immediate relatives is equal to or more than 10% of the total; and

(e) all persons whose shareholding is aggregated for the purpose of

disclosing in the prospectus under the heading "shareholding of the
promoter group".

Explanation III:

The Financial Institution, Scheduled Banks, Foreign Institutional Investors

(FIIs) and Mutual Funds shall not be deemed to be a promoter or promoter
group merely by virtue of the fact that 10% or more of the equity of the issuer
company is held by such institution.

Provided that the Financial Institutions, Scheduled Banks and Foreign

Institutional Investors (FIIs) shall be treated as promoters or promoter group
for the subsidiaries or companies promoted by them or for the mutual fund
sponsored by them.

6.8.4 Objects of the Offering

6.8.4.1 The object of raising funds through the issue, that is whether for fixed asset
creation and/ or for working capital or any other purpose, shall be disclosed
clearly in the prospectus.

6.8.4.2 Funds Requirement

(a) The requirement for funds proposed to be raised through the issue shall be
disclosed clearly.

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(b) Where the company proposes to undertake more than one activity, i.e.,
diversification, modernisation, expansion, etc., the total project cost shall be
given activity- wise or project wise as the case may be..

(c) Where the company is implementing the project in a phased manner, the cost
of each phase, including the phase, if any, which has already been
implemented, shall be separately given.

6.8.4.3 Funding Plan (Means of Finance)

(a) An undertaking shall be given in the prospectus by the issuer company

confirming 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.

(b) The balance portion of the means of finance for which no firm arrangement
has been made shall be mentioned without specification)

6.8.4.4 Appraisal

(a) The scope and purpose of the appraisal, if any, along with the date of
appraisal shall be disclosed in the prospectus.

(b) The prospectus shall contain the cost of the project and means of finance as
per the appraisal report.

(c) The revision, if any, in the project cost and the means of finance after the date
of issue of the appraisal report shall be explained and disclosed.

(d) The weaknesses and threats, if any, given in the appraisal report, shall be
disclosed in the prospectus by way of risk factors.

6.8.4.5 Schedule of Implementation

(a) Schedule of implementation of the project and progress made so far, giving
details of land acquisition, civil works, installation of plant and machinery, trial
production, date of commercial production, etc.

6.8.4.6 Funds Deployed

(a) Actual exp enditure incurred on the project (in cases of companies raising
capital for a project) upto a date not earlier than two months from the date of
filing the prospectus with the Registrar of Companies, as certified by a
Chartered Accountant.

6.8.4.7 Sources of Financing of Funds Already Deployed

(a) Means and source of financing, including details of "bridge loan" or other
financial arrangement, which may be repaid from the proceeds of the issue.
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6.8.4.8 Details of Balance Fund Deployment

(a) Year wise break up of the expenditure proposed to be incurred on the said
project.

6.8.4.9 Interim Use of Funds

(a) Investment avenues in which the management proposes to deploy issue

proceeds, pending its utilisation in the proposed project.

6.8.4.10 Basic Terms of Issue

6.8.4.11 Basis for Issue Price

(a) The basis for issue price/ floor price/ price band shall be disclosed and justified
on the basis of the following information, which shall be also disclosed
separately:

(i) Earnings Per Share, i.e., EPS pre-issue for the last three years (as adjusted
for changes in capital).

(ii) P/E pre-issue.

(iii) Average Return on Net Worth in the last three years.

(iv) Minimum Return on Increased Net Worth required to maintain pre -issue EPS.

(v) Net Asset Value per share based on last balance sheet.

(vi) Net Asset Value per share after issue and comparison thereof with the issue
price.

(vii) An illustrative format of disclosure in respect of basis for issue price is given in
Schedule XV.

(viii) Comparison of all the accounting ratios of the issuer company as mentioned
above with the industry average and with the accounting ratios of the peer
group (i.e., companies of comparable size in the same industry (indicate the
source from which industry average and accounting ratios of the peer group
has been taken).

(ix) The face value of shares (including the statement about the issue price/ floor
price/ price band being “X” times of the face value).

Provided that the projected earnings shall not be used as a justification for the
issue price in the prospectus.

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Provided further that the accounting ratios disclosed in the prospectus in

support of basis of the issue price shall be calculated after giving effect to the
consequent increase in capital on account of compulsory conversions
outstanding, as well as on the assumption that the options outstanding, if any,
to subscribe for additional capital will be exercised.

(b) The Lead Merchant Banker shall not proceed with the issue in case the
accounting ratios mentioned above do not justify the issue price.

(c) In case of book built issues, the red herring prospectus shall state that the final
price would be determined on the basis of the demand from the investors.

6.8.4.12 Tax Benefits

(a) Any special tax benefits for the issuer company and its shareholders.

6.9 About the Issuer Company

6.9.1 Industry Overview

6.9.2 Business Overview

6.9.2.1 Details of the business of the issuer company

(a) Location of the project

(b) Plant, machinery, technology, process, etc.:

(i) Details in a tabular form to be given shall include the machines required to be
bought by the issuer company, cost of the machines, name of the suppliers,
the date of placement of order and the date/ expected date of supply.

(ii) In case of machines yet to be delivered, the date of quotations relied upon for
the cost estimates given, shall also be mentioned.

(iii) Percentage and value terms the plant and machinery for which orders are yet
to be placed shall be stated and also be given by way of a risk factor.

(iv) Details of second hand machinery bought/ proposed to be bought, if any,

including the age of the machines, balance estimated life, etc. shall also be
given.

(c) Collaborations, any performance guarantee or assistance in marketing by the

collaborators:

(i) Following information regarding persons/ entities with whom technical and
financial agreements have been entered into to be given:

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a. place of registration and year of incorporation.

b. paid up share capital.
c. turnover of the last financial year of operation.
d. general information regarding such persons relevant to the issuer.

(d) Infrastructure facilities for raw materials and utilities like water, electricity, etc.

(e) Products/ services of the issuer company:

(i) Nature of the product/s – consumer/ industrial and end users.

(ii) Market, including details of the competition, past production figures for the
industry, existing installed capacity, past trends and future prospects regarding
exports (if applicable), demand and supply forecasts (if given, should be
essentially with assumptions unless sourced from a market research agency of
repute), etc. to be given. Source of data used shall be mentioned.

(iii) Approach to marketing and proposed marketing set up.

(iv) Export possibilities and export obligations, if any (in case of a issuer company
providing any "service" particulars, as applicable, be furnished).

6.9.2.2 Business strategy

(a) A brief statement about business strategy.

(i) A brief statement about future prospects, including the following:

(i) Capacity & Capacity Utilisation:

a. A table shall be incorporated giving the existing installed capacities for

each product, capacity utilisation for these products in the previous three
years, proposed capacities for existing as well as proposed products and
the assumptions for future capacity utilisation for the next three years
(from the date of commencement of commercial production) in respect of
existing as well as proposed products.

b. If the projected capacity utilisation is higher than the actual average

capacity utilisation by more than 25% during the previous three years,
how the issuer company proposes to achieve the projected levels of
capacity utilisation in view of its failure to achieve levels of similar
capacity utilisation in the past, shall be stated.

(ii) Projections:

No forecast of projections relating to financial performance of the issuer

company shall be given in the prospectus.

6.9.2.3 Property
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6.9.2.4 Purchase of property

(a) As respects any property referred to in sub-clause (b):

(i) the names, address, descriptions and occupations of the vendors;

(ii) the amount paid or payable in cash, shares or debentures to the vendor and,
where there is more than one separate vendor, or the company is a sub
purchaser, the amount so paid or payable to each vendor, specifying
separately the amount, if any, paid or payable for goodwill;

(iii) the nature of the title or interest in such property acquired or to be acquired by
the issuer company;

(iv) short particulars of every transaction relating to the property completed within
the two preceding years, in which any vendor of the property to the company
or any person who is, or was at the time of the transaction, a promoter, or a
director or proposed director of the company had any interest, direct or
indirect, specifying the date of the transaction and the name of such promoter,
director or proposed director and stating the amount payable by or to such
vendor, promoter, director or proposed director in respect of the transaction.

(b) The property to which sub-clause (a) applies is a property purchased or

acquired by the issuer company or proposed to be purchased or acquired,
which is to be paid for wholly or partly out of the proceeds of the issue offered
for subscription by the prospectus or the purchase or acquisition of which has
not been completed at the date of issue of the prospectus, other than property:

(i) the contract for the purchase or acquisition whereof was entered into in the
ordinary course of the issuer company’s business, the contract not being made
in contemplation of the issue nor the issue in consequence of the contract; or

(ii) as respects which the amount of the purchase money is not material.

(c) for the purpose of this clause, where a vendor is a firm, the members of the
firm shall not be treated as separate vendors.

(d) if the issuer company proposes to acquire a business which has been carried
on for less than three years, the length of time during which the business has
been carried.

6.9.3 Key Industry-Regulation (if applicable)

6.9.4 History and Corporate Structure of the issuer company

6.9.4.1 History and Major Events.

6.9.4.2 Main objects.

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6.9.4.3 Subsidiaries of the issuer company, if any and their businesses.

6.9.4.4 Shareholders agreements

(a) Key terms of subsisting shareholders’ agreements, if any (to be provided even
if the issuer company is not a party to such an agreement, but is aware of such
an agreement).

(b) All such agreements shall be included in the list of material contracts required
under clause 6.15.1.

6.9.4.5 Other agreements

(a) The dates, parties to, and general nature of every other material contract, not
being a contract entered into in the ordinary course of the business carried on
or intended to be carried on by the issuer company or a contract entered into
more than two years before the date of the prospectus.

(b) All such agreements shall be included in the list of material contracts required
under clause 6.15.1.

6.9.4.6 Strategic partners.

6.9.4.7 Financial partners.

6.9.5 Management

6.9.5.1 Board of Directors

(a) Names, address and occupation of Manager, Managing Director, and other
Directors (including Nominee Directors, Whole -time Directors), giving their
directorships in other companies.

(b) Details of borrowing powers.

6.9.5.2 Compensation of Managing Directors/ Whole time Directors

(a) The dates, parties to, and general nature of every contract appointing or fixing
the remuneration of a Director, Whole-time Director, Managing Director or
Manager whenever entered into, that is to say, whether within or more than,
two years before the date of the prospectus.

(b) All such contracts shall be included in the list of material contracts required
under clause 6.15.1.

6.9.5.3 Compliance with Corporate Governance requirements.

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6.9.5.4 Shareholding of Directors, including details of qualification shares held by

them, whereever applicable.

6.9.5.5 Interest of directors

(a) Full particulars of the nature and extent of the interest, if any, of every Director:

(i) in the promotion of the issuer company; or

(ii) in any property acquired by the issuer company within two years of the date of
the prospectus or proposed to be acquired by it.

(b) Where the interest of such a director consists in being a member of a firm or
company, the nature and extent of the interest of the firm or company, with a
statement of all sums paid or agreed to be paid to him or to the firm or
company in cash or shares or otherwise by any person either to induce him to
become, or to qualify him as, a director, or otherwise for services rendered by
him or by the firm or company, in connection with the promotion or formation of
the issuer company shall be disclosed.

6.9.5.6 Change, if any, in the directors during the last three years, and reasons,
thereof.

6.9.5.7 Management Organisation Structure.

6.9.5.8 Key Management Personnel

(a) A paragraph on the key managerial personnel shall be incorporated giving full
details of the personnel recruited as on the date of filing of the prospectus with
the Board indicating name, date of joining, qualification, details of previous
employment etc.

(b) The Lead Merchant Banker shall verify and ensure that the persons whose
names appear in this paragraph are in the employment of the issuer company
as permanent employees.

(c) The shareholding of the Key Managerial Personnel.

(d) Bonus or Profit Sharing Plan for the Key Managerial Personnel.

(e) Changes in the Key Managerial Personnel:

Any change otherwise than by way of retirement in the normal course in the
key senior managerial personnel particularly in charge of production, planning,
finance and marketing within one year prior to the date of filing the prospectus
with the Board shall be disclosed.

6.9.5.9 Employees

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6.9.5.10 Disclosures regarding employees stock option scheme/ employees stock

purchase scheme of the issuer company, if any, as required by the Guidelines
or Regulations of the Board relating to Employee Stock Option Scheme and
Employee Stock Purchase Scheme.

6.9.5.11 Payment or Benefit to Officers of the issuer c ompany (non-salary related).

(a) Any amount or benefit paid or given within the two preceding years or intended
to be paid or given to any officer and consideration for payment of giving of the
benefit.

6.9.6 Promoters/ Principal Shareholders

6.9.6.1 Where the promoters are individuals:

(a) A complete profile of the promoters, including their age, educational

qualifications, experience in the business or employment and in the line of
business proposed in the prospectus, their business and financial activities,
photograph, voter ID number, driving license number shall be disclosed.

(b) A declaration, confirming that the Permanent Account Number, Bank Account
Number and Passport Number of the promoters have been submitted to the
Stock Exchanges on which securities are proposed to be listed, at the time of
filing the draft prospectus with them.

6.9.6.2 Where the promoters are companies:

(a) History of the companies and the promoters of the companies shall be
furnished.

(b) Details in change of management of the companies, if any, including deta ils of
the persons who are holding the controlling interest together with the
applicability and compliance of Securities and Exchange Board of India
(Substantial Acquisition of Shares and Takeovers) Regulations, 1997.

(c) A declaration, confirming that the Permanent Account Numbers, Bank Account
Numbers, the Company Registration Numbers and the addresses of the
Registrars of Companies where the companies are registered have been
submitted to the Stock Exchanges on which securities are proposed to be
listed, at the time of filing the draft prospectus with them.

6.9.6.3 Common pursuits

6.9.6.4 Full particulars of the nature and extent of the interest, if any, of every
promoter:

(a) in the promotion of the issuer company; or

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(b) in any property acquired by the issuer company within two years of the date of
the prospectus or proposed to be acquired by it.

(c) Where the interest of such a director or promoter consists in being a member
of a firm or company, the nature and extent of the interest of the firm or
company, with a statement of all sums paid or agreed to be paid to him or to
the firm or company in cash or shares or otherwise by any person either to
induce him to become, or to qualify him as, a director, or otherwise for services
rendered by him or by the firm or company, in connection with the promotion or
formation of the issuer company.

6.9.6.5 Payment or benefit to promoters of the issuer company:

Any amount or benefit paid or given within the two preceding years or intended
to be paid or given to any promoter and consideration for payment of giving of
the benefit.

6.9.6.6 Related party transactions as per the Financial Statements

6.9.7 Currency of presentation

6.9.7.1 One standard financial unit shall be used in the prospectus

6.9.8 Dividend policy

6.10 Financial Statements

6.10.1 Selected Consolidated Financial and Operating data

6.10.2 Financial Information of the issuer company

6.10.2.1 A report by the auditors of the issuer company with respect to:

(a) profits and losses and assets and liabilities, in accordance with clauses
6.10.2.2 or 6.10.2.3, as the case may require; and

(b) the rates of dividends, if any, paid by the issuer company in respect of each
class of shares in the issuer company for each of the five financial years
immediately preceding the issue of the prospectus, giving particulars of each
class of shares on which such dividends have been paid and particulars of the
cases in which no dividends have been paid in respect of any class of shares
for any of those years;

and, if no accounts have been made up in respect of any part of the period of
five years ending on a date three months before the issue of the prospectus,
containing a statement of that fact (and accompanied by a statement of the
accounts of the issuer company in respect of that part of the said period up to
a date not earlier than six months of the date of issue of the prospectus
indicating the profit or loss for that period and the assets and liabilities position
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as at the end of that period together with a certificate from the auditors that
such accounts have been examined and found correct by them. The said
statement may indicate the nature of provision or adjustments made or are yet
to be made).

6.10.2.2 If the issuer company has no subsidiaries, the report shall:

(a) so far as regards profits and losses, deal with the profits or losses of the issuer
company (distinguishing items of a non- recurring nature) for each of the five
financial years immediately preceding the issue of the prospectus; and

(b) so far as regards assets and liabilities, deal with the assets and liabilities of the
issuer company at the last date to which the accounts of the issuer company
were made up.

6.10.2.3 If the issuer company has subsidiaries, the report shall:

(a) so far as regards profits and losses, deal separately with the issuer company’s
profits or losses as provided by 6.10.2.2 and in addition, deal either:

(i) as a whole with the combined profits or losses of its subsidiaries, so far as they
concern the members of the issuer company; or

(ii) individually with the profits or losses of each subsidiary, so far as they concern
the members of the issuer company;

or, instead of dealing separately with the issuer company’s profits or losses,
deal as a whole with the profits or losses of the issuer company, and, so far as
they concern the members of the issuer company, with the combined profits or
losses of its subsidiaries; and

(b) so far as regards assets and liabilities, deal separately with the issuer
company’s assets and liabilities as provided by 6.10.2.2 and in addition, deal
either:

(i) as a whole with the combined assets and liabilities of its subsidiaries, with or
without the issuer company’s assets and liabilities; or

(ii) individually with the assets and liabilities of each subsidiaries;

and shall indicate as respects the assets and liabilities of the subsidiaries, the
allowance to be made for persons other than the members of the issuer
company.

6.10.2.4 If the proceeds, or any part of the proceeds, of the issue of the shares or
debentures are, or is, to be applied directly or indirectly:

(a) in the purchase of any business; or

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(b) in the purchase of an interest in any bus iness and by reason of that purchase,
or anything to be done in consequence thereof, or in connection therewith; the
issuer company will become entitled to an interest as respects either the
capital or profits and losses or both, in such business exceeding fifty percent,
thereof;

a report made by accountants (who shall be named in the prospectus) upon:

(i) the profits or losses of the business of each of the five financial years
immediately preceding the issue of the prospectus; and

(ii) the assets and liabilities of the business at the last date to which the accounts
of the business were made up, being a date not more than one hundred and
twenty days before the date of the issue of the prospectus.

6.10.2.5
(a) If:
(i) the proceeds, or any part of the proceeds, of the issue of the shares or
debentures are or is to be applied directly or indirectly in any manner resulting
in the acquisition by the issuer company of shares in any other body corporate;
and

(ii) by reason of that acquisition or anything to be done in consequence thereof or

in connection therewith, that body corporate will become a subsidiary of the
issuer company;

a report made by accountants (who shall be named in the prospectus) upon:

(i) the profits or losses of the other body corporate for each of the five financial
years immediately preceding the issue of the prospectus; and

(ii) the assets and liabilities of the other body corporate at the last date to which its
accounts were made up.

(b) The said report shall:

(i) indicate how the profits or losses of the other body corporate dealt with by the
report would, in respect of the shares to acquired, have concerned members of
the issuer company and what allowance would have fallen to be made, in
relation to assets and liabilities so dealt with for holders of other shares, if the
issuer company had at all material times held the shares to be acquired; and

(ii) where the other body corporate has subsidiaries, deal with the profits or losses
and the assets and liabilities of the body corporate and its subsidiaries in the
manner provided by sub-clause (a) (ii) above in relation to the issuer company
and its subsidiaries.

6.10.2.6 Principal terms of loan and assets charged as security.

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6.10.2.7 Other provisions relating to accounts of the issuer company:

(a) All significant accounting policies and standards followed in the preparation of
the financial statements shall be disclosed.

(b) Statements of Assets and Liabilities and Profit and Loss or any other financial
information shall be incorporated after making the following adjustments,
wherever quantification is possible:

(i) Adjustments/ rectification for all incorrect accounting practices or failures to

make provisions or other adjustments which resulted in audit qualifications.

(ii) Material amounts relating to adjustments for previous years shall be identified
and adjusted in arriving at the profits of the years to which they relate
irrespective of the year in which the event triggering the profit or loss occurred.

(iii) Where there has been a change in accounting policy, the profits or losses of
the earlier years (required to be shown in the prospectus) and of the year in
which the change in the accounting policy has taken place shall be
recomputed to reflect what the profits or losses of those years would have
been if a uniform accounting policy was followed in each of these years.

(iv) If an incorrect accounting policy is followed, the re-computation of the financial

statements shall be in accordance with correct accounting policies.

(v) Statement of profit or loss shall disclose both the profit or loss arrived at before
considering extraordinary items and after considering the profit or loss from
extraordinary items. An illustrative format of the disclosure of profits and losses
on this basis is specified at Schedule X.

(vi) The statement of assets and liabilities shall be prepared after deducting the
balance outstanding on revaluation reserve account from both fixed assets and
reserves and the networth arrived at after such deductions. A suggested
format of assets and liabilities is specified at Schedule XI.

(c) The turnover disclosed in the Profit and Loss Statement shall be bifurcated
into:

(i) turnover of products manufactured by the issuer company;

(ii) turnover of products traded in by the issuer company; and

(iii) turnover in respect of products not normally dealt in by the issuer company but
included in (ii) above, shall be mentioned separately.

(d) The prospectus shall disclose details of `Other Income' in all cases where such
income (net of related expenses) exceeds 20% of the net profit before tax,
including:

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(i) the sources and other particulars of such income; and

(ii) an indication as to whether such income is recurring or non-recurring, or has

arisen out of business activities/ other than the normal business activities.

(e) Changes (with quantification, wherever possible) in the activities of the issuer
company which may have had a material effect on the statement of profit/ loss
for the five years, Including discontinuance of lines of business, loss of
agencies or markets and similar factors.

(f) Accounting and other ratios:

(i) The following accounting ratios shall be given for each of the accounting
periods for which financial information is given.

a. Earnings per Share: This ratio shall be calculated after excluding extra
ordinary items.

b. Return on net worth: This ratio shall be calculated excluding revaluation

reserves.

c. Net Asset Value per share. This ratio shall be calculated excluding
revaluation reserves.

(ii) ‘Accounting and other Ratios’ shall be based on the Financial Statements
prepared on the basis of Indian Accounting Standards.

(g) Capitalisation Statement:

(i) A Capitalisation Statement showing total debt, net worth, and the debt/ equity
ratios before and after the issue is made shall be incorporated.

(ii) In case of any change in the share capital since the date as of which the
financial information has been disclosed in the prospectus, a note explaining
the nature of the change shall be given.

(iii) An illustrative format of the Capitalisation Statement is specified at Schedule

XIII.

(h) Unsecured loans:

(i) Break-up of total outstanding unsecured loans taken by the issuer company,
promoters/ group companies/ associate companies and others shall be given
in the prospectus.

(ii) In respect of each such unsecured loan of the former category, the terms and
conditions, including interest rates and the repayment schedule.

(iii) If the loan can be recalled by the lenders at any time, the fact has to be given
as a risk factor.
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(i) For a proper understanding of the future tax incidence, the following factors
shall be identified and explained through proper disclosures:

(i) Profits after tax are often affected by the tax shelters which are available.

(ii) Some of these are of a relatively permanent nature (for example, arising out of
export profits) while others may be limited in point of time (for example, tax
holidays for new undertakings).

(iii) Tax provisions are also affected by timing differences which can be reversed in
the future (for example, the difference between book depreciation and tax
depreciation).

(iv) An illustrative format of statement in respect of tax shelter is specified in

Schedule XII.

6.10.2.8 The issuer company, if it so desires, may include in the prospectus, the
financial statements prepared on the basis of more than one accounting
practices, subject to disclosure of the material differences arising because of
differences in the accounting policies of different accounting practices.

6.10.3 Financial Information of Group Companies

6.10.3.1 The following information for the last three years, based on the audited
statements, in respect of all the companies, firms, ventures, etc. promoted by
the promoters, irrespective of whether these are covered under section 370
(1)(B) of the Companies Act, 1956 shall be given, wherever applicable:

(a) Date of Incorporation.

(b) Nature of activities.

(c) Equity Capital.

(d) Reserves (excluding revaluation reserve).

(e) Sales.

(f) Profit after tax (PAT).

(g) Earnings per share (EPS).

(h) Net Asset Value (NAV).

(i) The highest and lowest market price of shares during the preceding six months
with suitable disclosures for changes in capital structure during the period and
the market value on the date of filing the prospectus with the Registrar of
Companies.
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(j) If any of the companies has made public or rights issue in the preceding three
years, the issue price of the security, the current market price and particulars
of changes in the capital structure, if any, since the date of issue and a
statement regarding the cost and progress of implementation of the project in
comparison with the cost and implementation schedule given in the
prospectus.

(k) Information regarding adverse factors related to the company and in particular
regarding:

(i) whether the company has become a sick company within the meaning of the
Sick Industrial Companies (Special Provisions) Act, 1995 or is under winding
up.

(ii) whether the company has made a loss in the immediately preceding year and
if so, the profit or loss figures for the immediately preceding three years.

6.10.3.2 In case, the issuer company has more than five listed group companies, the
financial information may be restricted to the five largest listed companies to
be determined on the basis of market capitalisation one month before the date
of filing draft prospectus with the Board.

Provided that financial information regarding every such company which has
become a sick industrial company or is under winding up or has a negative net
worth shall be provided.

6.10.3.3 If the promoters have disassociated themselves from any of the companies/
firms during preceding three years, the reasons therefor and the
circumstances leading to the disassociation shall be furnished together with
the terms of such disassociation.

6.10.3.4
(a) In case there are common pursuits among these companies, the reasons and
justification for the same shall be spelt out and the conflict of interest situations
shall be stated.

(b) The related business transactions within the group shall also be mentioned.

(c) The significance of these transactions on the financial performance of the

company/ companies shall be stated.

6.10.3.5 Sales or purchase between companies in the promoter group when such sales
or purchases exceed in value in the aggregate 10% of the total sales or
purchases of the issuer and also disclose material items of income or
expenditure arising out of transactions in the promoter group.

6.10.4 Changes in Accounting Policies in the last three years

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6.10.5 Management’s Discussion and Analysis of Financia l Condition and

Results of Operations as Reflected in the Financial Statements:

6.10.5.1 Overview of the business of the issuer company.

6.10.5.2 Significant developments subsequent to the last financial year:

A statement by the directors whether in their opinion there have arisen any
circumstances since the date of the last financial statements as disclosed in
the prospectus and which materially and adversely affect or is likely to affect
the trading or profitability of the issuer company, or the value of its assets, or
its ability to pay its liabilities within the next twelve months.

6.10.5.3 Factors that may affect Results of the Operations.

6.10.5.4 Discussion on Results of Operations:

A summary of past financial results after adjustments as given in the auditors

report for the past three years containing significant items of income and
expenditure shall be given.

6.10.5.5 Comparison of recent Financial Year with the Previous Financial Years (last
three years) on the major heads of the Profit & Loss Statement:

(a) An analysis of reasons for the changes in significant items of income and
expenditure shall also be given, inter alia, containing the following:

(i) unusual or infrequent events or transactions.

(ii) significant economic changes that materially affected or are likely to affect
income from continuing operations.

(iii) known trends or uncertainties that have had or are expected to have a material
adverse impact on sales, revenue or income from continuing operations.

(iv) future changes in relationship between costs and revenues, in case of events
such as future increase in labour or material costs or prices that will cause a
material change are known.

(v) the extent to which material increases in net sales or revenue are due to
increased sales volume, introduction of new products or services or increased
sales prices.

(vi) total turnover of each major industry segment in which the issuer company
operated.

(vii) status of any publicly announced new products or business segment.

(viii) the extent to which business is seasonal.

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(ix) any significant dependence on a single or few suppliers or customers.

(x) competitive conditions.

6.10.5.6 ‘Management’s Discussion and Analysis of financial condition and results of

operations as reflected in the financial statements (MDA)’ shall be based on
the Financial Statements prepared on the basis of Indian Accounting
Practices. In addition, the issuer company may present MDA based on other
Accounting Practices.

6.11 Legal and Other Information

6.11.1 Outstanding Litigations and Material developments

6.11.1.1 Outstanding litigations involving the issuer company:

(a) Litigations against the issuer company or against any other company whose
outcome could have a materially adverse effect of the position of the issuer
company.

(b) Further, all the litigations against the directors involving violation of statutory
regulations or alleging criminal offence shall be furnished in the prospectus.

(c) Pending proceedings initiated for economic offences against the issuer
company or its directors shall be disclosed separately indicating their present
status.

(d) The details of the past cases in whic h penalties were imposed by the
concerned authorities on the issuer company or its directors.

(e) Outstanding litigations, defaults, etc., pertaining to matters likely to affect

operations and finances of the issuer company, including disputed tax
liabilities , prosecution under any enactment in respect of Schedule XIII to the
Companies Act, 1956 (1 of 1956) etc. shall be disclosed.

(f) The Lead Merchant Banker shall ensure to appropriately incorporate in the
prospectus and as risk factor(s), information regarding pending litigations,
defaults, non payment of statutory dues, proceedings initiated for economic
offences/ civil offences (including the past cases, if found guilty), any
disciplinary action taken by the Board/ stock exchanges against the issuer
company o r its Directors.

(g) The name(s) of small scale undertaking(s) or any other creditors to whom the
issuer company owes a sum exceeding Rs. 1 lakh which is outstanding more
than 30 days; and

6.11.1.2 The information about outstanding litigations as per clause 6.11.1.1 (e) shall
be furnished in respect of subsidiaries of the issuer company (if applicable).
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6.11.1.3 Outstanding litigations involving the promoter and group companies:

(a) All pending litigations in which the promoters are involved, defaults to the
financial institutions/ banks, non-payment of statutory dues and dues towards
instrument holders like debenture holders, fixed deposits, and arrears on
cumulative preference shares by the promoters and the companies/ firms
promoted by the promoters, shall be listed in the prospectus together with the
amounts involved and the present status of such litigations/ defaults. The likely
adverse effect of these litigations/ defaults, etc. on the financial performance of
the issuer company shall also be mentioned.

(b) Further, the cases of pending litigations, defaults, etc. in respect of companies/
firms/ ventures with which the promoters were associated in the past but are
no longer associated shall also be disclosed in case their name(s) continues to
be associated with particular litigation(s).

(c) Further, all the litigations against the promoter involving violation of statutory
regulations or alleging criminal offence shall be furnished in the prospectus.

(d) Pending proceedings initiated for economic offences against the promoters,
companies and firms promoted by the promoters shall be disclosed separately
indicating their present status.

(e) The details of the past cases in which penalties were imposed by the
concerned authorities.

(f) The lead merchant banker shall ensure to appropriately incorporate in the
prospectus and as risk factor(s), information regarding pending litigations,
defaults, non payment of statutory dues, proceedings initiated for economic
offences/ civil offences (including the past cases, if found guilty), any
disciplinary action taken by the Board/ stock exchanges against the promoters
and their other business ventures (irrespective of the fact whether they are
companies under the same management with the issuer company as per
section 370 (1B) of the Companies Act, 1956).

6.11.1.4 If any the above mentioned litigations, etc., arise after the filing of the
prospectus, the facts shall be incorporated appropriately in the prospectus
(and as risk factors).

6.11.1.5 In case there are no such cases, a distinct negative statement is required to be
made in this regard in the prospectus.

6.11.1.6 Material developments since the last balance sheet date.

6.11.2 Government Approvals/ Licensing Arrangements

6.11.2.1 Investment approvals (FIPB/ RBI, etc.).

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6.11.2.2 All government and other approvals.

6.11.2.3 Technical approvals.

6.11.2.4 Letter of in tent/ industrial license and declaration of the Central Govternment/
RBI about non-responsibility for financial soundness or correctness of
statements.

6.12 Other Regulatory and Statutory Disclosures

6.12.1 Authority for the issue and details of resolution passed for the issue.

6.12.2 Prohibition by SEBI.

6.12.3 Eligibility of the issuer company to enter the capital market.

85
(6.12.3A Compliance with provisos to clause 6.3 or 6.39, as the case may be, if
applicable.)

6.12.4 Disclaimer clause:

(a) A prospectus shall contain the following disclaimer clause in bold capital
letters:

"It is to be distinctly understood that submission of offer document to SEBI

should not in any way be deemed or construed that the same has been
cleared or approved by SEBI. SEBI does not take any responsibility either for
the financial soundness of any scheme or the project for which the issue is
proposed to be made or for the correctness of the statements made or
opinions expressed in the offer document. Lead Merchant Banker,
______________ has certified that the disclosures made in the offer document
are generally adequate and are in conformity with SEBI (Disclosures and
Investor Protection) Guidelines in force for the time being. This requirement is
to facilitate investors to take an informed decision for making investment in the
proposed issue.

It should also be clearly understood that while the Issuer Company is primarily
responsible for the correctness, adequacy and disclosure of all relevant
information in the offer document, the Lead Merchant Banker is expected to
exercise Due Diligence to ensure that the Company discharges its
responsibility adequately in this behalf and towards this purpose, the Lead
Merchant Banker _______________________ has furnished to SEBI a Due
Diligence Certificate dated ________________ in accordance with SEBI
(Merchant Bankers) Regulations 1992 which reads as follows:

(i) We have examined various documents including those relating to

litigation like commercial disputes, patent disputes, disputes with

85
Inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/19/2006/31/3 dated March 31, 2006.
Page 70 of 332
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collaborators etc. and other materials in connection with the finalisation of

the offer document pertaining to the said issue;

(ii) On the basis of such examination and the discussions with the Company,
its Directors and other officers, other agencies, independent verification
of the statements concerning the objects of the issue, projected
profitability, price justification and the contents of the documents
mentioned in the Annexure and other papers furnished by the company.

We confirm that:

(a) the offer document forwarded to SEBI is in conformity with the

documents, materials and paper relevant to the issue;

(b) all the legal requirements connected with the said issue, as also the
guidelines, instructions, etc. issued by SEBI, the Government and any
other competent authority in this behalf have been duly complied with;
and

(c) the disclosures made in the offer document are true, fair and adequate to
enable the investors to make a well informed decision as to the
investment in the proposed issue.

(d) beside ourselves, all the intermediaries named in the prospectus are
registered with SEBI and till date such registration is valid.

(e) We have satisfied ourselves about the worth of the underwriters to fulfill
their underwriting commitments.

The filing of offer document does not, however, absolve the company from any
liabilities under section 63 or 68 of the Companies Act, 1956 or from the
requirement of obtaining such statutory or other clearances as may be
required for the purpose of the proposed issue. SEBI, further reserves the right
to take up, at any point of time, with the lead merchant banker(s) any
irregularities or lapses in offer document."

(b) Disclaimer Statement from the Issuer and the Lead Manager:

A statement to the effect that the issuer company and the Lead Manager
accepts no responsibility for statements made otherwise than in the
prospectus or in the advertisement or any other material issued by or at the
instance of the issuer and that anyone placing reliance on any other source of
information would be doing so at his own risk should be incorporated.

6.12.5 Caution.

6.12.6 Disclaimer in respect of jurisdiction.

6.12.7 Disclaimer clause of the stock Exchanges.

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6.12.8 Disclaimer clause of the Reserve Bank of India (if applicable).

6.12.9 Filing of prospectus with the Board and the Registrar of Companies:

6.12.9.1 Under this head, the office of the Board where the prospectus has been filed
shall be mentioned.

6.12.9.2 Address of the Registrar of Companies, where copy of the prospectus, having
attached thereto the material contracts and documents referred to elsewhere
in the prospectus, has been filed, shall also be mentioned.

6.12.10 Listing:

6.12.10.1 Names of the designated stock exchange and other exchanges where
application has been made for listing of the present issue shall be mentioned.

6.12.11 Consent of the Directors, auditors, solicitors/ advocates, Managers to the

Issue, Registrar to the Issue, Bankers to the Company, Bankers to the Issue
and experts.

6.12.12 Expert opinion obtained, if any.

6.12.13 Expenses of the issue.

6.12.14 Details of fees payable to (in terms of amount, as a percentage of total issue
expenses and as a percentage of total issue size):

6.12.14.1 Lead Managers.

6.12.14.2 Co-lead Managers, if any
6.12.14.3 Co-managers, if any
6.12.14.4 Other Merchant Bankers
6.12.14.5 Registrars to the issue.
6.12.14.6 Advisors.
6.12.14.7 Bankers to issues
6.12.14.8 Trustees for the debenture-holders.
6.12.14.9 Others

6.12.15 Underwriting commission, brokerage and selling commission.

6.12.16 Previous public or rights issues, if any (during the last five years):

6.12.16.1 Closing Date.

6.12.16.2 Date of allotment.

6.12.16.3 Date of refunds.

6.12.16.4 Date of listing on the stock exchange.

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6.12.16.5 If the issue (s) at premium or discount and the amount thereof.

6.12.16.6 The amount paid or payable by way of premium, if any, on each share which
had been issued within the two years preceding the date of the prospectus or
is to be issued, stating the dates or proposed dates of issue and, where some
shares have been or are to be issued at a premium and other shares of the
same class at a lower premium, or at par or at a discount, the reasons for the
differentiation and how any premiums received have been or are to be
disposed of.

6.12.17 Previous issues of shares otherwise than for cash.

6.12.18 Commission or brokerage on previous issues.

6.12.19 Following particulars in regard to the issuer company and other listed
companies under the same management within the meaning section 370
(1)(B) of the Companies Act, 1956 which made any capital issue during the
last three years shall be given:

6.12.19.1 Name of the company.

6.12.19.2 Year of Issue.

6.12.19.3 Type of Issue (public/ rights/ composite).

6.12.19.4 Amount of issue.

6.12.19.5 Date of closure of issue.

6.12.19.6 Date of completion of delivery of share/ debenture certificates.

6.12.19.7 Date of completion of the project, where object of the issue was financing the
project.

6.12.19.8 Rate of dividend paid.

6.12.20 Promise vis -à-vis performance:

6.12.20.1 Issuer company:

(a) A separate para entitled "Promise Vs Performance - Last three issues" shall be
given indicating whether all the objects mentioned in the respective offer
documents relating to the earlier issues by the issuer company were met and
whether all projections made in the said offer documents were achieved.

(b) If not, non-achievement of objects/projections shall be brought out distinctly

shortfall and delays shall be quantified.

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6.12.20.2 Listed Ventures of Promoters:

(a) A separate paragraph on issues of group/associate companies entitled

"Promise Vs Performance - Last one Issue of group/associate companies"
shall be given indicating whether all the objects mentioned in the respective
offer documents relating to group/ associate companies were met and whether
all projections made in the said offer documents were achieved.

(b) If not, non-achievement of objects/ projections shall be brought out distinctly.

Shortfall and delays shall be quantified.

6.12.21 Outstanding debentures or bonds and redeemable preference shares and

other instruments issued by the issuer company outstanding as on the date of
prospectus and terms of issue.

6.12.22 Stock market data for equity shares of the issuer company, if listed:

6.12.22.1 Particulars of:

(a) high, low and average market prices of the share of the issuer company during
the preceding three years;

(b) monthly high and low prices for the six months preceding the date of filing the
draft prospectus with Board which shall be updated till the time of filing the
prospectus with the Registrar of Companies/ Stock Exchange concerned;

(c) number of shares traded on the days when the high and low prices were
recorded in the relevant stock exchange during said period of (i) and (ii) above;

(d) the stock market data referred to above shall be shown separately for periods
marked by a change in capital structure, with such period commencing from
the date the concerned stock exchange recognises the change in the capital
structure (e.g. when the shares have become ex-rights or ex-bonus);

(e) the market price immediately after the date on which the resolution of the
Board of Directors approving the issue was approved;

(f) the volume of securities traded in each month during the six months preceding
the date on which the prospectus is filed with ROC; and

(g) to volume of business transacted along with high, low and average prices of
shares of the issuer company shall also be stated for respective periods.

6.12.23 Mechanism evolved for redressal of investor grievances

6.12.23.1 The prospectus shall disclose the arrangements or any mechanism evolved by
the issuer company for redressal of investor grievances.

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6.12.23.2 The issuer company shall disclose the time normally taken by it for disposal of
various typ es of investor grievances.

6.12.23.3 Similar disclosure shall be made in regard to the listed companies under the
same management within the meaning of Section 370 (1B) of the Companies
Act, 1956 for the period of three years prior to the date of filing of the
pros pectus with the Registrar of Companies/ Stock Exchange.

6.12.24 Change, if any, in the auditors during the last three years, and reasons,
thereof.

6.12.25 Capitalisation of reserves or profits (during last five years).

6.12.26 Revaluation of assets, if any (during the last five years)

6.13 Offering Information

6.13.1 Terms of the Issue

6.13.1.1 Ranking of equity shares.

6.13.1.2 Mode of payment of dividend.

6.13.1.3 Face value and issue price/ floor price/ price band.

6.13.1.4 Rights of the instrument holders.

6.13.1.5 Market lot.

6.13.1.6 Nomination facility to investor.

6.13.1.7 Minimum subscription:

(a) For Non-underwritten Public Issues:

Following statement shall appear:

"If the company does not receive the minimum subscription of 90% of the
issued amount on the date of closure of the issue, or if the subscription level
falls below 90% after the closure of issue on account of cheques having being
returned unpaid or withdrawal of applications, the company shall forthwith
refund the entire subscription amount received. If there is a delay beyond 8
days after the company becomes liable to pay the amount, the company shall
pay interest as per Section 73 of the Companies Act, 1956."

(b) For Underwritten Public Issues:

Following statement shall appear:

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"If the company does not receive the minimum subscription of 90% of the net
offer to public including devolvement of Underwriters within 60 days from the
date of closure of the issue, the company shall forthwith refund the entire
subscription amount received. If there is a delay beyond 8 days after the
company becomes liable to pay the amount, the company shall pay interest
prescribed under Section 73 of the Companies Act, 1956."

(c) For Composite Issues:

(i) The Lead Merchant Banker shall ensure that the requirement of ’minimum
subscription’ is satisfied both jointly and severally, i.e., independently for both
rights and public issues.

(ii) If the issuer company does not receive the minimum subscription in either of
the issues the issuer company shall refund the entire subscription received.

(d) Offer for sale: The requirement of minimum subscription shall not be applicable
to offer for sale.

(e) Public issues by infrastructure companies: The requirement of minimum

subscription shall not be applicable to an eligible infrastructure company,
provided disclosures regarding the alternate source of funding is made in the
prospectus.

6.13.1.8 Arrangements for Disposal of Odd Lots:

(a) Any arrangements made by the issuer company for providing liquidity for and
consolidation of the shares held in odd lots, particularly when such odd lots
arise on account of issues by way of rights, bonus, conversion of debentures/
warrants etc., shall be intimated to the shareholders/ investors.

(b) The issuer company is free to make arrangements for providing liquidity in
respect of odd lot shares through any investment or finance company, broking
firms or through any other agency and the particulars of such arrangement, if
any, may be disclosed in the prospectus related to the concerned issue of
capital.

(c) The Lead Merchant Banker shall ascertain whether the issuer company
coming for fresh issue of capital proposes to set up trusts in order to provide
service to the investors in the matter of disposal of odd lot shares of the issuer
company held by them and if so, disclosures relating to setting up and
operation of the trust shall be contained in the prospectu s.

(d) Whenever any issue results in issue of shares in odd lots, the issuer company,
shall as far as possible issue certificates in the denomination of 1-2-5-10-20-50
shares.

6.13.1.9 Restrictions, if any, on transfer and transmission of shares/ debentures and on

their consolidation/ splitting.
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6.13.2 Issue Procedure

6.13.2.1 Fixed price issue or book building procedure as may be applicable, including
details regarding bid form / application form, who can bid/apply, maximum and
minimum bid/application size, bidding process, bidding, bids at different price
levels, etc.

6.13.2.2 Option to subscribe in the issue:

(a) The details of option to subscribe for securities to be dealt with in a depository.

(b) The Lead Merchant Banker shall incorporate a statement in the prospectus
and in the application form to the effect that the investor shall have an option
either to receive the security certificates or to hold the securities in
dematerialised form with a depository.

6.13.2.3 How to apply - availability of forms, prospectus and mode of payment:

(a) Applications by mutual funds:

(i) The Lead Merchant Bankers shall clearly incorporate necessary disclosures
under the heads "Procedure for applications by mutual funds" and "Multiple
Applications" to indicate that a separate application can be made in respect of
each scheme of an Indian mutual fund registered with the Board and that such
applications shall not be treated as multiple applications.

(ii) The applications made by the AMCs or custodians of a Mutual Fund shall
clearly indicate the name of the concerned scheme for which application is
being made.

(b) Applications by NRIs:

(i) The Lead Merchant Banker shall ensure the following disclosures:

a. the name and address of at least one place in India from where individual
NRI applicants can obtain the application forms.

b. "NRI applicants may please note that only such applications as are
accompanied by payment in free foreign exchange shall be considered
for allotment under the reserved category. The NRIs who intend to make
payment through Non-Resident Ordinary (NRO) accounts shall use the
form meant for Resident Indians and shall not use the forms meant for
reserved category."

6.13.2.4 Escrow mechanism:

(a) Escrow A/c. of the issuer company.

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(b) Escrow A/c. of the syndicate member.

6.13.2.5 Terms of payment and payment into the Escrow Collection Account.

6.13.2.6 Electronic registration of bids.

6.13.2.7 Build up of the book and revision of bids.

6.13.2.8 Price discovery and allocation.

6.13.2.9 Signing of underwriting agreement.

6.13.2.10 Filing of prospectus with the Registrar of Companies.

6.13.2.11 Announcement of Pre-Issue Advertisement.

6.13.2.12 Issuance of Confirmation of Allocation note (“CAN”) and Allotment in the Issue.

6.13.2.13 Designated date.

6.13.2.14 General instructions:

(a) Do’s and don’ts.

(b) Instructions for completing the Bid form.

86
((c) Bidders’ bank account details.)

(d) Bids by NRIs or FIIs on a repatriation basis .

6.13.2.15 Payment instructions:

(a) Payment into escrow account of the issuer company.

(b) Payment into escrow account of the syndicate member.

6.13.2.16 Submission of bid form.

6.13.2.17 Other instructions:

(a) Joint bids in the case of individuals.

(b) Multiple bids.

(c) Pan or GIR number.

86
Reinserted sub-clause (c), vide SEBI Circular No. SEBI/CFD/DIL/DIP/21/2006/24/4 dated April 24, 2006. The sub-clause
was earlier omitted vide SEBI Circular No. SEBI/CFD/DIL/DIP/18/2006/20/1 dated January 20, 2006 and provided as
under:
“Bidders bank details.”
Page 78 of 332
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(d) Issuer company’s right to reject bids.

(e) Equity shares in demat form with NSDL or CDSL.

(f) The investor’s attention shall also be invited to contact the compliance officer
in case of any pre-issue/ post-issue related problems such as non-receipt of
letters of allotment/ share certificates/ refund orders, etc.

6.13.2.18 Disposal of application and Application moneys.

6.13.2.19 Provisions of sub-section (1) of section 68A of the Companies Act, 1956
relating to punishment for fictitious applications, shall be mentioned.

6.13.2.20 Interest on refund of excess bid amount.

6.13.2.21 Basis of allotment or allocation.

6.13.2.22 Procedure and time of schedule for allotment and issue of certificates.

6.13.2.23 Method of proportionate allotment.

6.13.2.24 Letters of allotment or refund orders.

87
6.13.2.25 (Mode of making refunds:

The Company shall disclose the mode in which it shall make refunds to
applicants in case of oversubscription, in the prospectus and in the abridged
prospectus.

Provided that where the company proposes to make use of more than one
mode of making refunds to applicants, the respective cases where each such
mode will be adopted shall be disclosed.

Explanation: The permissible modes of making refunds are as follows:

(a) In case of applicants residing in any of the centres specified by the Board
– by crediting of refunds to th e bank accounts of applicants through
electronic transfer of funds by using ECS (Electronic Clearing Service),
Direct Credit, RTGS (Real Time Gross Settlement) or NEFT (National
Electronic Funds Transfer), as is for the time being permitted by the
Reserve Bank of India;

87
Substituted vide SEBI Circular No. SEBI/CFD/DIL/DIP/18/2006/20/1 dated January 20, 2006 for the following:
“Despatch of refund orders: The following clause shall be incorporated in the prospectus:

"The company shall ensure despatch of refund orders of value over Rs.1500/- and share/ debenture certificates by
Registered Post only and adequate funds for the purpose shall be made available to the Registrars by the issuer
company ".”
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(b) In case of other applicants – by despatch of refund orders by registered

post, where the value is Rs 1500/- or more, or under certificate of posting
in other cases, (subject however to postal rules); and

(c) In case of any category of applicants specified by the Board – crediting of

refunds to the applicants in any other electronic manner permissible
under the banking laws for the time being in force which is permitted by
the Board from time to time.)

6.13.2.26 Interest in Case of Delay in Despatch of Allotment Letters/ Refund Orders in

Case of Public Issues:

The caption "Interest in Case of Delay in Despatch of Allotment Letters/

Refund Orders in Case of Public Issues" shall appear and shall contain the
following statement:

(a) Where it is a fixed price issue:

"The company agrees that as far as possible allotment of securities offered to

the public shall be made within 30 days of the closure of public issue. The
company further agrees that it shall pay interest @15% per annum if the
allotment letters/ refund orders have not been despatched to the applicants
88
(or if, in a case where the refund or portion thereof is made in electronic
manner, the refund instructions have not been given to the clearing system in
the disclosed manner) within 30 days from the date of the closure of the issue.
However applications received after the closure of issue in fulfillment of
underwriting obligations to meet the minimum subscription requirement, shall
not be entitled for the said interest."

(b) Where it is a book-built issues:

"The company agrees that allotment of securities offered to the public shall be
made not later than 15 days of the closure of public issue. The company
further agrees that it shall pay interest @15% per annum if the allotment
letters/ refund orders have not been despatched to the applicants 89(or if, in a
case where the refund or portion thereof is made in electronic manner, the
refund instructions have not been given to the clearing system in the disclosed
manner) within 15 days from the date of the c losure of the issue."

6.13.2.27 Undertaking by the issuer company:

(a) The following undertaking by the issuer company shall be incorporated in the
prospectus:

88
Inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/18/2006/20/1 dated January 20, 2006.

89
Inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/18/2006/20/1 dated January 20, 2006.

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(i) that the complaints received in respect of the Issue shall be attended to by the
issuer company expeditiously and satisfactorily.

(ii) that all steps for completion of the necessary formalities for listing and
commencement of trading at all stock exchanges where the securities are to
be listed are taken within seven working days of finalisation of basis of
allotment.

(iii) that the issuer company shall apply in advance for the listing of equities on the
conversion of debentures/ bonds.

90
((iv) that funds required for making refunds to unsuccessful applicants as per the
mode(s) disclosed shall be made available to the Registrar to the issue by the
issuer.)

91
((iv)(a) that where refunds are made through electronic transfer of funds, a suitable
communication shall be sent to the applicant within 30 days or 15 days of
closure of the issue, as the case may be, giving details of the bank where
refunds shall be credited along with amount and expected date of electronic
credit of refund.)

(v) that the promoters’ contribution in full, wherever required, shall be brought in
advance before the Issue opens for public subscription and the balance, if any,
shall be brought in pro rata basis before the calls are made on public.

(vi) that the certificates of the securities/ refund orders to the non-resident Indians
shall be despatched within specified time.

(vii) that no further issue of securities shall be made till the securities offered
through this prospectus are listed or till the application moneys are refunded
on account of non-listing, undersubscription, etc.

(b) In case of a debenture issue, the issuer company shall also give undertakings
to the following effect in the prospectus:

(i) that the issuer company shall forward the details of utilisation of the funds
raised through the debentures duly certified by the statutory auditors of the
issuer company, to the debenture trustees at the end of each half-year.

(ii) that the issuer company shall disclose the complete name and address of the
debenture trustee in the annual report.

(iii) that the issuer company shall provide a compliance certificate to the debenture
holders (on yearly basis) in respect of compliance with the terms and

90
Substituted vide SEBI Circular No. SEBI/CFD/DIL/DIP/18/2006/20/1 dated January 20, 2006 for the following:
“that the funds required for despatch of refund orders/ allotment letters/ certificates by registered post shall be made
available to the Registrar to the Issue by the issuer company.”

91
Inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/18/2006/20/1 dated January 20, 2006.
Page 81 of 332
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conditions of issue of debentures as contained in the prospectus, duly certified

by the debenture trustee.

(iv) that the issuer company shall furnish a confirmation certificate that the security
created by the company in favour of the debenture holders is properly
maintained and is adequate enough to meet the payment obligations towards
the debenture holders in the event of default.

(v) that necessary cooperation with the credit rating agency (ies) shall be
extended in providing true and adequate information till the debt obligations in
respect of the instrument are outstanding.

6.13.2.28 Utilisation of Issue Proceeds:

(a) A statement by the Board of Directors of the issuer company to the effect that:

(i) all monies received out of issue of shares or debentures to public shall be
transferred to separate bank account other than the bank account referred to
in sub-section (3) of section 73 of the Companies Act, 1956;

(ii) details of all monies utilised out of the issue referred to in sub-item(i) shall be
disclosed under an appropriate separate head in the balance sheet of the
issuer company indicating the purpose for which such monies had been
utilised; and

(iii) details of all unutilised monies out of the issue of shares or debentures, if any,
referred to in sub-item (i) shall be disclosed under an appropriate separate
head in the balance sheet of the issuer company indicating the form in which
such unutilised monies have been invested.

(b) The prospectus shall contain a statement of the Board of Directors of the
issuer company to the effect that:

(i) the utilisation of monies received under promoters’ contribution and from firm
allotments and reservations shall be disclosed under an appropriate head in
the balance sheet of the issuer company, indicating the purpose for which
such monies have been utilised.

(ii) the details of all unutilised monies out of the funds received under promoters’
contribution and from firm allotments and reservations shall be disclosed under
a separate head in the balance sheet of the issuer company, indicating the
form in which such unutilised monies have been invested.

6.13.2.29 Restrictions on foreign ownership of Indian securities, if any:

(a) Investment by NRIs.

(b) Investment by FIIs.

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6.14 Description of Equity Shares and Terms of the Articles of Association

6.14.1 Rights of members regarding voting, dividend, lien on shares and the process
for modification of such rights and forfeiture of shares.

6.14.2 Main provisions of the Articles of Association.

6.15 Other Information

6.15.1 List of material contracts and inspection of documents for inspection:

6.15.1.1 Material contracts.

6.15.1.2 Documents.

6.15.1.3 Time and place at which the contracts, together with documents, will be
available for inspection from the date of prospectus until the date of closing of
the subscription list.

6.15.2 Declaration

The draft prospectus and final prospectus shall be approved by the Board of
Directors of the issuer company and shall be signed by all the Directors
(including the Managing Director), Chief Executive Officer and Chief Financial
Officer of the issuer company. They shall also certify that all the disclosures
made in the prospectus are true and correct.)

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92
(SECTION II - CONTENTS OF ABRIDGED PROSPECTUS

6.16 General Instructions : The information to be provided under each of the heads
specified below shall be as per the requirement of 93(Section I) of Chapter VI
except when specified otherwise.

6.16.1 The Abridged Prospectus shall be printed in a font size which shall not be
visually smaller than TIMES NEW ROMAN Size 10.

6.16.2 The order in which items appear in the Abridged Prospectus shall correspond,
wherever applicable, to the order in which items appear in the Prospectus.

6.16.3 The application form shall be so positioned that on the tearing-off of the
application form, no part of the information given in the Abridged Prospectus is
mutilated.

6.17 General Information

6.17.1 The name of the issuer company and address of the registered office of the
issuer company, along with telephone number, fax number, e-mail address
and website address, and where there has been a change in the address of
the registered office or name of the Issuer, details thereof.

6.17.2 Name/s of stock exchanges where listing of the securities is proposed.

6.17.3 Dates of opening, earliest closing and closing of the issue.

94
(6.17.3A Statement indicating whether IPO grading has been opted for. If yes,
disclosure of all grades so obtained, including unaccepted grades, as provided
under clause 5.6B.2 and the rationale / description of the grading/s so
obtained, as furnished by the credit rating agency/ies, may be given.)

6.17.4 Disclaimer Clause of SEBI

6.17.5 Consolidated Disclaimer Clause of Stock Exchanges: Disclaimer clauses of

stock exchanges shall be combined into a single disclaimer clause with
appropriate reference to individual stock exchanges .

6.17.6 Disclaimer Statement of the issuer company and merchant banker

6.17.7 Name and address of the Lead Managers, along with telephone number, fax
number, website address, name of contact person and e -mail address.

92
Substituted for Section II of Chapter VI, vide SEBI Circular No. SEBI/CFD/DIL/DIP/14/2005/25/1 dated January 25,
2005. The text of Section II, prior to this substitution, is given at the end of these Guidelines, after Schedule XXIX.

93
Substituted vide SEBI Circular No. SEBI/CFD/DIL/DIP/19/2006/31/3 dated March 31, 2006 for the letters and figure
“Part I”.

94
Inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/21/2006/24/4 dated April 24, 2006.
Page 84 of 332
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6.17.8 Name and address of the brokers along with phone numbers .

6.17.9 Name and address of the collecting bankers.

6.17.10 Name and address of the registrars to the issue along with phone number, fax
number, website address, name of contact person and email address.

6.17.11 Name and address of the trustee under debenture trust deed (in case of a
debenture issue) along with phone number, fax number, website address,
name of contact person and email address.

6.17.12 Name and address of the statutory auditors.

6.17.13 Rating for the proposed debenture/ preference shares issue, if any, obtained
from the credit rating agencies.

6.17.14 Name and address of the underwriters and the amount underwritten by them, if
applicable.

6.17.15
(a) Name, address, telephone number, fax number and email address of the
Compliance Officer.

(b) Investor’s attention shall be invited to contact the Compliance Officer in case of
any pre-issue/ post-issue related problems such as non-receipt of letters of
allotment/ share certificates/ credit of securities in depositories beneficiary
account/ refund orders , etc.

6.17.16 Provisions of sub section (1) of Section 68A of the Companies Act, 1956
relating to punishment for impersonation.

6.17.17 Declaration about the issue of allotment letters/ refunds within a period of 30
days and interest in case of delay in dispatching refund/ allotment letters @
15% p er annum or at the rate as may be specified.

6.17.18 Risk Factors and proposals to address the same.

6.18 Capital Structure of the issuer company

6.18.1 Following details to be furnished:

a. Authorised, issued, subscribed and paid up capital (Number of instruments,

description, aggregate nominal value).

b. Size of present issue. Disclose separately promoters’ contribution, firm

allotment/ reservation for specified categories and net offer to public .

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c. Number of instruments, description, aggregate nominal value and issue

amount shall be given in this order. Name(s) of group companies to be given,
in case, reservation has been made for shareholders of the group companies.

d. Paid-up Capital

i. after the issue

ii. after conversion of securities (if applicable).

e. Share Premium Account (before and after the issue).

6.18.2 Complete Notes to the Capital Structure.

6.18.3 A disclosure to the effect that the securities offered through this public/ rights
issue shall be made fully paid up or forfeited within 12 months from the date of
allotment of securities in a manner as specified in clause 8.5.2.

6.19 Terms of the Present Issue

6.19.1
i. Authority for the issue, terms of payment and procedure and time schedule for
allotment and issue of certificates/ refund orders.

ii. The clause "Interest in Case of Delay in Despatch of Allotment Letters/ Refund
Orders in Case of Public Issues" shall appear.

6.19.2 Instructions for applicants

a. How to Apply, Availability of Prospectus, Abridged Prospectus and Application

Forms, Mode of Payment and Book building procedure, if relevant.

b. Residents: In the application form meant for Indian Public, the declaration
relating to Nationality and Residentship shall be shown prominently as under:

"Nationality and Residentship (Tick whichever is applicable)

i. I am / We are Indian National(s) resident in India and I am/we are not

applying for the said equity shares as nominee(s) of any person resident
outside India or Foreign National(s).

ii. I am / We are Indian National(s) resident in India and I am / We are

applying for the said equity shares as Power of Attorney holder(s) of Non-
Resident Indian(s) mentioned below on non-repatriation basis.

iii. I am / We are Indian National(s) resident outside India and I am/we are
applying for the said equity shares on my / our own behalf on
nonrepatriation basis."

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c. Non-Resident Indians (NRIs): The application form meant for NRIs shall not
contain provision for payment through NR (O) accounts.

On the face of the form, the following legend shall be printed in a box:

"Attention NRI Applicants: Payment must be made through their Non Resident
External (NRE) / Foreign Currency Non Resident (FCNR) accounts or through
cheques / drafts sent from abroad and drawn on convertible rupee accounts in
India. Forms accompanied by cheques drawn on NR (O) accounts are liable to
be rejected".

d. Attention of NRIs shall be invited to the following:

i. the name and address of at least one place in India from where individual NRI
applicants can obtain the application forms.

ii. Such applications as are accompanied by payment in free foreign exchange

shall be considered for allotment under the reserved category.

iii. Such NRIs who wish to make payment through Non-Resident Ordinary (NRO)
accounts shall use the form meant for Resident Indians and shall not use the
form meant for reserved category. As regards applications in case of
reservations to NRIs, a disclosure is to be made incorporating the fact that
payment for such allotments shall come through external source only and that
payments through NRO account will not be permitted.

e. The application form should contain necessary instructions/ provisions for the
following:

i. Instructions to applicants to mention the number of application form on the

reverse of the instruments to avoid misuse of instruments submitted along with
the applications for shares/ debentures in public issues.

ii. Provision in the application form for inserting particulars relating to bank
account number and the name of the bank with whom such account is held, to
enable printing of the said details in the refund orders or for refunds through
Electronic Clearing System.

95
(Provided that in case of an issue of securities which is wholly required to
be made in the dematerialized form, it would not be necessary to require bank
account details in the application form.

Provided further that in a case covered by the preceding proviso, the

application form shall contain a statement that the bank account details of the
applicant would be taken from the data provided by him to the depository.)

95
Inserted two provisos vide SEBI Circular No. SEBI/CFD/DIL/DIP/18/2006/20/1 dated January 20, 2006.
Page 87 of 332
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iii. Disclosure of PAN/GIR number in respect of applications for monetary value of

the investment of Rs.50,000 and above.

iv. Details of options, if any, to receive securities subscribed for, either in

demateralised or physical form and a statement that trading in securities on
the stock exchanges in physical form will be available only subject to limits
prescribed by the Board for time to time.

96
(v. Brief mention of the various intended modes of making refunds (as disclosed
in the prospectus).)

f. Application by Mutual Funds

6.19.3 Any special tax benefits for company and its shareholders (Only section
numbers of the Income Tax Act and their substance should be mentioned,
without reproducing the text of the sections).

6.20 Particulars of the Issue

6.20.1 Objects of the issue

6.20.2 Project cost
6.20.3 Means of financing
6.20.4 Name of Appraising Agency, if any
6.20.5 Name of Monitoring Agency, if any

6.21 Company, Management and Project

6.21.1 History and main objects and present business of the company.

6.21.2 Promoters and their background.

6.21.3 Names, address and occupation of manager, managing director, and other
Directors (including nominee-directors and whole-time directors) givin g their
directorships in other companies.

6.21.4 Location of the project

6.21.5 Plant and machinery, technology, process, etc

6.21.6 Collaboration, any performance guarantee or assistance in marketing by the

collaborators

6.21.7 Infrastructure facilities for raw materials and utilities like water, electricity, etc.

6.21.8 Schedule of implementation of the project and progress made so far, giving
details of land acquisition, civil works, installation of plant and machinery, trial
production, date of commercial production etc

96
Inserted sub-clause, vide SEBI Circular No. SEBI/CFD/DIL/DIP/18/2006/20/1 dated January 20, 2006.
Page 88 of 332
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6.21.9 Products/Services

6.21.9.1 Nature of the products/services and end users

6.21.9.2 Existing, licensed and installed capacity of the product, demand of the product-
existing, and estimated in the coming years as estimates by a Government
authority or by any other reliable institution, giving source of the information. In
case the company is providing services, relevant information in regard to
nature/ extent of services, etc., have to be furnished.

6.21.9.3 Approach to marketing and proposed marketing set up

6.21.9.4 Export possibilities and export obligations, if any.

6.21.9.5 Stock Market Data: Disclose particulars of:-

a. high, low and average market prices of the share of the company during the
preceding three years

b. monthly high and low prices for the six months preceding the date of filing of
the prospectus

c. number of shares traded on the days when high and low prices were recorded
in the relevant stock exchange during period of (i) and (ii) above, and total
volume traded on those dates

d. the stock market data referred to above shall be shown separately for periods
marked by a change in capital structure, with such period commencing from
the date the concerned stock exchange recognises the change in the capital
structure (e.g., when the shares have become ex-rights or ex-bonus)

e. the market price immediately after the date on which the resolution of the
Board of Directors approving the issue was approved

f. the volume of securities traded in each month during the six months preceding
the date on which the offer document is filed with ROC

g. Along with high, low and average prices of shares of the company, details
relating to volume of business transacted should also be stated for respective
periods.

6.22 Following particulars in regard to the listed companies under the same
management which made any capital issue in the last three years

a. Name of the company

b. Year of issue

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c. Type of issue (public/ rights/ composite)

d. Amount of issue

e. Date of closure of issue

f. Date of despatch of share/ debenture certificate completed

g. Date of completion of the project, where object of the issue was financing of a
project

h. Rate of dividend paid, if any.

6.23 Basis for Issue Price

a. Earnings per share i.e. EPS pre-issue for the last three years (as adjusted for
changes in capital);

b. P/E pre-issue

c. Average return on net worth in the last three years

d. Minimum return on increased net worth required to maintain preissue EPS;

e. Net Asset Value per share based on last balance sheet;

f. Net Asset Value per share after issue and comparison thereof with the issue
price.

g. Comparison of all the accounting ratios of the issuer company as mentioned

above with the industry average and with the accounting ratios of the peer
group (i.e., companies of comparable size in the same industry. (Indicate the
source from which industry average and accounting ratios of the peer group
has been taken)

Provided that the projected earnings shall not be used as a justification for the
issue price in the offer document.

Provided further that the accounting ratios disclosed in the offer documents
in support of basis of the issue price shall be calculated after giving effect to
the consequent increase in capital on account of compulsory conversions
outstanding, as well as on the assumption that the options outstanding, if any,
to subscribe for additional capital will be exercised.

h. The face value of shares (including the statement about the issue price being
“X” times of the face value)

6.24 Outstanding Litigations and Defaults (in a summarised tabular form)

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6.24.1 Whether all payment/refunds, debentures, deposits of banks or companies,

interest on deposits, debenture interest, institutional dues have been paid up to
date. If not, details of the arrears, if any, to be stated.

6.25 Material Development: Any material development after the date of the latest
balance sheet and its impact on performance and prospects of the company.

6.26 Expert opinion obtained, if any.

6.27 Change, if any, in directors and auditors during the last three years and
reasons thereof.

6.28 Time and Place of Inspection of material contracts (List of material

contracts not required)

6.29 Financial Performance of the Company for the Last Five Years (Figures to
be taken from the audited annual accounts in a tabular form)

6.29.1

a. Balance Sheet Data: Equity Capital, Reserves (State Revaluation Reserve, the
year of revaluation and its monetary effect on assets) and borrowings

b. Profit and Loss data: Sales, Gross profit, Net profit, dividend paid, if any

c. Any change in accounting policies during the last three years and their effect
on the profits and the reserves of the company

d. Following information as extracted from the report of the auditors reproduced

in the main offer document in terms of clause 6.18 of the Guidelines:

i) net profit before accounting for extra ordinary items

ii) extra ordinary items

iii) net profit after accounting for extra ordinary items

6.29.2 Management Discussions and Analysis on Accounts

6.30 Listed Ventures of Promoters

6.31 Previous Public or Rights Issues, if any ,of last 5 years

6.32 Disclosure on Investor Grievances & Redressal System

6.33 Statement regarding minimum subscription clause:

Following statements shall appear depending upon the type of issue:

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6.33.20 For Non-underwritten Public Issues

“If the company does not receive the minimum subscription of 90% of the
issued amount on the date of closure of the issue, or if the subscription level
falls below 90% after the closure of issue on account of cheques having being
returned unpaid or withdrawal of applications, the company shall forthwith
refund the entire subscription amount received. If there is a delay beyond 8
days after the company becomes liable to pay the amount, the company shall
pay interest as per Section 73 of the Companies Act 1956.”

6.33.21 For Underwritten Public Issues

“If the company does not receive the minimum subscription of 90% of the net
offer to public including devolvement of Underwriters within 60 days from the
date of closure of the issue, the company shall forthwith refund the entire
subscription amount received. If there is a delay beyond 8 days after the
company becomes liable to pay the amount, the company shall pay interest
prescribed under Section 73 of the Companies Act 1956.”

6.33.22 For Composite Issues

i. The Lead Merchant Banker shall ensure that the requirement of "minimum
subscription" is satisfied both jointly and severally, i.e., independently for both
rights and public issues.

ii. If the company does not receive the minimum subscription in either of the
issues the company shall refund the entire subscription received.

6.34 Signatories to the Offer Document.)

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SECTION III - CONTENTS OF THE LETTER OF OFFER

97
6.39 (The letter of offer shall fulfill the requirements and shall contain the disclosures
as specified under Section of this Chapter.

Provided that information in terms of clauses 6.8.2.2, 6.8.2.3, sub-clauses (a),

(b), (c), (d) and (e) of clause 6.8.3.2, clauses 6.8.4.12, 6.9.2.1, 6.9.2.2, 6.9.2.3,
6.9.2.4, 6.9.4 6.9.6 ,6.10.3, 6.12.16, 6.12.17, 6.12.18, 6.12.20 and 6.12.21 may
not be disclosed in the letter of offer, if the following conditions are fulfilled:

(a) The issuer company has been filing periodic statements in regard to
financial results and shareholding pattern with the Designated Stock
Exchange and Registrar of Companies for the last three years and such
statements are available on websites of the Designated Stock Exchange/ on
a common e- filing platform.

(b) The issuer company has in place an investor grievance handling

mechanism which includes meeting of ‘Shareholders’ / Investors’ Grievance
Committee’ at frequent intervals, appropriate delegation of power by the
board of directors of the issuer company with regard to share transfer and
clearly laid out systems and procedures for timely and satisfactory
redressal of investor grievances.

(c) The Lead Merchant Banker has certified compliance of (a) and (b) above.

Provided further that where the issuer company is complying with the aforesaid
proviso, it shall –

(a) furnish to the Board the following undertaking along with the draft letter of
offer, which shall also be incorporated in the letter of offer:

“We confirm that other than the disclosures made in the instant letter of
offer, nothing material has changed in respect of disclosures made by us at
the time of our previous issue made on …………. . “

97
Substituted vide SEBI Circular No. SEBI/CFD/DIL/DIP/19/2006/31/3 dated March 31, 2006 for the following”
“The letter of offer shall fulfill the requirements and shall contain disclosures as specified under Section I of this Chapter
for the prospectus under the following heads:

Explanation:

For the purpose of rights issue, wherever the word 'RoC' appears, the same shall be deemed to refer Designated Stock
Exchange.”

Prior to the above, clause 6.39 was substituted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 for the
following:
“The letter of offer shall fulfil the requirements and shall contain disclosures as specified under Section I of this Chapter
for the prospectus under the following heads:

Explanation:
For the purpose of rights issue, wherever the word 'RoC' appears, the same shall be deemed to refer Regional Stock
Exchange.”
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(b) make a copy of the offer document of the immediately preceding public or
rights issue, available to the public as specified under clause 5.6.2(ii) and
also as a document for public inspection.

Explanation:

For the purpose of rights issue –

(a) wherever the word “RoC” appears, the same shall be deemed to refer to
“Designated Stock Exchange.

(b) wherever the word “ prospectus” appears, the same shall be deemed to
refer to “letter of offer”.)

6.40 Cover Pages

6.40.1 The front and back cover pages of the letter of offer shall comply with the
requirements specified under 98(clause 6.4 of Section I) of this Chapter.

6.41 General information

6.41.1 Name and address of registered office of the company.

6.41.2 Issue listed at: [Name (s) of the Stock Exchanges]

6.41.3 Opening, closing dates of the issue.

6.41.4 Name and address of Lead Merchant Bankers.

6.41.5 Name and address of Trustees under Debenture Trust Deeds (in case of
debenture/ issue).

6.41.6 Rating for the Debenture/ Preference Shares, if any, obtained from any Credit
Rating Agency.

6.41.7 Provisions of sub-section (1) of Section 68A of the Companies Act, 1956 relating
to punishment for fictitious applications.

6.41.8 Declaration about the issue of allotment letters/refunds within a period of 7 weeks
and interest in case of delay in refund at the prescribed rate under Section 73(2)/
(2A).

6.41.9 Declaration by the Board of Directors stating that all moneys received out of issue
of shares or debentures through an offer document shall be transferred to a
separate bank account other than the bank account referred to in sub-section (3)
of section 73;

98
Substituted vide SEBI Circular No. SEBI/CFD/DIL/DIP/14/2005/25/1 dated January 25, 2005 for “clause 6.2 of Section I”.
Page 94 of 332
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6.41.10 Minimum Subscription Clause: The minimum subscription clause shall be

incorporated as under:

99
(6.41.10.1) For Non-underwritten Rights Issue

i. If the Company does not receive the minimum subscription of 90% of the issue,
the entire subscription shall be refunded to the applicants within forty two days
from the date of closure of the issue.

ii. If there is delay in the refund of subscription by more than 8 days after the
company becomes liable to pay the subscription amount (i.e. forty two days after
closure of the issue), the company will pay interest for the delayed period, at
rates prescribed under sub-sections (2) and (2A) of Section 73 of the Companies
Act, 1956.

100
(6.41.10.2) For Underwritten Rights Issue

i. If the Company does not receive minimum subscription of 90% of the issue
including devolvement of underwriters, the entire subscription shall be refunded
to the applicants within forty two days from the date of closure of the issue.

ii. If there is delay in the refund of subscription by more than 8 days after the
company becomes liable to pay the subscription amount (i.e., forty two days after
closure of the issue), the company will pay interest for the delayed period, at
prescribed rates in sub-sections (2) and (2A) of Section 73 of the Companies Act,
1956.

6.42 Capital structure of the company

a. Issued, subscribed and paid-up capital

b. Size of present issue

c. Paid up capital:

i. after the present issue.

ii. after the conversion of debentures (if applicable)

d.
i. Details of promoters holding (pre-issue and post issues) and the lock-in.

ii. Pre and Post Issue shareholding pattern.

99
Renumbered clause 6.41.11 as “clause 6.41.10.1”, vide SEBI Circular No. SEBI/CFD/DIL/DIP/14/2005/25/1 dated
January 25, 2005.
100
Renumbered clause 6.41.12 as “clause 6.41.10.2”, vide SEBI Circular No. SEBI/CFD/DIL/DIP/14/2005/25/1 dated
January 25, 2005.
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iii. Promoters’ intention to subscribe to their entire rights entitlement.

6.43 Terms of the present issue

6.43.1 Authority for the issue, terms of payments and procedure and time schedule for
allotment and issue of certificates.

6.43.2 How to apply - availability of forms, letter of offer and mode of payment.

6.43.3 Spec ial tax benefits to company and shareholders under the Income tax Act, if
any.

6.44 Particulars of the issue

6.44.1 Object of the issue.

6.44.2 Project Cost.

6.44.3 Means of financing (including contribution of promoters).

6.45 Company, management and project

6.45.1 History, main objects and present business of the company.

6.45.2 Background of promoters, Managing Director/ Whole time Director and names of
nominees of institutions, if any, on the Board of Directors including key
management personnel.

6.45.3 Location of the Project.

6.45.4 Plant and Machinery, technology, process etc.

6.45.5 Collaboration, performance guarantee if any, or assistance in marketing by the

collaborators.

6.45.6 Infrastructure facilities for raw materials and utilities like water, electricity,
etc.

6.45.7 Schedule of implementation of the project and progress made so far, giving
details of land acquisition, execution of civil works, installation of plant and
machinery, trial production, date of commercial production, if any.

6.45.8 The products :

i. Nature of product(s)- consumer/ industrial and end users.

ii. Existing, licensed and installed capacity of the product, demand of the product -
existing, and estimated in the coming years as estimated by a Government
authority or by any other reliable institution, giving source of the information.
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iii. Approach to marketing and proposed marketing set up (in case of company
providing services, relevant information in regard to nature/ extent of services etc.
to be furnished).

6.45.9 Future prospects - The expected year when the company would be able to earn
net profit, declare dividend.

6.45.10 Change, if any, in directors and auditors during the last three years and reasons
thereof.

6.46 Financial performance of the company for the last five years:
(Figures to be taken from the audited annual accounts in tabular form)

6.46.1 Balance Sheet Data: Equity Capital, Reserves (State Revaluation Reserve, the
year of revaluation and its monetary effect on assets) and borrowings.

6.46.2 Profit and Loss data: Sales, Gross profit, Net profit, Dividend paid if any.

6.46.3 Any change in accounting policies during the last three years and their effect on
the profits and the reserves of the company.

6.46.4 Stock market quotation of shares / debentures of the company, if any, (high/ low
price in each of the last three years and monthly high /low price during the last six
months)

6.46.5 Details of any pending litigations, defaults against the company, these group
companies and the business relationship of these companies with the issuing
company.

6.46.6 Promise versus performance for the earlier Public/ Rights issues of the Company,
or group companies.

6.46.7 Financial performance of the subsidiary company/ group company.

101 102
6.46.8 (The accounting ratios as mentioned in (clause 6.8.4.11).

Provided that, the lead merchant banker shall not proceed with the issue in case
the accounting ratios mentioned above, do not justify the issue price.)

6.47 Risk Factors and Management perception of risk factors.

6.48 The information for the period between the last date of the balance sheet and
profit and loss account sent to the shareholders and up to the end of the last but
one month preceding the date of the letter of offer shall be furnished.

101
Substituted vide SEBI Circular No. DIP (Compendium) Circular No. 3 dated August 04, 2000 for "Justification of
premium".

102
Substituted vide SEBI Circular No. SEBI/CFD/DIL/DIP/14/2005/25/1 dated January 25, 2005 for “clause 6.13.1”.
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6.48.1 Working results of th e company under following heads:

(a)
(i) Sales/ turnover

(ii) Other income

(b) Estimated gross profit/ loss (excluding depreciation and taxes)

(c)
(i) Provision for depreciation

(ii) Provision for taxes

(d) Estimated net profit/ loss

6.48.2 Material changes and commitments, if any, affecting financial position of the
company.

6.48.3 Week-end prices for the last four weeks; current market price; and highest and
lowest prices of equity shares during the period with the relative dates.

6.49 Following particulars in regard to the listed companies under the same
management within the meaning of section 370(1B) which made any capital
issue in the last three years.

a. Name of the company.

b. Year of issue.

c. Type of issue (rights)

d. Amount of issue.

e. Date of closure of issue.

f. Date of despatch of share/ debenture certificate completed.

g. Date of completion of the project, where object of the issue was financing of a
project.

h. Rate of Dividend paid.

6.50 Management discussion and analysis of the financial conditions and

results of the operations as reflected in the financial statement.

6.50.1 Any material development after the date of the latest balance sheet and its impact
on performance and prospects of the company.
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6.51 Outstanding litigation

6.52 Expert opinion obtained if any.

6.53 Statutory and other information

6.53.1 Option to Subscribe

(a) The details of option to subscribed for securities to be dealt in a depository.

(b) The lead merchant banker shall incorporate a statement in the offer document
and in the application form to the effect that the investor shall have an option
either to receive the security certificates or to hold the securities in dematerialised
form with a depository.

6.53.2 Material contracts and time and place of inspection.

6.54 Undertaking by Directors

“No statement made in this Form shall contravene any of the provisions of the
Companies Act, 1956 and the rules made thereunder. All the legal requirements
connected with the said issue as also the guidelines, instructions etc. issued by
SEBI, Government and any other competent authority in this behalf have been
duly complied with.”

Signature of Directors

Place:
Date:

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103
(SECTION IV - CONTENTS OF THE ABRIDGED LETTER OF OFFER

6.55 The abridged letter of offer shall contain disclosures as specified in Section II of
this Chapter.

Provided that where the conditions laid down in 1st proviso to clause 6.39 are
satisfied, clauses 6.18.2, 6.19.3, 6.21, 6.22, 6.30 and 6.31 specified under
Section II of this Chapter shall not apply to the abridged letter of offer.

6.56 The order in which items shall appear in the abridged letter of offer shall
correspond, wherever applicable, to the order in which items appear in the letter
of offer.

6.57 The abridged letter of offer shall also include the following disclosures:

(a) Provisions pertaining to applications referred to in clause 5.11;

(b) Rights entitlement ratio;
(c) Fractional entitlements ;
(d) Renunciation;
(e) Application for Additional equity shares ;
(f) Intention of promoters to subscribe to their rights entitlement;
(g) Statement that a copy of the offer document of the immediately preceding public
or rights issue is made available to the public as specified under clause 5.6.2(ii)
and also as a document for public inspection.)

103
Inserted Section IV, vide SEBI Circular No. SEBI/CFD/DIL/DIP/19/2006/31/3 dated March 31, 2006.
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104
(CHAPTER VIA

ISSUE OF INDIAN DEPOSITORY RECEIPTS (IDRs)

PART I – GENERAL REQUIREMENTS

6A.1 PRELIMINARY

The guidelines given in this chapter are in addition to the provisions of the Companies (Issue
of Indian Depository Receipts) Rules, 2004 (hereinafter referred to as the IDR Rules) and
not in derogation thereof.

6A.2 ELIGIBILITY FOR ISSUE OF IDRS

No issuer shall make an issue IDRs unless:

(i) it fulfills the eligibility criteria as specified in Rule 4 of the IDR Rules
(ii) It is listed in its home country;
(iii) it has not been prohibited to issue securities by any Regulatory Body; and,
(iv) it has good track record with respect to compliance with securities market regulations.

6A.3 INVESTORS

1. NRIs and FIIs cannot purchase or possess IDRs unless special permission of the
Reserve Bank of India is taken.
2. Investments by Indian Companies in IDRs shall not exceed the investment limits, if
any, prescribed for them under applicable laws.
3. Automatic fungibility of IDRs is not permitted.
4. An issue of IDRs is open to QIBs (as defined in clause 2.2.2.B. of these Guidelines)
only.
5. The minimum application amount in an IDR issue shall be Rs.2,00,000/-
6. Procedure to be followed by each class of applicant for applying shall be mentioned
in the prospectus.

6A.4 MINIMUM ISSUE SIZE:

The size of an IDR issue shall not be less than Rs.50 crores

6A.5 MINIMUM SUBSCRIPTION:

If the company issuing the IDRs does not receive the minimum subscription of 90% of the
issued amount on the date of closure of the issue, or if the subscription level falls below 90%
after the closure of issue on account of cheques having being returned unpaid or withdrawal
of applications, the company shall forthwith refund the entire subscription amount received.
If there is a delay beyond 8 days after the company becomes liable to pay the amount, the
company shall pay interest at the rate of 15% per annum for the period of delay.

104
Inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/20/2006/3/4 dated April 3, 2006.
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PART II - DISCLOSURES IN A PROSPECTUS FOR IDRs

A prospectus for issue of IDRs shall contain all details as prescribed herein.

6A.6 GENERAL INSTRUCTIONS WITH RESPECT TO CONTENTS OF THE

PROSPECTUS:

1. The Merchant Banker has the option to file the draft prospectus as a public filing or a
confidential filing. In both the cases, the initial fee as prescribed in Rule 5 (i) (b) of the
IDR Rules shall accompany such filing.
2. The contents of the prospectus including the financial statements of the issuer
company, its subsidiaries and associates shall be in plain English.

“Associate” for the purpose of this chapter would mean “associate” as defined in
Indian GAAP or IFRS or US GAAP in which the financial statements of the issuer are
disclosed.
3. The prospectus shall contain all material information which shall be true and
adequate so as to enable the investors to make informed decision on the investments
in the issue.
4. The prospectus shall also contain the information and statements specified herein
5. The issuing company shall, through a Merchant Banker file a prospectus or letter of
offer certified by two authorized signatories of the issuing company, one of whom
shall be a whole -time director and other the Chief Accounts Officer or the Chief
Financial Officer, stating the particulars of the resolution of the Board or the
shareholders by which it was approved, with the SEBI and Registrar of Companies,
New Delhi, before such issue. They shall also certify that all the disclosures made in
the prospectus are true and correct.
6. The agreement made with the domestic depository shall also be furnished along with
the prospectus.

6A.7. DISCLAIMER

1. A disclaimer shall be made by the Merchant Banker (including a due diligence

certificate) in the format specified in Schedule III
2. A statement will be made by the Issuer disclaiming responsibility for statements made
otherwise than in the prospectus, as follows:

“Our company, our directors and the Merchant Banker accept no responsibility for
statements made otherwise than in the prospectus or in the advertisements or any
other material issued by at our instance and anyone placing reliance on any other
source of information including our website______ shall be doing so at his or her own
risk.”

6A.8 THE ISSUE

Summary of the terms of offer shall be incorporated, including:

1. Offer and Listing Details

2. Plan of Distribution
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3. Markets
4. Selling Shareholders, if any
5. Dilution
6. Expenses of the Issue

6A.9 FORWARD LOOKING STATEMENTS

A paragraph on the statements that are forward looking statements and not matters of
historical facts shall be incorporated. A statement on the sources of data used in the
prospectus and their accuracy shall also be incorporated. A line should also be incorporated
on whether these have been independently verified.

6A.10 GENERAL INFORMATION

1. Definitions/terms used in the prospectus

2. Name, address and contact information of the registered office of the company;
3. Name, address and contact information of the Domestic Depository, the Overseas
Custodian Bank with the address of its office in India, the Merchant Banker, the
Underwriter to the issue, Advisors to the issue and any other intermediary which may
be appointed in connection with the issue of IDRs;
4. Interest of Experts and Counsel
5. Name, address and contact information of the compliance officer in relation to the
issue of IDRs. The compliance officer should be placed in India
6. Name, address and contact information of Stock Exchanges where applications are
made or proposed to be made for listing of the IDRs;
7. Disclosure about provisions relating to punishment for fictitious applications;
8. Statement/declaration for refund of excess subscription
9. Statement that an interest of 15% p.a. would be paid to the investors if the allotments
letters / refund orders are not despatched within 30 days of the closure of the public
issue
10. Declaration about issue of allotment letters/certificates/ IDRs within the stipulated
period;
11. Date of opening of issue;
12. Date of closing of issue;
13. Method and Expected Timetable of the issue
14. A statement that subscription to the issue shall be kept open for atleast 3 working
days and not more than 10 working days
15. Date of earliest closing of the issue;
16. Declaration by the Merchant Banker with regard to adequacy of resources of
underwriters to discharge their respective obligations, in case of being required to do
so;
17. A statement by the issuing company that all moneys received out of issue of IDRs
shall be transferred to a separate domestic bank account, name and address of the
bank and the nature and number of the account to which the amount shall be
credited;
18. Details of availability of prospectus and forms, i.e., date, time, place etc;
19. Amount and mode of payment seeking issue of IDRs
20. Disclosure on Investor Grievances and Redressal System:

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a. The arrangements or any mechanism evolved by the company for redressal of

investor grievances.
b. The past record (for a min period of 3 years before the date of the prospectus)
of investor grievance redressal of the company and its listed
subsidiaries/associates including details as to the time normally taken by it for
disposal of various types of investor grievances.
c. That the company undertakes to subject itself to the jurisdiction of Indian
Courts having jurisdiction over the place where the stock exchange is situated
regarding grievances of the applicants for IDRs

6A.11 RISK FACTORS & MANAGEMENT PERCEPTION, IF ANY

1. Risk factors shall be disclosed as follows:

a. Risk factors associated with the company’s business

b. Risk factors associated with the country of the company proposing to issue
IDRs
c. Risk factors associated with the IDRs / underlying shares

2. Risk factors shall be classified as those which are specific to the project and internal
to the issuer company and those which are external and beyond the control of the
issuer company.

3. Risk factors shall be determined on the basis of their materiality.

4. Materiality shall be decided taking the following factors into account:

a. Some events may not be material individually but may be found material
collectively.
b. Some events may have material impact qualitatively instead of quantitatively.
c. Some events may not be material at present but may be having material
impacts in future.

5. The Risk factors shall appear in the prospectus in the following manner:
a. Risks envisaged by Management.
b. Proposals, if any, to address the risks.
c. Any ‘notes’ required to be given prominence shall appear immediately after the
Risk factors.

6A.12 RECENT DEVELOPMENTS

Important events in the recent past (2 FY preceding the issue) providing details of important
developments on 3 key areas: Operations & Management, Shareholding patterns and
Business Environment

6A.13 MARKET PRICE INFORMATION AND OTHER INFORMATION CONCERNING THE

SHARES IN THE DOMESTIC MARKET OF THE ISSUER

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1. Market price of shares for each quarter of the last three calendar years preceding the
calendar year preceding the year of the issue of Prospectus (High, Low, Average
Daily Trading Volume)
2. Market price of shares for each month of the calendar year preceding the year of the
issue of Prospectus (High, Low, Average Daily Trading Volume)
3. Market price of shares for the month preceding the date of Prospectus (High, Low,
Average Daily Trading Volume)
4. The Opening and Closing price on the last day of the preceding month of the date of
Prospectus along with the volume
5. This information should be provided, exchange wise, if the securities are listed in
more than one exchange
6. This information should updated as on last available date before the date of
prospectus
7. If it is a further issue of IDRs which are already listed in India, the above information
should be given about such IDRs also

6A.14 DIVIDENDS

1. Dividend policy of the Company

2. Rate of Dividend and Amount of Dividend paid for the last five financial years
3. Regulatory framework in the Country of Incorporation/share listed concerning
Dividends
4. Details of Arrangement with the Depositories for payment of Dividend to the IDR
holders
5. Information about changes, if any, in dividends announced and dividends paid and
time gap between the dividends announced and dividends paid.
6. Information about Dividend Yield.
7. Taxation aspects of dividend distribution.

6A.15 EXCHANGE RATES

1. Brief history of the pattern of Exchange rates between the Country of

Incorporation/where shares are listed and India
2. High, Low, Average Rates for the last five years
3. High, Low, Average Rates for the last twelve months

6A.16 FOREIGN INVESTMENT AND EXCHANGE CONTROLS OF THE COUNTRY OF

INCORPORATION/ WHERE SHARES ARE LISTED

Information relating to the relevant foreign investment laws and exchange control regulations
of the Country of Incorporation or country where the underlying equity shares are listed.

6A.17 OBJECTS OF THE ISSUE / USE OF PROCEEDS

The following shall be disclosed:

1. purpose of the issue;

2. break-up of the cost of project for which the money is raised through the IDR issue;
3. the means of financing such project; and
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4. proposed deployment status of the proceeds at each stage of the project.

6A.18 CAPITALISATION STATEMENT

Pre-issue as (Figures in Rs. crores)

Short-Term Debt
Long Term Debt
Shareholders Funds
- Share Capital
- Reserves
Total Shareholders Funds
Long Term Debt/Equity

6A.19 CAPITAL STRUCTURE

1. Authorised, issued, subscribed and paid up capital (Number of instruments,

description, aggregate nominal value).
2. Size of present issue.
3. Paid-up Capital:
- before the issue;
- after the issue (if the IDR issue involves issue of fresh equity shares); and
- share premium account (before and after the issue)
4. Detailed notes to Capital Structure

Capital Structure shall also contain details regarding holdings of major shareholders i.e., the
person or persons who are in over-a ll control of the company.

6A.20 FINANCIAL INFORMATION

1. The audited consolidated or unconsolidated financial statements prepared in

accordance with Indian GAAP or IFRS or US GAAP shall contain the following:
a. Report of Independent Auditors on the Financial Statements
b. Balance Sheets
c. Statements of Income
d. Schedules to Accounts
e. Statements of Changes in Stockholders’ Equity
f. Statements of Cash Flows
g. Statement of Accounting Policies
h. Notes to Financial Statements
i. Statement Relating to Subsidiary Companies (in case of unconsolidated
financial statements)

2. Report of the statutory auditor on the financial results and financial status of the
company for each of the five financial years immediately preceding the issue of
prospectus including the profits or losses and assets & liabilities of the issuing
company at the last date to which the accounts of the company were made in the
specified form; provided that the gap between date of issue and date of report shall
not be more than 120 days up to a period not being more than 120 days before the

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opening of the issue, wherever statutory audit is required under the law of the country
in which the issuing company is incorporated;

a. The above report needs to be stated in Indian Rupees in addition to home

country currency and shall be prepared either in Indian GAAP (including all
Accounting Standards issued by the Institute of Chartered Accountants of
India) or with the International Financial Reporting Standards (IFRS) [including
the International Accounting Standards (IAS)] or US GAAP, with a
reconciliation statement vis -à-vis Indian GAAP. If the same is prepared
according to IFRS or US GAAP, a paragraph on summary of significant
differences between Indian GAAP and IFRS or Indian GAAP and US GAAP,
as the case may be, shall also be incorporated.

b. Further, in case the report is prepared as per IFRS or US GAAP, the annual
and quarterly financial results shall be audited by a professional accountant or
certified public accountant or equivalent (by whatever name called in the issuer
country) .in accordance with the International Standards on Auditing (ISA). The
auditor’s report shall also be prepared in accordance with the ISA.

c. The above report needs to be stated on consolidated Basis or stand alone

basis

d. In case issuer country’s accounting norms do not require a statutory Audit,

such accounts shall be audited by a professional accountant or a certified
public accountant

3. A report by domestic depository, as certified by an Accountant who is member of

Institute of Chartered Accountants of India holding certificate of practice, upon profits
or losses of the issuing company for each of the five financial years immediately
preceding the issue of prospectus and upon the assets and liabilities of the issuing
company at the last date to which the accounts of the company were made in the
specified form; provided that the gap between date of issue and date of report shall
not be more than 120 days

4. If the proceeds of the IDR issue are used for investing in other body(ies) corporate,
then following details of such body(ies) corporate shall be given :

a) Names and address(es) of the bodies corporate;

b) The reports as stated above in respect of those bodies corporate also.

5. Related Party transactions

6. Liquidity and Capital Resources

6A.21 STATEMENT ON MATERIAL DEVELOPMENTS SUBSEQUENT TO THE DATE OF

THE LAST FINANCIAL STATEMENTS AS DISCLOSED IN THE PROSPECTUS

An statement by the directors whether in their opinion there have arisen any circumstances
since the date of the last financial statements as disclosed in the prospectus any which
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materially and adversely affect or is likely to affect the trading or profitability of the company,
or the value of its assets, or its ability to pay its liabilities within the next twelve months, and
if so, an outline of such circumstances and an assessment of their likely impact.

6A.22 MANAGEMENT DISCUSSION AND ANALYSIS OF THE FINANCIAL

STATEMENTS (BY COMPARING THE RECENT FINANCIAL YEAR WITH THE
PREVIOUS THREE FINANCIAL YEARS)

1. A summary of past financial results after adjustments as given in the auditors report
for the past three years containing significant items of income and expenditure shall
be given.
2. Overview of the business of the issuer company.
3. Factors that may affect Results of the Operations.
4. An analysis of reasons for the changes in significant items of income and expenditure
shall also be given, inter alia, containing the following:
a. unusual or infrequent events or transaction;
b. significant economic changes that materially affected or (are likely to effect
income from continuing operations;
c. known trends or uncertainties that have had or are expected to have a material
adverse impact on sales, revenue or income from continuing operations;
d. future changes in relationship between costs and revenues, in case of events
such as future increase in labour or material costs or prices that will cause a
material change are known;
e. the extent to which material increases in net sales or revenue are due to
increased sales volume, introduction of new products or services or increased
sales prices;
f. total turnover of each major industry segment in which the company operated
g. status of any publicly announced new products or business segment;
h. the extent to which business is seasonal;
i. any significant dependence on a single or few suppliers or customers;
j. competitive conditions.

6A.23 INDUSTRY AND BUSINESS OVERVIEW

Market including details of the competition, past production figures for the industry, existing
industry capacity, past trends and future prospects regarding exports (if, applicable),
demand and supply forecasts (if given, should be essentially with assumptions unless
sourced from a market research agency of repute), etc. to be given. Source of data used
shall be mentioned.

6A.24 DETAILS OF THE ISSUER

1. Main object, history and present business of the company;

2. location of the project, if any;
3. Installed capacity and the details of plant and machinery, infrastructure facilities,
technology etc., where applicable;
4. schedule of implementation of project and progress made so far, if applicable;
5. nature of product(s), consumer(s), industrial users;
6. Research and Development, Patents and Licenses, etc.
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7. Property, Plants and Equipment

8. particulars of financial and other defaults , if any;
9. Underwriting
10. Experts
11. Where You Can Find Additional Information
12. Enforcement of Civil Liabilities Against Foreign Persons

6A.25 SUBSIDIARIES AND ASSOCIATES OF THE ISSUER

The following information for the last 3 years based on the audited statem ents in respect of
subsidiaries and associates of the Issuing Company:

1. Date of Incorporation;
2. Nature of activities;
3. Equity Capital;
4. Reserves (excluding revaluation reserve);
5. Sales;
6. Profit after tax (PAT);
7. Earnings per share (EPS); and
8. Net Asset Value (NAV);

If the subsidiaries and associates are not required to prepare such audited statements as
per the laws prevailing in those countries, the same may be certified as true and correct by
the Board of Directors and the management of such companies, provided a certificate from
a certified public accountant or equivalent practicing in the concerned country is submitted to
SEBI.

6A.26 MANAGEMENT

1. Controlling shareholders and their Background

2. Details of the Board of Directors and the Key Managerial Personnel (i.e. Name,
address(es) of Directors, Manager, Managing Director or other principal officers of the
company, age, qualification, industry experience, other directorships)
3. Remuneration of the Directors and the Key managerial personnel with detailed
breakup, sitting fees, their relation with promoters / controlling shareholder(s), if any,
their equity holding in the company, duration of their association with the company.
4. Organisational Structure
5. Board Practices
6. Employees

6A.27 SECURITIES MARKET OF THE COUNTRY OF INCORPORATION/ WHERE

SHARES ARE LISTED

1. Brief History
2. Stock Exchange Regulation
3. Listing Regulations
4. Details of the Securities market regulator of the country of the issuer company
5. Whether the Securities market regulator of the country of the issuer company has
signed any MoU with SEBI/IOSCO
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6. Disclosure under the Companies Act and Securities Regulations (or equivalent
thereof)
7. Stock Exchanges
8. Takeover Code/Buyback Code
9. Reforms in Some Key Sectors of the Economy
10. Restriction on Foreign Ownership of Securities
11. Overview of the Financial Sector
12. Nature of the Securities Trading Market in that country
13. A statement of how the enforcement of Indian Securities Laws would be affected by
the fact that the issuer is located outside India

6A.28 DESCRIPTION OF THE INDIAN DEPOSITORY RECEIPTS AND RIGHTS OF IDR

HOLDERS

1. Brief description of the Indian Depository Receipts

2. Dividends, Other Distributions and Rights of IDR holders
3. Voting rights and their manner of exercise by IDR holders, if any.
4. Record dates and how the same will be disclosed.
5. Reports and other communication to which the IDR holders will be entitled.
6. Conversion procedure of IDRs into shares
7. Governing Law regarding various aspects of IDRs and transactions therein.

6A.29 PROVISIONS REGARDING TRANSFER OF SHARES AND DEPOSITORY

RECEIPTS

1. Provisions regarding transfer of IDRs

2. Outline of provisions regarding transfer of underlying shares after conversion

6A.30 INFORMATION RELATING TO THE DEPOSITARY - INDIAN & INTERNATIONAL

Brief details of the Domestic Depositary, Overseas Custodian Bank and Depositary
Agreement.

6A.31 APPROVALS OF THE GOVERNMENT/REGULATORY AUTHORITIES

Information relating to statutory and regulatory approvals required in home country for the
Issue and the related aspects and their status, and approvals from Indian Regulatory
authorities.

6A.32 TAXATION FRAMEWORK IN INDIA AND THE COUNTRY OF INCORPORATION/

WHERE SHARES ARE LISTED

Information relating to relevant provisions of Taxation law, Tax Treaties and their impact for
IDR holders.

6A.33 OUTSTANDING LITIGATIONS AND DEFAULTS

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1. Material litigation / liabilities/defaults including arrears / potential liabilities of the

issuer, its promoters / controlling shareholders / directors and its subsidiaries and
associates.
2. Materiality shall be determined on the basis of factors which are specific to the project
and to the issuer, its promoters / controlling shareholders / directors, its subsidiaries
and associates, which may have a bearing on the performance of the issuer
company.

Materiality shall be decided taking the following factors into account:

a. Some litigation/defaults may not be material individually but may be found material
collectively.
b. Some litigation/defaults may have material impact qualitatively instead of
quantitatively.
c. Some litigation/defaults may not be material at present but may be having a material
impact in future.

6A.34 BASIS OF ISSUE PRICE

1. Earnings per share i.e. EPS pre-issue for the last three years (as adjusted for
changes in capital);
2. P/E pre-issue
3. average return on net worth in the last three years
4. minimum return on increased net worth required to maintain pre-issue EPS;
5. Net Asset Value per share based on last balance sheet;
6. Net Asset Value per share after issue and comparison thereof with the issue price.
7. Comparison of all the accounting ratios of the issuer company as mentioned above
with the industry average and with the accounting ratios of the peer group ( i.e
companies of comparable size in the same industry.( Indicate the source from which
industry average and accounting ratios of the peer group has been taken)
8. The face value of shares (including the statement about the issue price being “X”
times of the face value) and that of the IDRs. The aggregate face value of the total
equity shares underlying a single IDR also shall be given.

Provided that the projected earnings shall not be used as a justification for the issue
price in the prospectus.

Provided further that the accounting ratios disclosed in the prospectus in support of
basis of the issue price shall be calculated after giving effect to the consequent
increase in capital on account of compulsory conversions outstanding, as well as on
the assumption that the options outstanding, if any, to subscribe for addit ional capital
will be exercised.

6A.35 MAIN PROVISIONS OF ARTICLES OF ASSOCIATION / MAIN CHARTER OF THE

ISSUER

6A.36 MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION

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Place at which inspection of the documents specified under Rule 6 of the Companies (Is sue
of Indian Depository Receipts) Rules, 2004, the prospectus, the financial statements and
auditor's report thereof will be allowed during the normal business hours.

6A.37 OTHER INFORMATION

1. Disclosure of mandatory vetting of the prospectus by the legal counsel to the Issuer
operating at the place where the registered office of the Issuer is situated.
2. Consent of Merchant Bankers, overseas custodian bank, the domestic depository and
all other intermediaries associated with the issue of IDRs.
3. Fees and expenses payable to the intermediaries involved in the issue of IDRs

PART III - APPLICABILITY OF PROVISIONS OF THE SEBI (DIP) GUIDELINES, 2000

Except Chapter VI, all other chapters of the SEBI (DIP) Guidelines, 2000 would apply to an
issue of Indian Depository Receipts (IDRs) to the extent as may be prescribed by SEBI for
such issues.

PART IV: CONTENTS OF ABRIDGED PROSPECTUS (See Rule 8(i) of the IDR Rules)

1. General Instructions: The information to be provided under each of the heads

specified below shall be as per the requirement of Part I of Chapter VI except when
specified otherwise.

2. The Abridged Prospectus shall be printed in a font size which shall not be visually
smaller than TIMES NEW ROMAN Size 10.

3. The order in which items appear in the Abridged Prospectus shall correspond, as far
as may be applicable, to the order in which items appear in the Prospectus.

4. The application form shall be so positioned that on the tearing-off of the application
form, no part of the information given in the Abridged Prospectus is mutilated.

5. General Information

5.1 The name of the issuer company and address of the registered office of the issuer
company, along with telephone number, fax number, e-mail address and website
address, and where there has been a change in the address of the registered office
or name of the Issuer, details thereof.
5.2 Name, address and contact information of the registered office of the company;

5.3 Name, address and contact information of the Domestic Depository, the Overseas
Custodian Bank with the address of its office in India, the Merchant Banker, the
Underwriter to the issue, Advisors to the issue and any other intermediary which may
be appointed in connection with the issue of IDRs;
5.4 Interest of Experts and Counsel

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5.5 Name, address and contact information of the compliance officer in relation to the
issue of IDRs. The compliance officer should be placed in India
5.6 Name, address and contact information of Stock Exchanges where applications are
made or proposed to be made for listing of the IDRs;
5.7 Disclosure about provisions relating to punishment for fictitious applications;
5.8 Statement/declaration for refund of excess subscription
5.9 Statement that an interest of 15% p.a. would be paid to the investors if the allotments
letters / refund orders are not despatched within 15/30 days of the closure of the
public issue, as the case may be
5.10 declaration about issue of allotment letters/certificates/ IDRs within the stipulated
period;
5.11 date of opening of issue;
5.12 date of closing of issue;
5.13 Method and Expected Timetable of the issue
5.14 a statement that subscription to the issue shall be kept open for atleast 3 working
days and not more than 10 working days
5.15 date of earliest closing of the issue;
5.16 declaration by the Merchant Banker with regard to adequacy of resources of
underwriters to discharge their respective obligations, in case of being required to do
so;
5.17 a statement by the issuing company that all moneys received out of issue of IDRs
shall be transferred to a separate domestic bank account, name and address of the
bank and the nature and number of the account to which the amount shall be
credited;
5.18 details of availability of prospectus and forms, i.e., date, time, place etc;
5.19 amount and mode of payment seeking issue of IDRs
5.20 Disclosure on Investor Grievances and Redressal System:
5.21 That the company undertakes to subject itself to the jurisdiction of Indian Courts
having jurisdiction over the place where the stock exchange is situated regarding
grievances of the applicants for IDRs

6. Capital Structure of the issuer company

Following details to be furnished:

6.1 Authorised, issued, subscribed and paid up capital (Number of instruments,

description, aggregate nominal value).
6.2 Size of present issue.
6.3 Paid-up Capital:
- before the issue;
- after the issue (if the IDR issue involves issue of fresh equity shares); and
- share premium account (before and after the issue)
6.4 Detailed notes to Capital Structure

7. Terms of the Present Issue

7.1 Authority for the issue, terms of payment and procedure and time schedule for
allotment and issue of certificates/ refund orders.

Page 113 of 332

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7.2 The clause "Interest in Case of Delay in Despatch of Allotment Letters/ Refund
Orders in Case of Public Issues" shall appear.

8. Instructions for applicants

8.1 How to Apply, Availability of Prospectus, Abridged Prospectus and Application Forms,
Mode of Payment and Book building procedure, if relevant.
8.2 In the application form, the declaration relating to Nationality and Residentship shall
be shown prominently as under:

"Nationality and Residentship (Tick whichever is applicable)

i. I am / We are Indian National(s) resident in India and I am/we are not applying
for the said equity shares as nominee(s) of any person resident outside India
or Foreign National(s).

ii. I am / We are Indian National(s) resident in India and I am / We are applying

for the said equity shares as Power of Attorney holder(s) of Non- Resident
Indian(s) mentioned below on non-repatriation basis.

iii. I am / We are Indian National(s) resident outside India and I am/we are
applying for the said equity shares on my / our own behalf on non-repatriation
basis."

8.3 The application form should contain necessary instructions/ provisions for the
following:

i. Instructions to applicants to mention the number of application form on the

reverse of the instruments to avoid misuse of instruments submitted along with
the applications for shares/ debentures in public issues.

ii. Provision in the application form for inserting particulars relating to bank
account number and the name of the bank with whom such account is held, to
enable printing of the said details in the refund orders or for refunds through
Electronic Clearing System.

iii. Disclosure of PAN/GIR number.

iv. Details of options, if any, to receive securities subscribed for and a statement
that trading in securities on the stock exchanges in physical form will be
available only subject to limits prescribed by the Board for time to time.

8.4 Any special tax benefits for company and its shareholders (Only section numbers of
the Income Tax Act and their substance should be mentioned, without reproducing
the text of the sections)

8.5 Restrictions on investments in IDRs / fungibility of IDRs

9. Particulars of the Issue

Page 114 of 332
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9.1 Objects of the issue

9.2 Project cost
9.3 Means of financing
9.4 Name of Appraising Agency, if any
9.5 Name of Monitoring Agency, if any

10. Description of the Indian Depository Receipts and Rights of IDR Holders

10.1 Brief description of the Indian Depository Receipts

10.2 Dividends, Other Distributions and Rights of IDR holders
10.3 Voting rights and their manner of exercise by IDR holders, if any.
10.4 Record dates and how the same will be disclosed.
10.5 Reports and other communication to which the IDR holders will be entitled.
10.6 Conversion procedure of IDRs into shares
10.7 Governing Law regarding various aspects of IDRs and transactions therein.

11. Company, Management and Project

11.1 History and main objects and present business of the company.
11.2 Promoters / controlling shareholders and their background.
11.3 Names, address and occupation of manager, managing director, and other Directors
(including nominee-directors and whole-time directors) giving their directorships in
other companies.
11.4 Location of the project
11.5 Plant and machinery, technology, process, etc
11.6 Collaboration, any performance guarantee or assistance in marketing by the
collaborators
11.7 Infrastructure facilities for raw materials and utilities like water, electricity, etc.
11.8 Schedule of implementation of the project and progress made so far, giving details of
land acquisition, civil works, installation of plant and machinery, trial production, date
of commercial production etc
11.9 Nature of the products/services and end users
11.10 Existing, licensed and installed capacity of the product, demand of the product-
existing, and estimated in the coming years as estimates by a Government authority
or by any other reliable institution, giving source of the information. In case the
company is providing services, relevant information with regard to nature/ extent of
services, etc., have to be furnished.
11.11 Approach to marketing and proposed marketing set up
11.12 Export possibilities and export obligations, if any.
11.13 Stock Market Data: Disclose particulars of:-

a. Market price of shares for each quarter of the last three calendar years
preceding the calendar year preceding the year of the issue of Prospectus
(High, Low, Average Daily Trading Volume)
b. Market price of shares for each month of the calendar year preceding the year
of the issue of Prospectus (High, Low, Average Daily Trading Volume)
c. Market price of shares for the month preceding the date of Prospectus (High,
Low, Average Daily Trading Volume)
Page 115 of 332
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d. The Opening and Closing price on the last day of the preceding month of the
date of Prospectus along with the volume
e. This information should be provided, exchange wise, if the securities are listed
in more than one exchange
f. This information should updated as on last available date before the date of
prospectus
g. If it is a further issue of IDRs which are already listed in India, the above
information should be given about such IDRs also

12. Particulars with regard to the subsidiaries / associates of the issuer

The fo llowing information for the last 3 years based on the audited statements in respect of
subsidiaries and associates of the Issuing Company:

12.1 Date of Incorporation;

12.2 Nature of activities;
12.3 Equity Capital;
12.4 Reserves (excluding revaluation reserve);
12.5 Sales;
12.6 Profit after tax (PAT);
12.7 Earnings per share (EPS); and
12.8 Net Asset Value (NAV);

13. Basis for Issue Price

13.1 Earnings per share i.e. EPS pre-issue for the last three years (as adjusted for
changes in capital);
13.2 P/E pre-issue
13.3 Average return on net worth in the last th ree years
13.4 Minimum return on increased net worth required to maintain pre-issue EPS;
13.5 Net Asset Value per share based on last balance sheet;
13.6 Net Asset Value per share after issue and comparison thereof with the issue price.
13.7 Comparison of all the accounting ratios of the issuer company as mentioned above
with the industry average and with the accounting ratios of the peer group (i.e.,
companies of comparable size in the same industry. (Indicate the source from which
industry average and accounting ratios of the peer group has been taken)

Provided that the projected earnings shall not be used as a justification for the issue
price in the prospectus.

Provided further that the accounting ratios disclosed in the prospectus in support of
basis of the issue price shall be calculated after giving effect to the consequent
increase in capital on account of compulsory conversions outstanding, as well as on
the assumption that the options outstanding, if any, to subscribe for additional capital
will be exercised.

13.8 The face value of shares (including the statement about the issue price being “X”
times of the face value) and that of the IDRs. The aggregate face value of the total
equity shares underlying a single IDR also shall be given
Page 116 of 332
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14. Outstanding Material Litigations and Defaults (in a summarised tabular form)

14.1 Material Litigation / Liabilities including arrears/Potential liabilities of the issuer, its
promoters / controlling shareholders / directors and its subsidiaries and associates.

15. Material Development: Any material development after the date of the latest balance
sheet and its impact on performance and prospects of the company.

16. Expert opinion obtained, if any.

17. Change, if any, in directors and auditors during the last three years and
reasons thereof.

18. Time and Place of Inspection of material contracts (List of material contracts not
required)

19. Financial Performance of the Company for the Last Five Years (Figures to be
taken from the audited annual accounts in a tabular form)

19.1 Balance Sheet Data: Equity Capital, Reserves (State Revaluation Reserve, the year
of revaluation and its monetary effect on assets) and borrowings
19.2 Profit and Loss data: Sales, Gross profit, Net profit, dividend paid, if any
19.3 Any change in accounting policies during the last three years and their effect on the
profits and the reserves of the company
19.4 Following information as extracted from the report of the auditors reproduced in the
main prospectus:
i) net profit before accounting for extra ordinary items
ii) extra ordinary items
iii) net profit after accounting for extra ordinary items

20. Management Discussions and Analysis on Accounts

21. Listed Ventures of Promoters / controlling shareholders
22. Disclosure on Investor Grievances & Redressal System
23. Statement regarding minimum subscription clause:

The following statement shall appear:

If the company issuing the IDRs does not receive the minimum subscription of 90% of
the issued amount on the date of closure of the issue, or if the subscription level falls
below 90% after the closure of issue on account of cheques having being returned
unpaid or withdrawal of applications, the company shall forthwith refund the entire
subscription amount received. If there is a delay beyond 8 days after the company
becomes liable to pay the amount, the company shall pay interest at the rate of 15%
per annum for the period of delay.

24. Information relating to relevant provisions of Taxation law, Tax Treaties and
their impact for IDR holders.

Page 117 of 332

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25. Brief details of the Domestic Depositary, Overseas Custodian Bank and
Depositary Agreement.

26. Information relating to statutory and regulatory approvals required in home

country for the Issue and the related aspects and their status, and approvals
from Indian Regulatory authorities.

27. Signatories to the Prospectus.)

Page 118 of 332

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CHAPTER VII

POST- ISSUE OBLIGATIONS

7.0 The post issue obligations shall be as follows:

105
7.1 (Deleted)

7.2 Post - Issue Monitoring Reports

7.2.1 Irrespective of the level of subscription, the post-issue Lead Merchant Banker
shall ensure the submission of the post-issue monitoring reports as per
formats specified in Schedule XVI.

7.2.2 These reports shall be submitted within 3 working days from the due dates.

106
7.2.2.1 (The due date for submitting Post Issue Monitoring report in case of public
issues by listed and unlisted companies:

a) 3 day monitoring report in case of issue through book building route, for
book built portion:

The due date of the report shall be 3rd day from the date of allocation in the
book built portion or one day prior to the opening of the fixed price portion
whichever is earlier.

b) 3 day monitoring report in other cases, including fixed price portion of

book built issue:

The due date for the report shall be the 3rd day from the date of closure of the
issue.

c) Final post issue monitoring report for all issues:

The due date for this report shall be the 3rd day from the date of listing or 78
days from the date of closure of the subscription of the issue, whichever is
earlier.)

105
Omitted vide SEBI Circular No. RMB (Compendium) Series Circular No. 2 (1999- 2000) dated February 16, 2000:
"7.1 Association of Resource Personnel
7.1.1 Lead Merchant Banker responsible for post issue obligations (post issue Lead Merchant Banker) shall ensure that
a public representative nominated by the Board is associated in the process of finalisation of basis of allotment in
following cases:
a) Par issues with over subscription level of more than 5 times
b) Premium issues with over subscription level of more than 2 times.
106
Substituted vide SEBI Circular No. RMB (Compendium) Series Circular No. 1 (2001-2002) dated circular dated July 17,
2001, for
"Public Issues
(a) 3-Day Post Issue Monitoring Report
The due date for this report shall be the 3rd day from the date of closure of subscription of the issue.
(b) 78-Day Post Issue Monitoring Report
The due date for this report shall be the 78th day from the date of closure of subscription of the issue."
Page 119 of 332
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107
7.2.2.2 (The due dates for submitting post issue monitoring report in case of Rights
issues):

(a) 3-Day Post-Issue Monitoring Report:

The due date for this report shall be the 3rd day from the date of closure of
subscription of the issue.

(b) 50-Day Post - Issue Monitoring Report:

The due date for this report shall be the 50th day from the date of closure of
subscription of the issue.

7.3 Redressal of Investor Grievances

7.3.1 The Post - Issue Lead Merchant Banker shall actively associate himself with
post-issue activities namely, allotment, refund and despatch and shall regularly
monitor redressal of in vestor grievances arising therefrom.

7.4 Co-ordination with Intermediaries

7.4.1
(i) The Post-issue lead merchant banker shall maintain close co-ordination with
the Registrars to the Issue and arrange to depute its officers to the offices of
various intermediaries at regular intervals after the closure of the issue to
monitor the flow of applications from collecting bank branches, processing of
the applications including those accompanied by stockinvest and other matters
till the basis of allotment is finalised, despatch security certificates and refund
orders completed and securities listed.

(ii) Any act of omission or commission on the part of any of the intermediaries
noticed during such visits shall be duly reported to the Board.

108
7.4.1.1 (Deleted).

7.4.1.2 Underwriters

a)
i) If the issue is proposed to be closed at the earliest closing date, the lead
Merchant Banker shall satisfy himself that the issue is fully subscribed before
announcing closure of the issue.

107
Substituted vide SEBI Circular No. RMB (Compendium) Series Circular No. 1 (2001-2002) dated July 17, 2001 for "
Rights Issues "

108
Omitted the following clause vide SEBI Circular No. SEBI/CFD/DIL/DIP/12/2004/8/4 dated April 8, 2004:
“Stock Invest
The lead merchant banker shall ensure compliance with the instructions issued by the RBI on handling of stock invest
by any person including Registrars.”
Page 120 of 332
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ii) In case, there is no definite information about subscription figures, the issue
shall be kept open for the required number of days to take care of the
underwriters' interests and to avoid any dispute, at a later date, by the
underwriters in respect of their liability.

b) In case there is a devolvement on underwriters, the lead Merchant Banker

shall ensure that the underwriters honour their commitments within 60 days
from the date of closure of the issue.

c) In case of undersubscribed issues, the lead merchant banker shall furnish

information in respect of underwriters who have failed to meet their
underwriting devolvements to the Board in the format specified at Schedule -
XVII.

7.4.1.3 Bankers to an issue

The post-issue Lead Merchant Banker shall ensure that moneys received
pursuant to the issue and kept in a separate bank (i.e. Bankers to an Issue), as
per the provisions of section 73(3) of the Companies Act 1956, is released by
the said bank only after the listing permission under the said Section has been
obtained from all the stock exchanges where the securities was proposed to
be listed as per the offer document.

7.5 Post-issue Advertisements

7.5.1 Post-issue Lead Merchant Banker shall ensure that in all issues,
advertisement giving details relating to oversubscription, basis of allotment,
number, value and percentage of applications 109(), number, value and
percentage of successful allottees 110(), date of completion of despatch of
refund orders, date of despatch of certificates and date of filing of listing
application is released within 10 days from the date of completion of the
various activities at least in an English National Daily with wide circulation, one
Hindi National Paper and a Regional language daily circulated at the place
where registered office of the issuer company is situated.

7.5.2 Post-issue Lead Merchant Banker s hall ensure that issuer company/ advisors/
brokers or any other agencies connected with the issue do not publish any
advertisement stating that issue has been oversubscribed or indicating
investors’ response to the issue, during the period when the public issue is still
open for subscription by the public.

7.5.3 Advertisement stating that "the subscription to the issue has been closed" may
be issued after the actual closure of the issue.

109
Omitted the words “received along with stockinvest” vide SEBI Circular No. SEBI/CFD/DIL/DIP/14/2005/25/1 dated
January 25, 2005.

110
Omitted the words “who have applied through stockinvest” vide SEBI Circular No. SEBI/CFD/DIL/DI P/14/2005/25/1
dated January 25, 2005.
Page 121 of 332
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7.6 Basis of Allotment

111
7.6.1 (In a public issue of securities, the Executive Director/Managing Director of
the Designated Stock Exchange along with the post issue Lead Merchant
Banker and the Registrars to the Issue shall be responsible to ensure that the
basis of allotment is finalised in a fair and proper manner in accordance with
the following guidelines:

Provided 112 (that) in the book building portion of a book built public issue
notwithstanding the above clause, Clause 11.3.5 of Chapter XI of these
Guidelines shall be applicable.)

7.6.1.1 Proportionate Allotment Procedure

113
(Allotment shall be on proportionate basis within the specified categories,
rounded off to the nearest integer subject to a minimum allotment being equal
to the minimum application size as fixed and disclosed by the issuer.

111
Substituted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 for the following:
“In a public issue of securities, the Executive Director/Managing Director of the Regional Stock Exchange along with the
post issue Lead Merchant Banker and the Registrars to the Issue shall be responsible to ensure that the basis of
allotment is finalised in a fair and proper manner in accordance with the following guidelines:
Provided, in the book building portion of a book built public issue notwithstanding the above clause, Clause 11.3.5 of
Chapter XI of these Guidelines shall be applicable.” Prior to this substitution, the clause was substituted vide circular
dated February 16, 2000 for "the public issue of securities that has been over subscribed, the post issue Lead Merchant
Banker and the Registrar to an Issue, responsible for finalizing the basis of allotment, shall ensure that allotments are
made in the following manner:"

112
Inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/14/2005/25/1 dated January 25, 2005.

113
Substituted for the following vide SEBI Circular No. SEBI/CFD/DIL/DIP/13/2004/28/5 dated May 28, 2004:
“The allotment shall be subject to allotment in marketable lots, on a proportionate basis as explained below:
a) Applicants shall be categorised according to the number of shares applied for.
b) The total number of shares to be allotted to each category as a whole shall be arrived at on a proportionate basis
i.e. the total number of shares applied for in that category (number of applicants in the category x number of shares
applied for) multiplied by the inverse of the oversubscription ratio as illustrated below:

Total number of applicants in category of 100s - 1,500

Total number of shares applied for - 1,50,000
Number of times oversubscribed - 3
Proportionate allotment to category - 1,50,000 x 1/3
= 50,000

c) Number of the shares to be allotted to the successful allottees shall be arrived at on a proportionate basis i.e. total
number of shares applied for by each applicant in that category multiplied by the inverse of the oversubscription
ratio. Schedule XVIII of basis of allotment procedure may be referred to.

Number of shares applied for by - 100

each applicant
Number of times oversubscribed - 3
Proportionate allotment to each
successful applicant - 100 x 1/3 = 33
(to be rounded off to 100)

d) All the applications where the proportionate allotment works out to less than 100 shares per applicant, the allotment
shall be made as follows:
i. Each successful applicant shall be allotted a minimum of 100 securities; and
ii. The successful applicants out of the total applicants for that category shall be determined by drawal of lots in
such a manner that the total number of shares allotted in that category is equal to the number of shares
worked out as per (ii) above.
Page 122 of 332
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Explanation:

For the purposes of the aforesaid clause, the illustration given in schedule
XVIII may be referred.)

114
7.6.1.2 (Reservation for Retail Individual Investor)

115
7.6.1.2.1 (The above proportionate allotments of securities in an issue that is
oversubscribed shall be subject to the reservation for 116(Retail individual
investors ) as described below:

a) A minimum 50% of the net offer of securities to the public shall initially be
made available for allotment to retail individual investors, as the case may be.

b) The balance net offer of securities to the public shall be made available for
allotment to:

i) individual applicants other than retail individual investors, and;

e) If the proportionate allotment to an applicant works out to a number that is more than 100 but is not a multiple of
100 (which is the marketable lot), the number in excess of the multiple of 100 shall be rounded off to the higher
multiple of 100 if that number is 50 or higher.
f) If that number is lower than 50, it shall be rounded off to the lower multiple of 100. As an illustration, if the
proportionate allotment works out to 250, the applicant would be allotted 300 shares.
g) If however the proportionate allotment works out to 240, the applicant shall be allotted 200 shares.
h) All applicants in such categories shall be allotted shares arrived at after such rounding off.
i) If the shares allocated on a proportionate basis to any category is more than the shares allotted to the applicants in
that category, the balance available shares for allotment shall be first adjusted against any other category, where
the allocated shares are not sufficient for proportionate allotment to the successful applicants in that category.
j) The balance shares if any, remaining after such adjustment shall be added to the category comprising applicants
applying for minimum number of shares.
As the process of rounding off to the nearer multiple of 100 may result in the actual allocation being higher than the
shares offered, it may be necessary to allow a 10% margin i.e. the final allotment may be higher by 10 % of the net
offer to public.”

114
Substi tuted vide SEBI Circular No. SEBI/CFD/DIL/DIP/12/2004/8/4 dated April 8, 2004 for R
“ eservation for Small
Individual Applicants”.

115
Substituted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 for the following:
“The above proportionate allotments of securities in an issue that is oversubscribed shall be subject to the reservation
for small individual applicants as described below:
a) A minimum 50% of the net offer of securities to the public shall initially be made available for allotment to individual
applicants who have applied for allotment equal to or less than 10 marketable lots of shares or debentures or the
securities offered, as the case may be.
b) The balance net offer of securities to the public shall be made available for allotment to:
i) individual applicants who have applied for allotment of more than 10 marketable lots of shares or debentures
or the securities offered and ;
ii )other investors including Corporate bodies/ institutions irrespective of the number of shares, debentures, etc.
applied for.
c) The unsubscribed portion of the net offer to any one of the categories specified in (a) or (b) shall / may be made
available for allotment to applicants in the other category, if so required.

Explanation
It is clarified that the words "a minimum of 50% of the public offer" used in sub -clause (a) above means that if the
category of individual applicants upto 10 marketable lots was to be entitled to get 70% of the public offer in accordance
with proportionate formula, the category should get 70%. If the category is entitled to get only 30% of the public offer in
accordance with the proportionate allotment formula, there should be a reservation of a minimum of 50% of the net
public offer.”

116
Substituted vide SEBI Circular No. SEBI/CFD/DIL/DIP/12/2004/8/4 dated April 8, 2004 for “small individual applicants”.
Page 123 of 332
 (Updated till May 8, 2006 )

ii) other investors including Corporate bodies/ institutions irrespective of the

number of shares, debentures, etc. applied for.

c) The unsubscribed portion of the net offer to any one of the categories specified
in (a) or (b) shall / may be made available for allotment to applicants in the
other category, if so required.

Explanation:

It is clarified that the words "a minimum of 50% of the public offer" used in sub-
clause (a) above means that if the category of retail individual investors was to
be entitled to get 70% of the public offer in accordance with proportionate
formula, the category should get 70%. If the category is entitled to get only
30% of the public offer in accordanc e with the proportionate allotment formula,
there should be a reservation of a minimum of 50% of the net public offer.)

117
7.6.2 (The drawal of lots (where required) to finalise the basis of allotment, shall
be done in the presence of a public representative on the Governing Board of
the Designated Stock Exchange.)

118
7.6.3 (The basis of allotment shall be signed as correct by the Executive
Director/Managing Director of the designated stock exchange and the public
representative (where applicable) in addition to the lead merchant banker
responsible for post issue activities and the Registrar to the Issue. The
designated stock exchange shall invite the public representative on a rotation
basis from out of the various public representatives on its governing board.)

7.7 Other Responsibilities

119
(7.7.1 The lead merchant banker shall ensure that the despatch of share certificates/
refund orders/ 120 () and demat credit is completed and the allotment and listing

117
Substituted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 for the following:
“The drawl of lots (where required) to finalise the basis of allotment, shall be done in the presence of a public
representative on the Governing Board of the Regional Stock Exchange.”

Prior to the above, this clause was inserted vide SEBI Circular No. RMB (Compendium) Series Circular No. 2 (1999-
2000) dated February 16, 2000.

118
Substituted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 for the following:
“The basis of allotment shall be signed as correct by the Executive Director/Managing Director of the stock exchange
and the public representative (where applicable) in addition to the lead merchant banker responsible for post issue
activities and the Registrar to the Issue. The stock exchange shall invite the public representative on a rotation basis
from out of the various public representatives on its governing board.”.

Prior to the substitution, this clause was inserted vide SEBI Circular No. RMB (Compendium) Series Circular No. 2
(1999-2000) dated February 16, 2000.

119
Inserted Clause nos. 7.7.1 and 7.7.2 and consequently renumbered Clause nos. 7.7.1 to 7.7.5 as Clause Nos. 7.73 to
7.7.7 respectively, vide SEBI Circular No. DIP (Compendium) Circular No. 3 dated August 04, 2000.

120
Omitted the words “cancelled stock invests” vide SEBI Circular No. SEBI/CFD/DIL/DIP/14/2005/25/1 dated January
25, 2005.

Page 124 of 332

 (Updated till May 8, 2006 )

documents submitted to the stock exchanges within 2 working days of

finalisation of the basis of allotment.

7.7.2 The post issue lead manager shall ensure that all steps for completion of the
necessary formalities for listing and commencement of trading at all stock
exchanges where the securities are to be listed are taken within 7 working
days of finalisation of basis of allotment.)

7.7.3 Lead Merchant Banker shall ensure payment of interest to the applicants for
delayed dispatch of allotment letters, refund orders, etc. as prescribed in the
offer document.

7.7.4 The Post-issue Lead Merchant Banker shall ensure that the despatch of refund
orders / allotment letters /share certificates is done by way of registered post /
certificate of posting as may be applicable.

7.7.5 In case of all issues, advertisement giving details relating to oversubscription,

basis of allotment, number, value and percentage of applications received
121
(), number, value and percentage of successful allottees 122(), date of
completion of despatch of refund orders, date of despatch of certificates and
date of filing of listing application.

7.7.6 Such advertisement shall be released within 10 days from the date of
completion of the various activities.

7.7.7 Post-issue Lead merchant banker shall continue to be responsible for post
issue activities till the subscribers have received the shares/ debenture
certificates or refund of application moneys and the listing agreement is
entered into by the issuer company with the stock exchange and listing/ trading
permission is obtained.

123
7.8 (Deleted)

121
Omitted the words “alongwith stockinvest” vide SEBI Circular No. SEBI/CFD/DIL/DIP/14/2005/25/1 dated January 25,
2005.

122
Omitted the words “who have applied through stockinvest” vide SEBI Circular No. SEBI/CFD/DIL/DIP/14/2005/25/1
dated January 25, 2005.

123
Omitted the following clause vide SEBI Circular No. SEBI/CFD/DIL/DIP/14/2005/25/1 dated January 25, 2005:
“7.8 Certificate Regarding Realisation of Stockinvests

7.8.1 The Post-Issue Lead Merchant Banker shall submit within two weeks from the date of allotment, a Certificate to
the Board certifying that the stockinvests on the basis of which allotment was finalised, have been realised.”
Page 125 of 332
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CHAPTER VIII

OTHER ISSUE REQUIREMENTS

8.0 The Lead Merchant Banker shall ensure compliance with the following:

124
8.1 (Omitted)

125
8.2 (Public issue and listing of non-convertible debt securities (hereinafter
referred to as NCDS) and Debt Securities convertible into equity after
allotment (hereinafter referred to as DSCE).

8.2.1 An unlisted company making a public issue of NCDS may, subject to other
applicable provisions of these guidelines, make a public issue and make an
application for listing its NCDS in the Stock Exchange/s without making a prior
public issue of equity and listing thereof, if the following conditions are fulfilled:

124
Omitted the following clause vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003:
“Public Offer by Unlisted Companies with Post Issue Capital upto Rs.5 crores

8.1.1 An unlisted company, with a commercial operation of less than two years proposing to issue securities to the public,
resulting in post issue capital of Rs.3 crores and not exceeding Rs.5 crores, shall be eligible to apply for listing of
securities only on those stock exchange(s) where trading of securities is screen-based.

8.1.2 The issuer company shall appoint market maker(s) on all the stock exchanges where the securities are proposed to
be listed.

8.1.3 The appointment of market makers shall be subject to the following :-

i. At least one market maker undertakes to make market for a minimum period of 18 months and at least one additional
market maker undertakes to make market for a minimum period of 12 months from the date on which the securities
are admitted to dealing.
ii. Market makers undertake to offer buy and sell quotes for a minimum depth of 3 marketable lots;
iii. Market makers undertake to ensure that the bid-ask spread (difference between quotations for sale and purchase) for
their quotes shall not at any time exceed 10%:
iii. The inventory of the market makers on each of such stock exchanges, as on the date of allotment of securities, shall
be at least 5% of the proposed issue of the company.

8.1.4 The unlisted companies whos e capital after the proposed issue of securities is less than Rs.3 crores shall be eligible
to be listed only on the Over the Counter Exchange of India.”

125
Substituted vide SEBI Circular No. RMB (Compendium) Series Circular No. 3 (2001-2002) dated January 11, 2002 for
the following:
"Listing of pure debt / convertible instruments issued by Unlisted infrastructure companies and Municipal Corporations

8.2.1 An unlisted infrastructure company making a public issue of pure debt instruments / convertible debt instruments and
a Municipal Corporation making a public issue of pure debt instruments shall be eligible to apply for listing of these
instruments in the stock exchanges subject to the following:

ii) the debt instruments, irrespective of the maturity, shall carry on rating from a credit rating agency not below investment
grade;

iii) the debt instruments, irrespective of the maturity, shall be fully secured by creating security in favour of the Debenture
Trustees;

iv) in the case of issue of pure debt instruments by an infrastructure company, equity issued prior to the public issue of debt
can be listed only when a public offer of equity has been made; and

in the case of issue of debt instruments by infrastructure companies fully or partly convertible into equity, while the PCD/FCD
shall be listed directly, the equity held prior to the public issue of the PCD/FCD shall be listed only at the time when the
equity arising on conversion of the PCD/FCD are listed."
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a) The NCDS shall carry a credit rating not below investment grade at-least from
one Credit Rating Agency registered with the Board. Where the issue size of
the NCDS is Rs. 100 crores or more, such rating shall be obtained from at
least two Credit Rating Agencies.

126
b) (A contribution of atleast 20% of the project cost i.e., objects proposed to be
inter alia, financed through the issue, shall be brought in the form of equity.
Such equity partic ipation may be brought by the promoter from his own funds
or from other sources, subject to the condition that at least 20% of the issue
size is brought by way of equity by the promoter from his own funds. In case,
the project is to be implemented in stages, the promoters contribution as per
these requirements shall be with respect to total equity participation till the
respective stage vis a vis the debt raised or proposed to be raised through the
issue)

c) The issuer company shall agree to comply with the requirements of continuing
disclosures as specified under the listing agreement to be entered into with
concerned stock exchanges as is applicable for listing of equity shares.

d) The issuer company shall agree to obtain prior consent of the holders of the
NCDS through special resolution to be passed at the general meeting of the
NCDS holders for change in terms of issue, change in capital structure and
change in shareholding pattern.

e) There shall be no partly paid up shares/other securities at the time of filing of

draft offer document with the Board.

f) The issuer company may come out with a public issue of equity/security
convertible into equity after allotment during the currency of the NCDS or
thereafter, only after complying with the guidelines applicable for an initial
public offering of such securities.

g) The equity held by the promoters or others at the time of issue of NCDS may
be listed only when an initial public offer of equity/securities convertible into
equity after allotment is made after complying with the applicable provisions of
these Guidelines.

8.2.2 A Municipal Corporation which has no share capital may be subject to the
provisions of sub-clauses (a), (b) and (c) of Clause 8.2.1, make a public issue
of NCDS and list the same on the stock exchange/s.

8.2.3 An unlisted company making a public issue of DSCE may, subject to other
applicable provisions of these guidelines make a public issue and make an

126
Substituted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 for the following:
“The promoter's contribution of atleast 20% of the project cost i.e. objects proposed to be inter alia financed through the
issue, shall be brought in the form of equity. Where the promoters contribution exceeds Rs. 100 crores, the promoters
shall bring in Rs.100 crores before the opening of the public issue and the remaining promoters' contribution shall be
brought in on pro rata basis, before calls on the NCDS are made. The promoters' contribution of 20% of equity shall be
locked in for a period of 3 years from the date of allotment in the public issue of NCDS.”
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application for listing on the stock exchanges without making a prior public
issue of its equity and listing thereof, if the following conditions are fulfilled:
a) The provisions of clauses (a) to (e) of clause 8.2.1 shall be mutatis mutandis
complied with.

b) An issuer company making an initial public offer of DSCE may come out with a
subsequent public issue of equity/ security convertible into equity after
allotment during the currency of the DSCE only after complying with the
guidelines applicable for an initial public offering of such securities.

Provided that the provisions of Clause 2.6 shall not be applicable for an Initial
Public Offer of such securities if the floor price for conversion of DSCE is
determined and disclosed in the offer document for issue of DSCE.

c) The equity held by the promoters and others may be listed along with the
listing of equity in initial public offering of equity/security convertible into equity
after allotment or at the time of listing if equity arising on conversion of the
DSCE .

d) If the equity shares held by the promoters is proposed to be listed on

conversion of DSCE, it shall be ensured that the number of equity shares
allotted to the public (after excluding the allotment of equity shares to holders
of DSCE issued on firm allotment/reservation basis) as a percentage of the
total paid up equity capital after conversion and listing of the promoters equity,
is not less than the percentage specified in clause (b) of sub-rule (2) of Rule 19
of Securities Contracts (Regulations) Rules, 1957.

8.2.4 The lead merchant banker can mention a price band of 20% (cap in the
coupon rate/ price band should not be more than 20% of the floor coupon
rate/price) in the offer document filed with the Board and the specific coupon
rate/price can be determined by an issuer in consultation with the lead
manager at a later date before filing of the offer document with the RoC/s.

8.2.5 The issuer may subject to the provisions of Chapter XI of these guidelines,
make the issue through book building process to ascertain and determine the
coupon rate and price/ conversion price of the NCDS/ DSCE).)

127
8.2.2.1 (Deleted)

8.3 Rule 19(2)(b) of SC (R) Rules, 1957

127
Omitted the following Clause vide SEBI Circular No. RMB (Compendium) Series Circular No. 3 (2001- 2002) dated
January 11, 2002:
"In case of change in standard denomination of equity shares, the compliance with the following shall be ensured while
making disclosure in the offer document:-
(i) all the financial data affected by the change in denomination of shares shall be clearly and unambiguously presented in
the offer document.
(ii) comparison of financial ratios representing value per share and comparison of stock market data in respect of price and
volume of securities shall be clearly and unambiguously presented in the offer document.
(iii) the capital structure incorporated in the offer document shall be clearly presented giving all the relevant details pertaining
to the change in denomination of the shares."
Page 128 of 332
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128
8.3.1 (In case of a public issue by an unlisted company, the net offer to public
shall be at least 10% or 25% as the case may be, of the post-issue capital.)

129
8.3.2 (In case of a public issue by a listed company, the net offer to public shall be
at least 10% or 25%, as the case may be, of the issue size.)

8.3.3 An infrastructure company, satisfying the requirements in Clause 2.4.1 (iii) of

Chapter II, inviting subscription from public 130(shall not attract the provisions of
Clauses 8.3.1and 8.3.2 above).

131
(8.3.4) The issuer company is free to make reservations and/or firm allotments to
various categories of persons mentioned hereafter for the remaining of the issue
size subject to other relevant provisions of these guidelines.
128
Substituted vide SEBI Circular No. RMB (Compendium) Series Circular No. 1 dated July 17, 2001 for the following:
"In case of a public issue by an unlisted company, the net offer to public shall be at least 25% of the post-issue capital."
129
Substituted vide SEBI Circular No. RMB (Compendium) Series Circular No. 1 dated July 17, 2001 for the following:
“In case of a public issue by a listed company, the net offer to public shall be at least 25% of the issue size" .
130
Substituted vide SEBI Circular No. RMB (Compendium) Series Circular No. 1 dated July 17, 2001 for the following:
“may not be required to offer at least 25% of its securities to public for subscription as required under rule 19(2)(b) of
SC(R) Rules, 1957" .

131
Omitted the following Clause no. 8.3.4 and renumbered Clause no. 8.3.5 as 8.3.4, vide SEBI Circular No. RMB
(Compendium) Series Circular No. 1 dated July 17, 2001:
“8.3.4 In case of public issues or offers for sale of equity shares or securities convertible at a later date into equity by
131
unlisted companies ('in any of the eligible sector)' at least 10% of the securities issued by such company may be
offered to the public subject to the following:-
(i) minimum twenty lacs securities are offered to the public (excluding reservation, firm allotment and promoter's
contribution); and
(ii) the size of the offer to the public i.e. the offer price multiplied by the number of securities offered to the public at point
(i) above, is minimum Rs.50 crores.
131
("Explanation 1 : For the purpose of the above clause company in the eligible sectors shall mean :
i. company deriving 75% or more of their turnover from information technology activities during the two years
immediately preceding the date of filing the offer document with the Board
ii. company deriving 75% or more of their turnover from media/entertainment activities during the two years
immediately preceding the date of filing the offer document with the Board
iii. company deriving 75% or more of their turnover from telecommunication activities during the two years
immediately preceding the date of filing the offer document with the Board

"Explanation 2 : For the purposes of Explanation 1 –

a. "Information Technology" shall have the same meaning as in clause (iii) of Explanation 2 to Clause 2.2.
(b) "Media/Entertainment " shall comprise:
i. production of television programmes
ii. production of films - corporate films, feature films, documentary films etc.
iii. production of radio programmes
iv. production of print publications like books, newspapers, magazines, journals etc.
v. entertainment websites offering music, films etc.
vi. news websites
vii. production of music
viii. event management
ix. running of television channels
x. running of radio stations/channels
xi. production of Advertisements
(c) "Telecommunication " shall comprise:
i. Internet Service providers
ii. Providers of telephony
iii. Television/internet cable networks
iv. Providers of internet and telephony Gateways
v. Producers of communication software
vi. Producers of internet networking hardware
vii. Providers of Satellite services) "

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Explanation:

1. The expression "reservation” shall mean reservation on Competitive Basis

wherein allotment of shares is made in proportion to the shares applied for
by the concerned reserved categories.

2. Reservation on competitive basis can be made in a public issue to the

following categories:

Sr. No. Category of Persons

132
(i) (Employees of the company)

(ii) Shareholders of the promoting companies in the case of a

new company and shareholders of group companies in the
case of an existing company

(iii) Indian Mutual Funds

(iv) Foreign Institutional Investors (including non resident Indians

and overseas corporate bodies)

(v) Indian and Multilateral development Institutions.

(vi) Scheduled Banks

133
(2A. In a public issue (not being a composite issue) by a listed company, the
reservation on competitive basis can be made for the shareholders who,
on the record date ( date fixed for the purpose of determining the
eligible shareholders) , are holding shares worth up to Rs. 50,000/-
determined on the basis of closing price as on the previous day.

Provided that the allotment to such shareholders shall be on

proportionate basis as in case of allotment in public category.)

3. Specified Categories for “Firm allotment” in public issues can be made to

the following :

Sr. No. Category of Persons

In the above clause, the words “in any of the eligible sector” appearing between “into equity by unlisted companies” and “at
least 10% of the securities” w ere substituted for the words “information technology sector” vide SEBI Circular No. DIP
(Compendium) Circular No. 3 dated August 4, 2000.

In the above clause, Explanations 1 and 2 were initially inserted vide SEBI Circular No. DIP (Compendium) Circular
No. 3 dated August 4, 2000.
132
Substituted vide SEBI Circular No. SEBI/CFD/DIL/DIP/13/2004/28/5 dated May 28, 2004 for the following:
“Permanent employees (including working directors) of the company and in the cas e of a new company the permanent
employees of the promoting companies.”

133
Inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/13/2004/28/5 dated May 28, 2004.
Page 130 of 332
 (Updated till May 8, 2006 )

(i) Indian and Multilateral Development Financial Institutions

(ii) Indian Mutual Funds

(iii) Foreign Institutional Investors (including non resident Indians

and overseas corporate bodies)

(iv) Permanent / regular employees of the issuer company

(v) Scheduled Banks

4. The Lead Merchant Banker(s) can be included in the category of persons

entitled to firm allotments subject, to an aggregate maximum ceiling of 5%
of the proposed issue of securities.

5. The aggregate of reservations and firm allotments for employees in an

issue, shall not exceed 10% of the total proposed issue amount.

6. For shareholders, the reservation, shall not exceed 10% of the total
proposed issue amount.

7. In case of prom oting companies are Designated Financial Institutions/ State

and central financial Institutions, the employees and the shareholders of
such promoting companies, shall not be eligible for the said reservations.

8. The allotment of securities to the specified categories for firm allotment/

reservation shall be subject to such conditions as may be specified by the
Government and regulatory authorities.

134
(8.3.5 Application to the Board for Relaxation from applicability of Clause (b) to sub-
rule (2) of Rule 19 of the Securities Contracts (Regulation) Rules, 1957 by an
unlisted company:

8.3.5.1 An unlisted company may make an application to the Board for relaxation from
applicability of clause (b) to sub-rule (2) of Rule 19 of the Securities Contracts
(Regulation) Rules, 1957 for listing of its shares without making an initial public
offer if it satisfies the following conditions:

i. Shares have been allotted by the unlisted company (transferee company) to

the holders of securities of a listed company (transferor company) pursuant to
a scheme of reconstruction or amalgamation under the provision of the
Companies Act, 1956 and such scheme has been sanctioned by the High
Court/s of the Judicature.

134
Inserted clauses 8.35, 8.3.5.1, 8.3.5.2, 8.3.5.3 and 8.3.5.4 vide SEBI Circular No. RMB (Compendi um) Series Circular
No. 1 dated July 17, 2001.
Page 131 of 332
 (Updated till May 8, 2006 )

ii. The listing of the shares of the unlisted transferee company is in terms of
scheme of arrangement sanctioned by the High Court/s of the Judicature.

iii. Atleast 25% of the paid up share capital, post scheme, of the unlisted
transferee company seeking listing comprises shares allotted to the public
holders of shares in the listed transferor company.

iv. The unlisted company has not issued/reissued any shares, not covered under
the scheme.

v. There are no outstanding warrants/instruments/agreements which gives right

to any person to take the shares in the unlisted transferee company at any
future date. If there are such instruments in the scheme sanctioned by the
Court, the percentage referred to in point (iii) above, shall be computed after
giving effect to the consequent increase of capital on account of compulsory
conversions outstanding as well as on the assumption that the options
outstanding, if any, to subscribe for additional capital will be exercised.

vi. The share certificates have been despatched to the allottees pursuant to the
scheme of arrangement or their names have been entered as beneficial owner
in the records of the depositaries.

vii. That the shares of the transferee company issued in lieu of the locked-in
shares of the transferor company are subjected to the lock-in for the remaining
period.

viii. In addition to the requirements of Clause (vii) above, the following

conditions are also to be complied with:

a) in case of a hiving off of a division of a listed company (say 'A') and its merger
with a newly formed company or existing company (say 'B') there would not be
any additional lock-in, if the paid up share capital of company 'B' is only to the
extent of requirement for incorporation purposes.

b) in case of merger where the paid-up share capital of the company seeking
listing (company 'B') is more than the requirement for incorporation; the
promoters' shares shall be locked in to the extent 20% of the post merger paid-
up capital of the unlisted company, for a period of 3 years from the date of
listing of the shares of the unlisted company. The balance of the entire pre-
merger capital of the unlisted company shall also be locked-in for a period of 3
years from the date of listing of the shares of the unlisted company.

135
8.3.5.2 (An application to the Board under Clause 8.3.5.1 shall be made through the
designated stock exchange of the listed company and the designated stock
exchange may recommend the application giving the reason therefore.)

135
Substituted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 for the following:
“An application to the Board under Clause 8.3.5.1 shall be made through the regional stock exchange of the listed
company and the regional stock exchange may recommend the application giving the reason therefore.”
Page 132 of 332
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8.3.5.3 The unlisted company shall take steps for listing, simultaneously on all stock
exchanges where the shares of the (transferor) listed company are/were listed,
within 30 days of the date of the final order of the High Court/s approving the
scheme. The formalities for commencing of trading shall be completed within
45 days of the date of final order of the High Court/s.

8.3.5.4 Before commencement of trading, the company shall give an advertisement in

one English and one Hindi newspaper with nationwide circulation and one
regional newspaper with wide circulation at the place where the registered
office of the company is situated, giving details as specified in Schedule
XXVIII.)

8.4 Capital Structure

8.4.1 For the purposes of presentation of the capital structure in the specified format,
the lead merchant banker shall take into account the following:

a) Proposed issue amount = (Promoters’ contribution in the proposed issue) + (firm

allotment) + (offer through the offer document).

b) Offer through the offer doc ument shall include net offer to the public and
reservations to the permitted reserved categories and shall not include the
promoters’ contribution in the proposed issue and firm allotment.

c) Net offer to the public shall mean the offer made to Indian public and does not
include reservations/ firm allotments/ promoters’ contribution.

8.5 Firm Allotments and Reservations

a)
i) If any firm allotment has been made to any person(s) in the specified categories,
no further application for subscription to the public issue from such person(s)
[excepting application from employee's category] shall be entertained.

ii) where reservation has been made to specified category(ies), person(s) belonging
to category(ies) [except employees and shareholders categories] shall not make
an application in the ` net public offer' category.

b)
i) An applicant in the net public category cannot make an application for that
number of securities exceeding the number of securities offered to the public.

ii) In the case of reserved categories, a single applicant in the reserved category
can make an application for a number of security which exceeds the reservation.

c)
i) Any unsubscribed portion in any reserved category may be added to any other
reserved category.

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ii) The unsubscribed portion, if any, after such inter se adjustments amongst the
reserved categories shall be added back to the net offer to the public.

d) In case of undersubscription in the net offer to the public portion, spill-over to the
extent of undersubscription shall be permitted from the reserved category to the
net public offer portion.

e) If any person to whom firm allotment is proposed to be made withdraws partially

or fully from the offer made to him after filing of the prospectus with the Registrar
of Companies, the extent of shares proposed to be allotted to such person, shall
be taken up by the promoters and the subscription amount shall be brought in at
least one day prior to the issue opening date.

f) The shares so acquired by promoters under sub-clause (e) above shall also be
subject to a lock-in for a period of 3 years.

g) No buy-back or stand-by or similar arrangements shall be allowed with the

persons for whom securities are reserved for allotment on a firm basis.

8.6 Terms of the Issue

136
(8.6.1) Minimum Application Value

137
i) The minimum application value shall be within the range of Rs. 5,000 to Rs,
7,000. The issuer company, in consultation with the merchant banker, shall
stipulate the minimum application size (in terms of number of shares) falling
within the aforesaid range of minimum application value and make upfront
disclosures in this regard, in the offer document.

Explanation:

For the purpose of this clause, the minimum application value shall be with
reference to the issue price of the shares and not with reference to the amount
payable on application.

Illustration:

For the purpose of sub clause (i), the following may be taken as illustration:

The issue price of shares is Rs.500. Out of the same, Rs.100/- is payable on
application and the balance on allotment and calls. In this instance, the
application value of Rs.5000-7000 shall be arrived at with reference to the
issue price of Rs.500/-. As such, the minimum application size, to be stipulated

136
Renumbered clause “8.6.1.1” as clause "8.6.1”, vide SEBI Circular No. SEBI/CFD/DIL/DIP/14/2005/25/1 dated January
25, 2005.

137
Substituted vide SEBI Circul ar No. SEBI/CFD/DIL/DIP/13/2004/28/5 dated May 28, 2004 for the following:
“In case of public issue at par, the minimum number of shares for which an application is to be made, shall be fixed at
200 shares of face value of Rs.10/- each.”
Page 134 of 332
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in the offer document, would range from 10 shares to 14 shares and not 50
shares to 70 shares.)

138
ii) (Applications can be made in multiples of the minimum size /value so
stipulated in the offer document by the issuer and merchant banker as at (i)
and within the range of Rs.5000-7000, as stipulated at (i).)

139
iii) (Schedule XVIIIA may be referred for illustration on sub clause (ii) above.)

140
(iv) The minimum application moneys to be paid by an applicant along with the
application money shall not be less than 25% of the issue price.

v) In case of an offer for sale, the entire amount payable on eac h instrument shall
be brought in at the time of application.)

8.6.2 Securities Issued to be Made Fully Paid Up

a) If the subscription money is proposed to be received in calls, the calls shall be

structured in such a manner that the entire subscription money is c alled within 12
months from the date of allotment.

b) If the investor fails to pay call money within 12 months the subscription money
already paid may be forfeited.

c) If the issue size is above Rs.500 crores and is subject to monitoring requirement
as per Clause 8.17.1 of this Chapter, it shall not be necessary to call the entire
subscription money within 12 months.

8.7 Restriction on further Capital Issues

138
Substituted vide SEBI Circular No. SEBI/CFD/DIL/DIP/13/2004/28/5 dated May 28, 2004 for the following:
“Where the public issue is at a premium or comprises security, whether convertible or non-convertible, or the public issue is
of more than one security, the minimum application moneys payable in respect of each security by each applicant, shall not
be less than Rs 2000/- irrespective of the size of premium subject to applications being for a multiple of tradeable lots;”

139
Substituted vide SEBI Circular No. SEBI/CFD/DIL/DIP/13/2004/28/5 dated May 28, 2004 for the following:
“The successful applicants shall be issued by the issuer company share certificates/ instruments for eligible number of
shares in tradeable lots.”
140
Omitted the following sub-clauses and sub-clause (v) renumbered as sub-clause (iv) and sub-clause (vii) renumbered
as sub-clause (v), vide SEBI Circular No. SEBI/CFD/DIL/DIP/13/2004/28/5 dated May 28, 2004:
(iv) The minimum tradeable lot, in case of shares of face value of Rs.10/- each, shall at the option of the issuer/offeror,
be fixed on the basis of offer price as given below:

Provided that the maximum tradeable lot in any case shall not exceed 100 shares.

Offer price per share Minimum Tradeable lot

Up to Rs 100 100 Shares
Rs 101- Rs 400 50 Shares

More than Rs. 400 10 Shares

(vi) The minimum number of instruments for which an application has to be made shall be not less than the tradeable
lot.”
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8.7.1 No company shall make any further issue of capital in any manner whether by
way of issue of bonus shares, preferential allotment, rights issue or public issue
or otherwise, during the period commencing from the submission of offer
document to the Board on behalf of the company for public or rights issues, till
the securities referred to in the said offer document have been listed or
application moneys refunded on account of non-listing or undersubscription, etc.
141
(unless full disclosures regarding the total capital to be raised from such
further issues are made in the draft offer document.)

8.7.2
(a) No company shall, pending conversion of Fully Convertible Debentures (FCDs)
or Partly Convertible Debentures (PCDs), issue any shares by way of bonus or
rights unless similar benefit is extended to the holders of such FCDs or PCDs,
through reservation of shares in proportion to such convertible part of FCDs/
PCDs.

(b) The share so reserved may be issued at the time of conversion(s) of such
debentures on the same terms on which the bonus or rights issue was made.

8.7.3
(a) An issuer company shall not withdraw rights issue after announcement of record
date in relation to such issue.

(b) In cases where the issuer has withdrawn the rights issue after announcing the
record date, the issuer company shall not make an application for listing of any
securities of the company for a minimum period of 12 months from the record
date.

Provided that shares resulting from the conversion of PCDs/ FCDs/ Warrants
issued prior to the announcing of the record date in relation to rights issue may
be granted listing by the concerned Stock exchange(s).

8.8 Period of Subscription

8.8.1 Public Issues

(a) Subscription list for public issues shall be kept open for at least 3 working days
and not more than 10 working days.

(b) The public issue made by an infrastructure company, satisfying the

requirements in Clause 2.4.1 (iii) of Chapter II may be kept open for a
maximum period of 21 working days.

(c) The period of operation of subscription list of public issue shall be disclosed in
the prospectus.

8.8.2 Rights Issues

141
Inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/19/2006/31/3 dated March 31, 2006.
Page 136 of 332
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8.8.2.1 Rights issues shall be kept open for at least 30 days and not more than 60 days.

8.9 Price Band

8.9.1 If in a draft offer document submitted to the Board, a price band as per the
provisions of clause 3.5.1 of Chapter III of these Guidelines is mentioned,
suitable explanatory notes indicating the financial implications, if the price were to
be fixed at different ranges within the price band approved by the company
Board / General Body, shall be disclosed in the offer document.

8.10 Retention of Oversubscription

8.10.1 The quantum of issue whether through a rights or a public issue, shall not
exceed the amount specified in the prospectus/ letter of offer.

Provided that an oversubscription to the extent of 10% of the net offer to public
is permissible for the purpose of rounding off to the nearer multiple of 100 while
finalising the allotment.

8.11 Underwriting

8.11.1 The issuers have the option to have a public issue underwritten by the
underwriter.

8.11.2 In respect of every underwritten issue, the lead merchant banker(s) shall accept
a minimum underwriting obligation of 5% of the total underwriting commitment or
Rs.25 lacs whichever is less.

8.12 Updation of Offer Document

8.12.1 The Lead Merchant Banker shall ensure that the particulars as per audited
statements contained in the offer document are not more than 6 months old from
issue opening date.

8.12.2 In respect of a Government company making a public issue, the auditors report
in the prospectus shall not be more than six months old as on the date of filing of
the prospectus with the Registrar of Companies or the Stock Exchange as the
case may be.

8.13 Compliance Officer to be Appointed by Lead Merchant Banker

8.13.1 The merchant bankers shall appoint a senior officer as Compliance Officer to
ensure that all Rules, Regulations, Guidelines, Notifications etc. issued by the
Board, the Government of India, and other regulatory organizations are complied
with.

8.13.2 The Compliance Officer shall co-ordinate with regulatory authorities in various
matters and provide necessary guidance as also ensure compliance internally.
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8.13.3 The Compliance Officer shall also ensure that observations made/ deficiencies
pointed out by the Board do not recur.

8.14 Incentives to Prospective Shareholders

8.14.1 The issuer shall not offer any incentives to the prospective investors by way of
medical insurance scheme, lucky draw, prizes, etc.

8.15 New Financial Instruments

8.15.1 The lead manager shall ensure adequate disclosures in the offer document,
more particularly relating to the terms and conditions, redemption, security,
conversion and any other relevant features of any new financial instruments such
as Deep Discount Bonds, Debentures with Warrants, Secured Premium Notes
etc.

8.16 Issue of Debentures Bearing Interest Less Than Bank Rate

8.16.1 Whenever FCDs are issued bearing interest at a rate less than the Bank Rate, the
offer document shall contain disclosures about the price that would work out to the
investor, taking into account the notional interest loss on the investment from the
date of allotment of FCDs to the date(s) of conversions).

8.17 Requirement of Monitoring Agency

8.17.1 In case of issues exceeding Rs.500 crores, the issuer shall make arrangements
for the use of proceeds of the issue to be monitored by one of the financial
institutions.

8.17.2 A copy of the monitoring report as per the format specified at Schedule XIX,
shall be filed with the Board by the said monitoring agency, on a half yearly
basis, till the completion of project, for the purposes of record.

8.18 Safety Net or Buy Back Arrangement

8.18.1 Any safety net scheme or buy-back arrangements of the shares proposed in any
public issue shall be finalised by issuer company with the lead merchant banker
in advance and disclosed in the prospectus.

8.18.2 Such buy back or safety net arrangements shall be made available only to all
original resident individual allottees.

8.18.3 Such buy back or safety net facility shall be limited upto a maximum of 1000
shares per allottee and the offer shall be valid at least for a period of 6 months
from the last date of despatch of securities.

8.18.4 The financial capacity of the person making available buy back or safety net
facility shall be disclosed in the draft prospectus.
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8.19 Utilisation of funds in case of Rights Issues

142
8.19.1 (The issuer company may utilise funds collected against rights issues after
satisfying designated stock exchange that minimum 90% subscription has been
received.)

8.20 Option to Receive Securities in Dematerialised Form

8.20.1 The Lead merchant Banker shall incorporate a statement in the offer document
and in the application form to the effect that the investors have an option to either
receive securities in the form of physical certificates or hold them in a
dematerialised form.

8.21 Issue Opening Date

143
8.21.1 (An issue shall open within 3 months from the date of issuance of the
observation letter by the Board, if any or within 3 months from the 22nd day
from the date of filing of the draft offer document with the Board, if no
observation letter is issued.)

144
(Provided that nothing in this clause shall apply to shelf prospectus .)

8.21.2 Presentation of financials in case of change of denomination

In case of change in standard denomination of equity shares, the compliance

with the following shall be ensured while making disclosure in the offer
document:

(i) all the financial data affected by the change in denomination of shares shall be
clearly and unambiguously presented in the offer document.

(ii) comparison of financial ratios representing value per share and comparison of
stock market data in respect of price and volume of securities shall be clearly and
unambiguously presented in the offer document.

(iii) the capital structure incorporated in the offer document shall be clearly presented
giving all the relevant details pertaining to the change in denomination of the
shares.

142
Substituted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 for the following:
“The issuer company may utilise funds collected against rights issues after satisfying regional stock exchange that minimum
90% subscription has been received.”

143
Substituted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 for the following:
“An issue shall open within 365 days from the date of issuance of the observation letter by the Board, if any or 365 days
nd
from the 22 day from the date of filing of the draft offer document with the Board, if no observation letter is issued.”

144
Inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/12/2004/8/4 dated April 8, 2004.
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145
(CHAPTER VIII-A

GREEN SHOE OPTION

8A.1
146
(a) (An issuer company making a public offer of equity shares can avail of the
Green Shoe Option (GSO) for stabilizing the post listing price of its shares,
subject to the provisions of this Chapter.)

(b) A company desirous of availing the option granted by this Chapter, shall in the
resolution of the general meeting authorizing the public issue, seek
authorization also for the possibility of allotment of further shares to the
‘stabilizing agent’ (SA) at the end of the stabilization period in terms of clause
8A.15.

8A.2 The company shall appoint one of the 147(merchant bankers or Book Runners,
as the case may be, from amongst) the issue management team, as the
“stabilizing agent” (SA), who will be responsible for the price stabilization
process, if required. The SA shall enter into an agreement with the issuer
company, prior to filing of offer document with SEBI, clearly stating all the terms
and conditions relating to this option including fees charged / expenses to be
incurred by SA for this purpose.

8A.3
148
((a) The SA shall also enter into an agreement with the promoter(s) or pre-issue
shareholders who will lend their shares under the provisions of this Chapter,
specifying the maximum number of shares that may be borrowed from the
promoters or the shareholders, which shall not be in excess of 15% of the total
issue size.)

8A.4 The details of the agreements mentioned in clause 8A.2 and 8A.3 shall be
disclosed in 149 (the draft prospectus,) the draft Red Herring prospectus, Red
Herring prospectus and the final prospectus. The agreements shall also be
included as material documents for public inspection in terms of 150 (clause
6.15.1).

145
Inserted Chapter, vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003.

146
Substituted vide SEBI Circular No. SEBI/CFD/DIL/DIP/13/2004/28/5 dated May 28, 2004 for the following:
“(a) In case an issuer company is making an initial public offer of equity shares through the book building mechanism,
the company can avail of the Green Shoe option (GSO) for stabilizing the post listing price of its shares, subject to the
provisions of this Chapter“.

147
Substituted vide SEBI Circular No. SEBI/CFD/DIL/DIP/13/2004/28/5 dated May 28, 2004 for “Lead book runners,
amongst”.

148
Substituted vide circular no SEBI/CFD/DIL/DIP/13/2004/28/5 dated May 28, 2004 for the following:
“The SA shall also enter into an agreement with the promoter(s) who will lend their shares for the purpose of clause 8A.5,
specifying the maximum number of shares that may be borrowed from the promoters, which shall not be in excess of 15% of
the total issue size. “
149
Inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/13/2004/28/5 dated May 28, 2004.

Page 140 of 332

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151
8A.5 (Lead merchant banker or the) Lead Book Runner, in consultation with the
SA, shall determine the amount of shares to be overallotted with the public issue,
subject to the maximum number specified in clause 8A.3.

8A.6 The 152(draft prospectus,) draft Red Herring prospectus, the Red Herring
prospectus and the final prospectus shall contain the following additional
disclosures:
a. Name of the SA

b. The maximum number of shares (as also the percen tage vis a vis the proposed
issue size) proposed to be over-allotted by the company.

c. The period, for which the company proposes to avail of the stabilization
mechanism,

d. The maximum increase in the capital of the company and the shareholding
pattern post issue, in case the company is required to allot further shares to the
extent of over-allotment in the issue.

e. The maximum amount of funds to be received by the company in case of further

allotment and the use of these additional funds, in final document to be filed with
RoC

f. Details of the agreement/ arrangement entered in to by SA with the promoters to

borrow shares from the latter which inter-alia shall include name of the
promoters, their existing shareholding, number & percentage of shares to be lent
by them and other important terms and conditions including the rights and
obligations of each party.

g. The final prospectus shall additionally disclose the exact number of shares to be
allotted pursuant to the public issue, stating separately therein the number of
shares to be borrowed from the promoters and overallotted by the SA, and the
percentage of such shares in relation to the total issue size.

8A.7
153
((a) In case of an initial public offer by a unlisted company, the promoters and pre-
issue shareholders and in case of public issue by a listed company, the
promoters and pre- issue shareholders holding more than 5% shares, may
lend the shares subject to the provisions of this Chapter.
150
Substituted vide circular SEBI Circular No. SEBI/CFD/DIL/DIP/14/2005/25/1 dated January 25, 2005, for “clause
6.19.15”.

151
Inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/13/2004/28/5 dated May 28, 2004.

152
Inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/13/2004/28/5 dated May 28, 2004.

153
Substituted vide SEBI Circular No. SEBI/CFD/DIL/DIP/13/2004/28/5 dated May 28, 2004 for the following:
“The SA shall borrow shares from the promoters of the company to the extent of the proposed over-allotment. These
shares shall be in dematerialized form only. For the purposes of this clause, promoter means a promoter as defined in
Explanation I to clause 6.4.2.1.”
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(b) The SA shall borrow shares from the promoters or the pre-issue shareholders
of the issuer company or both, to the extent of the proposed over-allotment.

Provided that the shares referred to in this clause shall be in dematerialized

form only.)

8A.8 The allocation of these shares shall be pro-rata to all the applicants.

8A.9 The stabilization mechanism shall be available for the period disclosed by the
company in the prospectus, which shall not exceed 30 days from the date
when trading permission was given by the exchange(s).

8A.10 The SA shall open a special account with a bank to be called the “Special
Account for GSO proceeds of _____ company” (hereinafter referred to as the
GSO Bank account) and a special account for securities with a depository
participant to be called the “Special Account for GSO shares of company”
(hereinafter referred to as the GSO Demat Account).

8A.11 The money received from the applicants against the overallotment in the green
shoe option shall be kept in the GSO Bank Account, distinct from the issue
account and shall be used for the purpose of buying shares from the market,
during the stabilization period.

8A.12 The shares bought from the market by the SA, if any during the stabilization
period, shall be credited to the GSO Demat Account.

8A.13 The shares bought from the market and lying in the GSO Demat Account shall
be returned to the promoters immediately, in any case not later than 2 working
days after the close of the stabilization period.

8A.14 The prime responsibility of the SA shall be to stabilize post listing price of the
shares. To this end, the SA shall determine the timing of buying the shares,
the quantity to be bought, the price at which the shares are to be bought etc.

8A.15 On expiry of the stabilization period, in case the SA does not buy shares to the
extent of shares over-allotted by the company from the market, the issuer
company shall allot shares to the extent of the shortfall in dematerialized form
to the GSO Demat Account, within five days of the closure of the stabilization
period. These shares shall be returned to the promoters by the SA in lieu of
the shares borrowed from them and the GSO Demat Account shall be closed
thereafter. The company shall make a final listing application in respect of
these shares to all the Exchanges where the shares allotted in the public issue
are listed. The provisions of Chapter XIII shall not be applicable to such
allotment.

8A.16 The shares returned to the promoters under clause 8A.13 or 8A.15, as the
case may be, shall be subject to the remaining lock in period as provided in the
proviso the clause 4.14.1.
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8A.17 The SA shall remit an amount equal to (further shares allotted by the issuer
company to the GSO Demat Account) * (issue price) to the issuer company
from the GSO Bank Account. The amount left in this account, if any, after this
remittance and deduction of expenses incurred by the SA for the stabilization
mechanism, shall be transferred to the investor protection fund(s) of the stock
exchange(s) where the shares of issuer company are listed, in equal parts if
the shares are listed in more than one exchanges. The GSO Bank Account
shall be closed soon thereafter.

8A.18 The SA shall submit a report to the stock exchange(s) on a daily basis during the
stabilization period. The SA shall also submit a final report to SEBI in the format
specified in Schedule XXIX. (Flag B)This report shall be s igned by the SA and
the company. This report shall be accompanied with a depository statement for
the “GSO Demat Account” for the stabilization period, indicating the flow of the
shares into and from the account. The report shall also be accompanied by an
undertaking given by the SA and countersigned by the depository( ies) regarding
confirmation of lock-in on the shares returned to the promoters in lieu of the
shares borrowed from them for the purpose of the stabilization, as per the
requirement specified in 8A.16.

8A.19 The SA shall maintain a register in respect of each issue having the green shoe
option in which he acts as a SA. The register shall contain the following details
of:

154
(a) in respect of each transaction effected in the course of the stabilizing action, the
price, date and time

155
(b) the details of the promoters from whom the shares are borrowed and the number
of shares borrowed from each; and

156
(c) details of allotments made under clause 8A.15.

8A.20 The register must be retained for a period of at least three years from the date of
the end of the stabilizing period.”

157
8A.21 (For the purpose of the Chapter VIII-A,

154
Numbered the bulleted sub-clause, vide SEBI Circular No. SEBI/CFD/DIL/DIP/14/2005/25/1 dated January 25,
2005.

155
Numbered the bulleted sub-clause, vide SEBI Circular No. SEBI/CFD/DIL/DIP/14/2005/25/1 dated January 25,
2005.

156
Numbered the bulleted sub-clause, vide SEBI Circular No. SEBI/CFD/DIL/DIP/14/2005/25/1 dated January 25,
2005.

157
Substituted vide SEBI Circular No. SEBI/CFD/DIL/DIP/13/2004/28/5 dated May 28, 2004 for the following:
“For the purpose of the Chapter VIII-A, Over allotment shall be defined as an allocation of shares in excess of the size
of a public issue, made by the SA out of shares borrowed from the promoters, in pursuance of a green shoe option
exercised by the company in accordance with the provisions of the said Chapter.”
Page 143 of 332
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(a) promoter means a promoter as defined in Explanation I to clause 6.4.2.1of

these guidelines.”

(b) Over allotment shall mean as an allotment or allocation of shares in excess of

the size of a public issue, made by the SA out of shares borrowed from the
promoters or the pre-issue shareholders or both, in pursuance of a green shoe
option exercised by the company in accordance with the provisions of this
Chapter.))

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CHAPTER IX

GUIDELINES ON ADVERTISEMENT

9.0 The Lead Merchant Banker shall ensure compliance with the guidelines on
Advertisement by the issuer company.

9.1 Guidelines on Advertisements

9.1.1 An issue advertisement shall be truthful, fair and clear and shall not contain any
statement which is untrue or misleading.

9.1.2 Any advertisement reproducing or purporting to reproduce any information

contained in a offer document shall reproduce such information in full and disclose
all relevant facts and not be restricted to select extracts relating to that item.

9.1.3 An issue advertisement shall be considered to be misleading, if it contains -

a) Statements made about the performance or activities of the company in the

absence of necessary explanatory or qualifying statements, which may give an
exaggerated picture of the performance or activities, than what it really is.

b) An inaccurate portrayal of past performance or its portrayal in a manner which

implies that past gains or income will be repeated in the future.

9.1.4
a) An advertisement shall be set forth in a clear, concise and understandable
language.

b) Extensive use of technical, legal terminology or complex language and the inclusion
of excessive details which may distract the investor, shall be avoided.

9.1.5 An issue advertisement shall not contain statements which promise or guarantee
rapid increase in profits.

9.1.6 An issue advertisement shall not contain any information that is not contained in the
offer document.

9.1.7 No models, celebrities, fictional characters, landmarks or caricatures or the likes

shall be displayed on or form part of the offer documents or issue advertisements.

158
(9.1.8) Issue advertisements shall not appear in the form of crawlers (the advertisements
which run simultaneously with the programme in a narrow strip at the bottom of
the television screen) on television.

159
(9.1.8A In case of issue advertisement on television screen:
158
Numbered the clause as “9.1.8”, vide SEBI Circular No. SEBI/CFD/DIL/DIP/14/2005/25/1 dated January 25, 2005.
159
Inserted clause 9.1.8A, vide SEBI Circular No. SEBI/CFD/DIL/DIP/12/2004/8/4 dated April 8, 2004.

Page 145 of 332

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(a) the risk factors shall not be scrolled on the screen; and

(b) the advertisement shall advise the viewers to refer to the red herring prospectus
or other offer document for details.)

9.1.9 No advertisement shall include any issue slogans or brand names for the issue
except the normal commercial name of the company or commercial brand names of
its products already in use.

9.1.10 No slogans, expletives or non-factual and unsubstantiated titles shall appear in the
issue advertisements or offer documents.

9.1.11 If any advertisement carries any financial data, it shall also contain data for the past
three years and shall include particulars relating to sales, gross profit, net profit,
share capital, reserves, earnings per share, dividends and the book values.

9.1.12
(a) All issue advertisements in newspapers, Magazines, brochures, pamphlets
containing highlights relating to any issue shall also contain risk factors given equal
importance in all respects including the print size.

(b) The print size of highlights and risk factors in issue advertisements shall not be less
than point 160(7) size.

161
(c) (Subject to section 66 of the Companies Act, 1956, any advertisement made by
an issuer namely Pre – Issue advertisement, advertisement for opening or closure
of the issue, shall be in the format and contain the minimum disclosures as given in
the relevant part of Schedule XX – A.

(d) Any pre–issue advertisement made under clause 5.6A or advertisement made in
connection with opening or closing of any issue by the issuer, which is displayed in
a billboard shall not contain any information apart from that mentioned in the
relevant part of Schedule XX – A.)

9.1.13 No issue advertisement shall be released without giving “Risk Factors” in respect of
the concerned issue.

Provided that an issue opening / closing advertisement which does not contain the
highlights need not contain risk factors.

160
Substituted vide SEBI Circular No. DIP (Compendium) Circular No. 3 dated August 04, 2000 for “9”.

161
Substituted vide SEBI Circular No. SEBI/CFD/DIL/DIP/14/2005/25/1 dated January 25, 2005 for the following:
“(c) It shall contain the names of Issuer company, address of its Registered Office, names of the main Lead Merchant
Bankers and Registrars to the Issue.

(d) It shall contain the disclosure about the face value of shares (including the statement about the issue price being
“X” times of the face value)” vide circular no SEBI/CFD/DIL/DIP/13/2004/28/5 dated May 28, 2004

Prior to the above, the above sub-clause (d) of clause 9.1.12 was inserted vide SEBI Circular No.
SEBI/CFD/DIL/DIP/13/2004/28/5 dated May 28, 2004.
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9.1.14 No corporate advertisement of issuer company shall be issued after 21 days of the
filing of the offer document with the Board till the closure of the issue unless the risk
factors as are required to be mentioned in the offer document, are mentioned in
such advertisement.

9.1.15 No product advertisement of such company shall contain any reference directly or
indirectly to the performance of the company during the period mentioned in clause
9.1.14.

9.1.16
(a) No advertisement shall be issued stating that the issue has been fully subscribed or
oversubscribed during the period the issue is open for subscription, except to the
effect that the issue is open or closed.

(b) No announcement regarding closure of the issue shall be made except on the last
closing date.

(c) If the issue is fully subscribed before the last closing date as stated in the offer
document, the announcement should be made only after the issue is fully
subscribed and such announcement is made on the date on which the issued is to
be closed.

9.1.17 Announcement regarding closure of issue shall be made only after the Lead
Merchant Banker is satisfied that at least 90% of the issue has been subscribed and
a certificate has been obtained to that effect from the Registrar to the Issue.

9.1.18 No incentives, apart from the permissible underwriting commission and brokerage,
shall be offered through any advertisements to anyone associated with marketing
the issue.

9.1.19 In case there is a reservation for the NRIs, the issue advertisement shall specify the
same and indicate the place in India from where the individual NRI applicant can
procure application forms.

9.2 The Lead Merchant Banker shall also comply with the following:

a) to obtain undertaking from the issuer as part of Memorandum of Understanding to

be entered into by the Lead Merchant Banker with the issuer company to the effect
that the issuer company shall not directly or indirectly release, during any
conference or at any other time, any material or information which is not contained
in the offer documents.

b) to ensure that the issuer company obtains approval in respect of all issue
advertisements and publicity materials from the Lead Merchant Banker responsible
for marketing the issue and also ensure availability of copies of all issue related
materials with the Lead Merchant banker at least till the allotment is completed.

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162
(9.3 Research reports

9.3.1 The lead merchant banker shall ensure that the following are complied with in
respect of research reports:

i. the research report is prepared only on the basis of published information as

contained in the offer document.

163
ii. (no selective or additional information or information extraneous to the offer
document shall be made available by the issuer or any member of the issue
management team/ syndicate to any particular section of the investors or to any
research analyst in any manner whatsoever including at road shows,
presentations, in research or sales reports or at bidding centres etc.)

164
iii. (no report or information, other than the contents of the draft offer document
shall be circulated by the issuer or any member of the issue management team/
syndicate or their associates, after the date of receipt of observations from SEBI.)

iv. The advertisement code is observed while circulating the research reports, and
that the risk factors are reproduced wherever highlights are given, as in case of
an advertisement.)

162
Inserted clauses 9.3 and 9.3.1 vide SEBI Circular No. RMB (Compendium) Series Circular No. 1 (2001- 2002) dated July
17, 2001.
163
Substituted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 for the following:
“no selective or additional information or information extraneous to the offer document shall be made available by the
issuer or any member of the issue management team/ syndicate to only one section of the investors in any manner
whatsoever including at road shows, presentations, in research or sal es reports or at bidding centres etc.”

164
Inserted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 the following clause and the aforesaid inserted
clause was deferred vide press release no. PR No.246/2003 dated October 13, 2003:
“no research report shall be circulated by the issuer or any member of the issue management team/ syndicate or their
associates, commencing from a date 45 days immediately preceding the filing of draft offer document with SEBI and till
45 days after commencement of trading in the relevant securities)”
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CHAPTER X

GUIDELINES FOR ISSUE OF DEBT INSTRUMENTS

10.0 A company offering Convertible/ Non Convertible debt instruments through an offer
document, shall comply with the following provisions in addition to the relevant
provisions contained in other chapter of these guidelines.

10.1 Requirement of credit rating

165
10.1.1 (No company shall make a public issue or rights issue of debt instruments
(whether convertible or not), unless credit rating of not less than investment grade
is obtained from not less than two registered credit rating agencies and disclosed
in the offer document.)

166
10.1.2 (Deleted)

167
10.1.3 (Where credit ratings are obtained from more than two credit rating agencies,
all the credit rating/s, including the unaccepted credit ratings, shall be disclosed.)

10.1.4 All the credit ratings obtained during the three (3) years preceding the public or
rights issue of debt instrument (including convertible instruments) for any listed
security of the issuer company shall be disclosed in the offer document.

10.2 Requirement in respect of Debenture Trustee

168
10.2.1 (No company shall issue a prospectus or a letter of offer to the public for
subscription of its debentures, unless the company has appointed one or more
debenture trustees for such debentures in accordance with the provisio ns of the
Companies Act, 1956.)

169
10.2.2 (The names of the debenture trustees shall be stated in the Offer Documents
and also in all the subsequent periodical communications sent to the debenture
holders).

165
Substituted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 for the following:
“No public or rights issue of debt instruments (including convertible instruments) in respect of their maturity or
conversion period shall be made unless credit rating from a credit rating agency has been obtained and disclosed in
the offer document.”

166
Omitted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 for the following:
“a public / rights issue of debt security of issue greater than or equal to Rs.100 crores two ratings from two different credit
rating agencies shall be obtained.”

167
Substituted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 for the following:
“Where credit rating is obtained from more than one credit rating agencies, all the credit rating/s, including the unaccepted
credit ratings, shall be disclosed.”

168
Substituted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 for the following:
“In case of issue of debenture with maturity of more than 18 months, the issuer shall appoint a Debenture Trustee.”
169
Substituted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 for the following:
“The names of the debenture trustees must be stated in the offer document”.
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170
10.2.3 (A trust deed shall be executed by the issuer company in favour of the debenture
trustees within three months of the closure of the issue.)

10.2.4 Trustees to the debenture issue shall be vested with the requisite powers for
protecting the interest of debenture holders including a right to appoint a nominee
direc tor on the Board of the company in consultation with institutional debenture
holders.

171
10.2.5 (The merchant banker shall, along with the draft offer document, file with the
Board, certificates from the bankers of the Company that the assets on which the
security is to be created are free from any encumbrances and the necessary
permissions to mortgage the assets have been obtained or No-objection
Certificate from the Financial Institutions or Banks for a second or pari passu
charged in cases where assets are encumbered.

The merchant banker shall also ensure that the security created is adequate to
ensure 100% asset cover for the debentures.)

10.2.6 The debenture trustee shall ensure compliance of the following:

172
a) (It shall obtain reports from the lead bank, regarding monitoring progress of the
project.)

173
b) (It shall monitor utilization of funds raised in the debenture issue.)

c) Trustees shall obtain a certificate from the company's auditors:

(i) in respect of utilisation of funds during the implementation period of projects .

(ii) in the case of debentures for working capital, certificate shall be obtained at the end
of each accounting year.

d) Debenture issues by companies belonging to the groups for financing replenishing

funds or acquiring share holding in other companies shall not be permitted.

Explanation:

170
Substituted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 for the following:
“A trust deed shall be executed by the issuer company in favour of the debenture trustees within six months of the
closure of the issue.”

171
Substituted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 for the following:
“The merchant banker shall, along with draft offer document, file with Board, certificates from their bankers that the assets
on which security is to be created are free from any encumbrances a nd the necessary permissions to mortgage the assets
have been obtained or a No Objection Certificate from the financial institutions or banks for a second or pari passu charge
in cases where assets are encumbered.”

172
Substituted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 for the following:
“Lead financial institution / investment institution shall monitor the progress in respect of debentures raised for project
finance / modernisation / expansion / diversification / normal capital expendi ture.”
173
Substituted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 for the following:
“The lead bank for the Company shall monitor debentures raised for working capital funds.”
Page 150 of 332
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The expression `replenishing of funds or acquiring shares in other companies' shall

mean replenishment of funds or acquiring share holdings of other companies in the
same group. In other words, the company shall not issue debentures for acquisition
of shares / providing loan to any company belonging to the same group. However,
the company may issue equity shares for purposes of repayment of loan to or
investment in companies belonging to the same group.

e) The debenture trustees shall supervise the implementation of the conditions

regarding creation of security for the debentures and debenture redemption
reserve.

10.3 Creation of Debenture Redemption Reserve (DRR)

174
(10.3.1 For the redemption of the debentures issued, the company shall create debenture
redemption reserve in accordance with the provisions of the Companies Act,
1956.)

10.4 Distribution of Dividends

175
(a) (In case of the companies which have defaulted in payment of interest on
debentures or redemption of debentures or in creation of security as per the
terms of issue of the debentures, any distribution of dividend shall require
approval of the Debenture Trustees and the Lead Institution, if any.)

(b) In the case of existing companies prior permission of the lead institution for
declaring dividend exceeding 20% or as per the loan covenants is necessary if the
company does not comply with institutional condition regarding interest and debt
service coverage ratio.

(c)

174
Substituted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 for the following:
“10.3.1 A company has to create DRR in case of issue of debenture with maturity of more than 18 months.
10.3.2 The issuer shall create DRR in accordance with the provisions given below,
(a) If debentures are issued for proj ect finance for DRR can be created upto the date of commercial production.
(b) The DRR in respect of debentures issued for project finance may be created either in equal instalments or higher
amounts if profits so permit.
(c) In the case of partly convertible debentures, DRR shall be created in respect of non-convertible portion of
debenture issue on the same lines as applicable for fully non-convertible debenture issue.
(d) In respect of convertible issues by new companies, the creation of DRR shall commence from the year the
company earns profits for the remaining life of debentures.
(e) DRR shall be treated as a part of General Reserve for consideration of bonus issue proposals and for price
fixation related to post tax return.
(f) Company shall create DRR equivalent to 50% of the amount of debenture issue before debenture redemption
commences.
(g) Drawl from DRR is permissible only after 10% of the debenture liability has actually been redeemed by the
company.
(h) The requirement of creation of a DRR shall not be applicab le in case of issue of debt instruments by
infrastructure companies.”

175
Substituted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 for the following:
“In case of new companies, distribution of dividend shall require approval of the trustees to the issue and the lead
institution, if any.”
Page 151 of 332
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(i) Dividends may be distributed out of profit of particular years only after transfer of
requisite amount in DRR.

(ii) If residual profits after transfer to DRR are inadequate to distribute reasonable
dividends, company may distribute dividend out of general reserve.

10.5 Redemption

10.5.1 The issuer company shall redeem the debentures as per the offer document.

176
10.6 (Disclosure and) Creation of Charge

177
(10.6.1 The offer document shall specifically state the assets on which security shall be
created and shall also state the ranking of the charge/s. In case of second or
residual charge or s ubordinated obligation, the offer document shall clearly state
the risks associated with such subsequent charge. The relevant consent for
creation of security such as pari passu letter, consent of the lessor of the land in
case of leasehold land etc. shall be obtained and submitted to the debenture
trustee before opening of issue of debenture.)

178
(10.6.2 The offer document shall state the security / asset cover to be maintained. The
basis for computation of the security / asset cover, the valuation methods and
periodicity of such valuation shall also be disclosed. The security / asset cover
shall be arrived at after reduction of the liabilities having a first / prior charge, in
case the debentures are secured by a second or subsequent charge.)

179
10.6.3 (Deleted).

180
(10.6.4 The issue proceeds shall be kept in an escrow account until the documents for
creation of security as stated in the offer document, are executed.)

181
(10.6.5) If the issuing company proposes to create a charge for debentures of maturity of
less than 18 months, it shall file with Registrar of Companies particulars of charge
under the Companies Act.

176
Inserted vide SEBI Circular No. DIP (Compendium) Circular No. 4 dated September 06, 2000.

177
Inserted vide SEBI Circular No. DIP (Compendium) Circular No. 4 dated September 06, 2000.

178
Inserted vide SEBI Circular No. DIP (Compendium) Circular No. 4 dated September 06, 2000.

179
Deleted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 the following:
“The security shall be created within six months from the date of issue of debentures.
Provided that if for any reasons the company fails to create security within 12 months from the date of issue of debentures
the company shall be liable to pay 2% penal interest to debenture holders.
Provided further that if security is not created even after 18 months , a meeting of the debenture holders shall be called
within 21 days to explain the reasons thereof and the date by which the security shall be created).”

The above clause, initially numbered as 10.6.1, was renumbered as 10.6.3, vide SEBI Circular No. DIP (Compendium)
Circular No. 4 dated September 06, 2000.
180
Inserted vide SEBI Circular No. DIP (Compendium) Circular No. 4 dated September 06, 2000.

Page 152 of 332

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Provided that, where no charge is to be created on such debentures, the issuer

company shall ensure compliance with the provisions of the Companies
(Acceptance of Deposits) Rules, 1975, as, unsecured debentures / bonds are
treated as "deposits" for purposes of these rules.

182
(10.6.6) The proposal to create a charge or otherwise in respect of such debentures, may be
disclosed in the offer document along with its implications.

10.7 Requirement of letter of option

183
10.7.1 (Where the company desires to rollover the debentures issued by it, it shall file
with SEBI a copy of the notice of the resolution to be sent to the debenture-
holders for the purpose, through a merchant banker prior to dispatching the same
to the debenture-holders. The notice shall contain disclosures with regard to
credit rating, necessity for debenture -holders resolution and such other terms
which SEBI may specify. Where the company desires to convert the debentures
into equity shares in accordance with clause 10.7.2, it shall file with SEBI a copy
of the letter of option to be sent to debenture-holders with the Board, through a
merchant banker, prior to dispatching the same to the debenture -holders. The
letter of option shall contain disclosures with regard to option for conversion,
justification for conversion price and such other terms which SEBI may specify.)

184
10.7.1.1 (Roll over of Non Convertible Portions of Partly Convertible Debentures
(PCDs)/ Non Convertible Debentures (NCDs), by company not being in
default.

181
Renumbered Clause no. 6.6.2 as 6.6.5, vide SEBI Circular No. DIP (Compendium) Circular No. 4 dated September 06,
2000.

182
Renumbered Clause no. 6.6.3 as 6.6.6 vide SEBI Circular No. DIP (Compendium) Circular No. 4 dated September 06,
2000.

183
Substituted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 for the following:
“10.7.1 Filing of letter of option
A letter of option containing disclosures with regard to credit rating, debenture holder resolution, option for
conversion, justification for conversion price and such other terms which the Board may prescribe from time to
time shall be filed with the Board through an eligible Merchant Banker, in the following cases:”

184
Substituted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 for the following:
“In case of Roll over of Non Convertible portions of Partly Convertible Debentures(PCDs)/ Non Convertible
Debentures (NCDs).

i) In case, the non-convertible portions of PCD/NCD issued by a listed company, value of which exceeds Rs.50 lacs, can
be rolled over without change in the interest rate subject to the following conditions:
(a) An option shall be compulsorily given to debenture holders to redeem the debentures as per the terms of the offer
document.
(b) Roll over shall be done only in cases where debenture holders have sent their positive consent and not on the basis of
the non-receipt of their negative reply.
(c) Before roll over of any NCDs or non-convertible portion of the PCDs, a fresh credit rating shall be obtained within a
period of six months prior to the due date of redemption and communicated to debenture holders before roll over.
(d) Fresh trust deed shall be executed at the time of such roll over.
(e) Fresh security shall be created in respect of such debentures to be rolled over.

Provided that if the existing trust deed or the security documents provide for continuance of the security till redemption of
debentures fresh security may not be created.”
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The non-convertible portions of PCDs or the NCDs issued by a listed company,

the value of which exceeds Rs.50 lacs, can be rolled over without change in the
interest rate subject to section 121 of the Companies Act, 1956 and subject to the
following conditions, if the company is not in default:

(a) A resolution to this effect is passed by postal ballot, having the assent from not
less than 75% of the debenture-holders.

(b) The company shall redeem the debentures of all the dissenting debenture
holders, who have not assented to the resolution.

(c) Before roll over of any NCDs or non-convertible portion of the PCDs, at least two
credit ratings of not less than investment grade, shall be obtained within a period
of six months prior to the due date of redemption and communicated to debenture
holders before roll over.

(d) Fresh trust deed shall be executed at the time of such roll over.

(e) Fresh security shall be created in respect of such debentures to be rolled over.

Provided that if the existing trust deed or the security documents provide for
continuance of the security till redemption of debentures, fresh trust deed or fresh
security need not be created.)

185
(10.7.1.1A Roll over of Non Convertible portions of Partly Convertible Debentures
(PCDs)/ Non Convertible Debentures (NCDs), by the company being in
default.

The non-convertible portions of PCDs and the NCDs issued by a listed company,
the value of which exceeds Rs.50 lacs, can be rolled over without change in the
interest rate subject to section 121 of the Companies Act, 1956 and subject to the
following conditions, where the company is in default:

(a) A resolution to this effect is passed by postal ballot, having the assent from not
less than 75% of the debenture-holders.

(b) The company shall send an Auditors’ certificate on the cash flow of the company
with comments on the liquidity position of the company to all debenture holders,
along with the notice for passing the said resolution.

(c) The company shall redeem the debentures of all the dissenting debenture
holders, who have not assented to the resolution.

(d) The debenture trustee shall decide on whether the company is required to create
fresh security and execute fresh trust deed in respect of such debentures to be
rolled over

185
Inserted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003.
Page 154 of 332
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Provided that if the existing trust deed or the security documents provide for
continuance of the security till redemption of debentures, fresh security and fresh
trust deed need not be created.

10.7.1.2 In case of conversion of instruments (PCDs/FCDs,etc.) into equity capital

i) In case, the convertible portion of any instrument such as PCDs, FCDs etc. issued
by a listed company, value of which exceeds Rs.50 Lacs and whose conversion
price was not fixed at the time of issue, holders of such instruments shall be given a
compulsory option of not converting into equity capital.

ii) Conversion shall be done only in cases where instrument holders have sent their
positive consent and not on the basis of the non-receipt of their negative reply.

Provided that where issues are made and cap price with justification thereon, is
fixed beforehand in respect of any instruments by the issuer and disclosed to the
investors before issue, it will not be necessary to give option to the instrument
holder for conve rting the instruments into equity capital within the cap price.

iii) In cases where an option is to be given to such instrument holders and if any
instrument holder does not exercise the option to convert the debentures into equity
at a price determined in the general meeting of the shareholders, the company shall
redeem that part of debenture at a price which shall not be less than its face value,
within one month from the last date by which option is to be exercised.

iv) The provision of sub-clause (iii) above shall not apply if such redemption is to be
made in accordance with the terms of the issue originally stated.

186
10.7.1.3 (The debenture trustee shall submit a certificate of compliance with clauses
10.7.1.1, 10.7.1.1A or 10.7.1.2, as the case may be, to the merchan t banker

186
Substituted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 for the following:
“In case of Conversion of Debentures Issued under Consent of Controller of Capital Issues (CCI)
A) In case, the value of convertible portion of any instrument such as PCDs, FCDs, etc. issued by a listed company
exceeds Rs 50 Lacs and;

i) where in terms of the consent issued by the Controller of Capital Issues, the price of conversion of PCDs / FCDs is to
be determined at a later date by the Controller, such price and the timing of conversion shall be determined at a
general meeting of the shareholders subject to -

a) the consent of the holders of PCDs / FCDs for the conversion terms shall be obtained individually and conversion will
be given effect to only if the concerned debentureholders send their positive consent and not on the basis of non-
receipt of their negative reply; and

b) such holders of debentures, who do not give such consent, shall be given an option to get the convertible portion of
debentures redeemed or repurchased by the company at a price, which shall not be less than face value of the
debentures.

c) where the consent from the Controller of Capital Issues stipulates cap price for conversion of FCDs / PCDs, the board
of the Company may determine the price at which the debentures may be converted.

Provided that options to debentures / other instrument holders for conversion into equity not required where the
consent from the Controller of Capital Issues stipulates cap price for conversion of FCDs and PCDs and the cap price
has been disclosed to the investors before subscription is made.

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which shall be filed with the Board within 15 days of the closure of the rollover or
conversion.)

187
(10.7.2 Companies may issue unsecured/ subordinated debt instruments/ obligations
(which are not 'public deposits' as per the provisions of Section 58 A of the
Companies Act, 1956 or such other notifications, guidelines, Circular etc. issued
by RBI, DCA or other authorities).

Provided that such issue shall be subscribed by Qualified Institutional Buyers or

other investor who has given positive consent for subscribing to such unsecured /
sub-ordinated debt instruments/ obligation.)

10.8 Other requirements

10.8.1 No company shall issue of FCDs having a conversion period of more than 36
months, unless conversion is made optional with "put" and "call" option.

10.8.2 If the conversion takes place at or after 18 months from the date of allotment, but
before 36 months, any conversion in part or whole of the debenture shall be
optional at the hands of the debenture holder.

10.8.3
(a) No issue of debentures by an issuer company shall be made for acquisition of
shares or providing loan to any company belonging to the same group.

ii) In case of issue of debentures fully or partly convertible made in the past, where the conversion was to be made at a
price to be determined by the CCI at a later date, the price of conversion and time of conversion shall be determined
by the issuer company in a meeting of the debenture holders, subject to the following:

The decision in the said meeting of debenture holders may be ratified by the shareholders in their meeting.
Such conversions shall be optional for acceptance on the part of indivi duals debenture holders.
The dissenting debenture holders shall have the right to continue as debenture holders if the terms of conversions are
not acceptable to them.

iii) Where issue of PCDs and FCDs is made pursuant to the consent given by the Controller of Capital Issues and the
consent specifies the timing of conversion but the price of conversion of PCDs / FCDs is to be determined at a later
date, the following shall be complied with:-

a) the consent of the shareholders is to be obtained only for the purposes of fixing the price of conversion and not for the
pre-poning and postponing the timing of the conversion approved by CCI.

b) The conversion price shall be reasonable (in comparison with previous conversion price where the terms of the issue
provide for more than one conversion) and the conversion price shall not exceed the face value of that part of the
convertible debenture which is sought to be converted.

c) In cases where an option is to be given to the debentureholders and, if any debentureholder does not exercise the
option to convert the debentures into equity at a price determined in the general meeting of the shareholders, the
company shall redeem that part of debenture at a price which shall not be less than its face value within one month
from the last date by which option is to be exercised.

d) The provision in sub-clause (c) above shall not be applicable in case such redemption is to be made in accordance
with the original terms of the offer.

In cases of issues of debentures fully or partly convertible, irrespective of value made in the past, where conversion was to
be made at a price to be determined by CCI and the consent order does not provide for a specific premium or a cap price
for conversion, the draft letter of option to the debentureholders filed with the Board shall contain justification for the
conversion price.”

187
Inserted vide SEBI Circular No. DIP (Compendium) Circular No. 4 dated September 06, 2000.
Page 156 of 332
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Sub-clause (a) shall not apply to the issue of fully convertible debentures providing
conversion within a period of eighteen months.

10.8.4 Premium amount and time of conversion shall be determined by the issuer
company and disclosed.

10.8.5 The interest rate for debentures can be freely determined by the issuer company.

10.9 Additional Disclosures in respect of debentures

The offer document shall contain:

(a) Premium amount on conversion, time of conversion.

(b) In case of PCDs/ NCDs, redemption amount, period of maturity, yield on

redemption of the PCDs/ NCDs.

(c) Full information relating to the terms of offer or purchase including the name(s) of
the party offering to purchase the khokhas (non-convertible portion of PCDs).

(d) The discount at which such offer is made and the effective price for the investor as
a result of such discount.

(e) The existing and future equity and long term debt ratio.

(f) Servicing behaviour on existing debentures, payment of due interest on due dates
on term loans and debentures.

(g) That the certificate from a financial institution or bankers about their no objection for
a second or pari passu charge being created in favour of the trustees to the
proposed debenture issues has been obtained.

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CHAPTER XI

188
(GUIDELINES ON BOOK BUILDING)

11.1 An issuer company proposing to issue capital through book building shall comply
with the following:

A) 75% Book Building Process

11.2 In an issue of securities to the public through a prospectus the option for 75%
book building shall be available to the issuer company subject to the following:

(i) The option of book-building shall be available to all body corporate which are
otherwise eligible to make an issue of capital to the public.

(ii)
(a) The book-building facility shall be available as an alternative to, and to the extent
of the percentage of the issue which can be reserved for firm allotment, as per
these Guidelines.

(b) The issuer company shall have an option of either reserving the securities for firm
allotment or issuing the securities through book-building process.

(iii) The issue of securities through book-building process shall be separately

identified / indicated as 'placement portion category', in the prospectus.

(iv)
(a) The securities availa ble to the public shall be separately identified as 'net offer to
the public'.

(b) The requirement of minimum 25% of the securities to be offered to the public
shall also be applicable.

(v) In case the book-building option is availed of, underwriting shall be mandatory to
the extent of the net offer to the public.

(vi) The draft prospectus containing all the information except the information
regarding the price at which the securities are offered shall be filed with the
Board.

(vii) One of the lead merchant banker to the issue shall be nominated by the issuer
company as a Book Runner and his name shall be mentioned in the prospectus.

(viii)
(a) The copy of the draft prospectus filed with the Board may be circulated by the
Book Runner to the institutional buyers who are eligible for firm allotment and to

188
Inserted heading of the Chapter vide SEBI Circular No. SEBI/CFD/DIL/DIP/14/2005/25/1 dated January 25, 2005.
Page 158 of 332
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the intermediaries eligible to act as underwriters inviting offers for subscribing to

the securities.

(b) The draft prospectus to be circulated shall indicate the price band within which
the securities are being offered for subscription.

(ix) The Book Runner on receipt of the offers shall maintain a record of the names
and number of securities ordered and the price at which the institutional buyer or
underwriter is willing to subscribe to securities under the placement portion.

(x) The underwriter(s) shall maintain a record of the orders received by him for
subscribing to the issue out of the placement portion.

(xi)
(a) The underwriter(s) shall aggregate the offers so received for subscribing to the
issue and intimate to the Book Runner the aggregate amount of the orders
received by him.

(b) The institutional investor shall also forward its orders, if any, to the book runner.

(xii) On receipt of the information, the Book Runner and the issuer company shall
determine the price at which the securities shall be offered to the public.

(xiii) The issue price for the placement portion and offer to the public shall be the
same.

(xiv) On determination of the price of the underwriter shall enter into an underwriting
agreement with the issuer indicating the number of securities as well as the price
at which the underwriter shall subscribe to the securities.

Provided that the Book Runner shall have an option of requiring the underwriters
to the net offer to the public to pay in advance all monies required to be paid in
respect of their underwriting commitment.

(xv) On determination of the issue price within two day, thereafter the prospectus shall
be filed with the Registrar of Company.

(xvi) The issuer company shall open two different accounts for collection of application
moneys, one for the private placement portion and the other for the public
subscription.

(xvii) One day prior to the opening of the issue to the public, Book Runner shall collect
from the institutional buyers and the underwriters the application forms along with
the application moneys to the extent of the securities proposed to be allotted to
them / subscribed by them.

(xviii)
(a) Allotments for the private placement portion shall be made on the second day
from the closure of the issue.
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(b) However, to ensure that the securities allotted under placement portion and
public portion are pari passu in all respects, the issuer company may have one
date of allotment which shall be the deemed date of allotment for the issue of
securities through book building process.

(xix) In case the Book Runner has exercised the option of requiring the underwriter to
the net offer to the public to pay in advance all moneys required to be paid in
respect of their underwriting commitment by the eleventh day of the closure of the
issue the shares allotted as per the private placement category shall be eligible to
be listed.

(xx)
(a) Allotment of securities under the pubic category shall be made as per the
Guidelines.

(b) Allotment of securities under the public category shall be eligible to be listed.

(xxi)
(a) In case of undersubscription in the net offer to the public spillover to the extent of
under subscription shall be permitted from the placement portion to the net offer
to the public portion subject to the condition that preference shall be given to the
individual investors.

(b) In case of under subscription in the placement portion spillover shall be permitted
from the net offer to the public to the placement portion.

(xxii) The issuer company may pay interest on the application moneys till the date of
allotment or the deemed date of allotment provided that payment of interest is
uniformly given to all the applicants.

(xxiii)
(a) The Book Runner and other intermediaries associated with the book building
process shall maintain records of the book building process.

(b) The Board shall have the righ t to inspect such records.

189
B) (Offer to Public Through Book Building Process)

190
11.3 (An issuer company may, subject to the requirements specified in this chapter,
make an issue of securities to the public through a prospectus in the following
manner:
a. 100% of the net offer to the public through book building process, or

189
Substituted vide SEBI Circular No. RMB (Compendium) Series Circular No. 2 (2001- 2002) dated November 29, 2001
for words "100% BOOK BUILDING PROCESS".

190
Substituted vide SEBI Circular No. RMB (Compendium) Series Circular No. 2 (2001- 2002) dated November 29, 2001
for the following:
"In an issue of securities to the public through a prospectus option for 100% Book Building shall be available to any
issuer company subject to the following:"
Page 160 of 332
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b. 75% of the net offer to the public through book building process and 25% at the
price determined through book building.)

11.3.1
191
(i) (Deleted)

(ii) Reservation or firm allotment to the extent of percenta ge specified in these

Guidelines shall not be made to categories other than the categories mentioned
in sub-clause (iii) below.

(iii) Book Building shall be for the portion other than the promoters contribution and
the allocation made to:

(a) ‘permanent employees of the issuer company and in the case of a new company
the permanent employees of the promoting companies';

(b) ‘shareholders of the promoting companies in the case of a new company and
shareholders of group companies in the case of an existing company’ either on a
‘competitive basis’ or on a ‘firm allotment basis’.

192
((c) persons who, on the date of filing of the draft offer document with the Board,
have business association, as depositors, bondholders and subscribers to
services, with the issuer making an in itial public offering, provided that allotment
to such persons shall not exceed 5% of the issue size.

Provided further that no reservation shall be made for the issue management
team, syndicate members, their promoters, directors and employees and for the
group/associate companies of issue management team and syndicate members
and their promoters, directors and employees.)

(iv) The issuer company shall appoint an eligible Merchant Banker(s) as book
runner(s) and their name(s) shall be mentioned in the draft prospectus.

193
((iv) (a) The issuer company shall enter into an agreement with one or more of the Stock
Exchange(s) which have the requisite system of on-line offer of securities. The
agreement shall specify inter-alia, the rights, duties, responsibilities and
obligations of the company and stock exchange (s) inter se. The agreement may
also provide for a dispute resolution mechanism between the company and the
stock exchange.

191
Omitted the following words vide SEBI Circular No. RMB (Compendium) Series Circular No. 1 (2001-2002) dated July
17, 2001:
"Issue of capital shall be Rs.25 crores and above."

192
Inserted vide SEBI Circular No. RMB (Compendium) Series Circular No. 4 (2001-2002) dated March 06, 2002.

193
Inserted sub-clauses (iv)(a) and (iv) (b) vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003.
Page 161 of 332
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(iv) (b) The company may apply for listing of its securities on an exchange other than the
exchange through which it offers its securities to public through the on-line
system.)

194
(v) (The Lead Merchant Banker shall act as the Lead Book Runner.)

195
((v) (a) In case the issuer company appoints more than one 196 (merchant banker(s)), the
names of all such (merchant bankers (s)) who have submitted the due diligence
certificate to SEBI, may be mentioned on the front cover page of the prospectus.
A disclosure to the effect that " the investors may contact any of such (merchant
bankers(s)), for any complaint pertaining to the issue" shall be made in the
prospectus, after the "risk factors”.)

197
((v) (b) The lead book runner/issuer may designate, in any manner, the other Merchant
Banker(s), subject to the following:

1. the inter-se allocation of responsibilities amongst the merchant bankers shall be

disclosed in the prospectus on the page giving the details of the issue
management team;

2. a co-ordinator shall be appointed amongst the lead book runners, for the purpose
of co-ordination with SEBI.

3. the names of only those merchant bankers who have signed the inter-se
allocation of responsibilities shall be mentioned in the offer document on the page
where the details of the issue management team is given.)

(vi) The primary responsibility of building the book shall be that of the Lead Book
Runner.

(vii) The Book Runner(s) may appoint those intermediaries who are registered with
the Board and who are permitted to carry on activity as an ‘Underwriter’ as
syndicate members.

198
((vii)(a) The Book Runner(s)/syndicate members shall appoint brokers of the exchange,
who are registered with SEBI, for the purpose of accepting bids, applications and
placing orders with the company and ensure that the brokers so appointed are

194
Substituted vide SEBI Circular No. RMB (Compendium) Series Circular No. 4 (2001- 2002) dated March 06, 2002 for
the following:
"The Lea d Merchant Banker shall act as the Lead Book Runner and the other eligible Merchant Banker(s), so
appointed by the Issuer, shall be termed as Co-Book Runner(s)."

195
Inserted vide SEBI Circular No. RMB (Compendium) Series Circular No. 1 (2001-2002) dated November 29, 2001.

196
Substituted the words "merchant banker (s)" for the words "book runner (s)" in Clause (v) (a), wherever they appear,
vide SEBI Circular No. RMB (Compendium) Series Circular No. 4 (2001-2002) dated March 06, 2002.

197
Inserted vide SEBI Circular No. RMB (Compendium) Series Circular No. 4 (2001-2002) dated March 06, 2002.

198
Inserted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003.
Page 162 of 332
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financially capable of honouring their commitments arising out of defaults of their

clients/investors, if any.)

199
((vii)(b) For the purposes of this Chapter, the brokers, so appointed accepting applications
and application monies, shall be considered as ‘bidding/collection centres’.)

200
((vii)(c) The broker/s so appointed, shall collect the money from his/their client for every
order placed by him/them and in case the client/investors fails to pay for shares
allocated as per the Guidelines, the broker shall pay such amount.)

201
((vii)(d) The company shall pay to the broker/s a commission/fee for the services rendered
by him/them. The exchange shall ensure that the broker does not levy a service
fee on his clients/investors in lieu of his services .)

(viii) The draft prospectus containing all the disclosures as laid down in Chapter VI
except that of price and the number of securities to be offered to the public shall
be filed by the Lead Merchant Banker with the Board.

Provided that the total size of the issue shall be mentioned in the draft
prospectus.

202
(viii) (a) (The red herring prospectus shall disclose, either the floor price of the
securities offered through it or a price band along with the range within which the
price can move, if any.)

203
(Provided that in case of a further public issue of a class of securities which is
already listed on a recognised stock exchange, it shall not be necessary to
disclose the floor price or price band in the red-herring prospectus if the same is
disclosed by way of an announcement made by the issuer or the merchant
banker at least one day before the opening of the bid in all those newspapers
where pre-issue advertisement was released.

Provided further that where the issuer opts not to make the disclosure of the
price band or floor price in the red-herring prospectus in terms of the foregoing
proviso, the following shall be additionally disclosed in the red-herring prospectus:

199
Inserted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003.

200
Inserted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003.

201
Inserted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003.

202
Substituted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 for the following:
“The red herring prospectus shall disclose, only the floor price of the securities offered through it and shall not mention
the maximum price or the indicative price band”

Initially inserted vide SEBI Circular No. RMB (Compendium) Series Circular No. 1 (2001- 2002) dated November 29,
2001.

203
Inserted provisos vide SEBI Circular No. SEBI/CFD/DIL/DIP/15/2005/29/3 dated March 29, 2005.
Page 163 of 332
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(a) a statement that the floor price or price band, as the case may be, shall be
disclosed one before the opening of the bid;

(b) a statement that the investors may be guided in the meantime by the
secondary market prices;

(c) names and editions of the newspapers where the announcement of the floor
price or price band would be made;

(d) names of websites (with address), journals or other media in which the said
announcement will be made.)

204
((viii)(b) In case the red herring prospectus discloses the price band, the lead book runner
shall ensure compliance with the following conditions:

(a) The cap of the price band should not be more than 20% of the floor of the band;
i.e cap of the price band shall be less than or equal to 120% of the floor of the
price band

(b) The price band can be revised during the bidding period in which case the
maximum revision on either side shall not exceed 20% i.e floor of price band can
move up or dow n to the extent of 20% of floor of the price band disclosed in the
red herring prospectus and the cap of the revised price band will be fixed in
accordance with Clause (a) above;

(c) Any revision in the price band shall be widely disseminated by informing the stock
exchanges, by issuing press release and also indicating the change on the
relevant website and the terminals of the syndicate members.

(d) In case the price band is revised, the bidding period shall be extended for a
further period of three days, subject to the total bidding period not exceeding
thirteen days.

(e) The manner in which the shortfall, if any, in the project financing, arising on
account of lowering of price band to the extent of 20% will be met shall be
disclosed in the red herring prospectus. It shall also be disclosed that the
allotment shall not be made unless the financing is tied up.)

(ix)
(a) In case of appointment of more than one Lead Merchant Banker or Book Runner
for book building, the rights, obligations and responsibilities of each should be
delineated.

(b) In case of an under subscription in an issue, the shortfall shall have to be made
good by the Book Runner(s) to the issue and the same shall be incorporated in
the interse allocation of responsibility given in Schedule II.

204
Inserted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003.
Page 164 of 332
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(x)
(a) The Board within 21 days of the receipt of the draft prospectus may suggest
modifications to it.

(b) The Lead Merchant Banker shall be responsible for ensuring that the
modifications / final observations made by the Board are incorporated in the
prospectus.

(xi)
205
(a) (Deleted)
206
(b) (The issuer company shall circulate the application forms to the Brokers)

207
(xii) (Deleted)

(xiii) The pre-issue obligations and disclosure requirements as specified in Chapter V

and VI respectively of these Guidelines, shall be applicable to issue of securities
through book building unless stated otherwise in this Chapter.

(xiv) The Book Runner(s) and the issuer company shall determine the issue price
based on the bids received through the ‘syndicate members’.

208
((xiv)(a) Retail individual investors may bid at "cut off" price instead of their writing the
specific bid prices in the bid forms.)

(xv) On determination of the price, the number of securities to be offered shall be

determined (issue size divided by the price which has been determined).

205
Omitted the following clause vide SEBI Circular No. SEBI/CFD/DIL/DIP/14/2005/25/1 dated January 25, 2005:
“(xi) (a)The issuer company shall after receiving the final observations, if any, on the offer document from the Board,
make an advertisement in an English National daily with wide circulation, one Hindi National newspaper and a
Regional language newspaper with wide circulation at the place where the registered office of the Issuer
company is situated, containing the salient features of the final offer document as specified in Form 2A of the
Companies Act circulated along with the application form. The advertisement in addition to other required
information, shall also contain the following:
i. the date of opening and closing of the issue
ii. the method and process of application and allotment
iii. the names, addresses and the telephone numbers of the stock brokers and centres for bidding”.

Prior to the above, the clause was substituted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 for the
following:
“The issuer company shall after receiving the final observations if any on the offer document from the Board make an
advertisement in an English National daily with wide circulation, one Hindi National newspaper and a Regional
language newspaper with wide circulation at the place where the registered office of the Issuer company is situated”.
206
Substituted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 for the following:
“The advertisement so issued shall contain the salient features of the final offer document as specified in Form 2A of
the Companies Act circulated along with the application form.”

207
Omitted the following clause vide SEBI Circular No. RMB (Compendium) Series Circular No. 1 (2001-2002) dated
November 29, 2001:
“The issuer company shall compulsorily offer an additional 10% of the issue size offered to the public through the
prospectus."

208
Inserted vide SEBI Circular No. RMB (Compendium) Series Circular No. 4 (2001-2002) dated March 06, 2002.
Page 165 of 332
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(xvi) Once the final price (cut-off price) is determined all those bidders whose bids
have been found to be successful (i.e. at and above the final price or cut-off price)
shall become entitle for allotment of securities.

(xvii) No incentive, whether in cash or kind, shall be paid to the inve stors who have
become entitled for allotment of securities.

209
(xvii) (a) (The broker may collect an amount to the extent of 100% of the application
money as margin money from the clients/investors before he places an order on
their behalf. The margin collected from categories other than Qualified
Institutional Buyers shall be uniform across the book runner(s)/syndicate
members, for each such category.)

210
((xvii)(aa) The broker/syndicate member shall collect an amount of not less than ten
percent of the application money as margin money in respect of bids placed by
qualified institutional buyers.)

211
(xvii) (b) (Bids for securities beyond the investment limit prescribed under relevant laws
shall not be accepted by the syndicate members/brokers from any category of
clients/ investors.)

212
((xvii)(c) The lead book runner may reject a bid placed by a qualified institutional buyer for
reasons to be recorded in writing provided that such rejection shall be made at
the time of acceptance of the bid and the reasons therefor shall be disclosed to
the bidders. Necessary disclosures in this regard shall also be made in the offer
document.)

(xviii) On determination of the entitlement under sub-clause (xvi), the information

regarding the same (i.e. the number of securities which the investor becomes
entitled) shall be intimated immediately to the investors.

(xviii) (a) 213(Renumbered)

209
Substituted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 for the following:
“The margin collected from categories other than Qualified Institutional Buyers shall be uniform across the book
runner(s)/syndicate members, for each such category”.

Initially inserted vide SEBI Circular No. RMB (Compendium) Series Circular No. 1 (2001- 2002) dated November 29,
2001.

210
Inserted sub-clause, vide SEBI Circular No. SEBI/CFD/DIL/DIP/16/2005/19/9 dated September 19, 2005.

211
Substituted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 for the following:
“Bids for securities beyond the investment limit prescribed under relevant laws shall not be accepted by the syndicate
members from any category of investors.”

Initially inserted as sub-clause (xvii)(a) vide circular dated November 29, 2001 and renumbered as (xvii)(b) vide SEBI
Circular No. RMB (Compendium) Series Circular No. 4 (2001- 2002) dated March 06, 2002.

212
Inserted sub-clause, vide SEBI Circular No. SEBI/CFD/DIL/DIP/16/2005/19/9 dated September 19, 2005.

213
Inserted vide SEBI Circular No. RMB (Compendium) Series Circular No. 1 (2001- 2002) dated November 29, 2001 and
later renumbered as (xvii) (b) vide SEBI Circular No. RMB (Compendium) Series Circular No. 4 (2001-2002) dated
March 06, 2002.
Page 166 of 332
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(xix) The final prospectus containing all disclosures as per these Guidelines including
the price and the number of securities proposed to be issued shall be filed with
the Registrar of Companies.

(xx) Arrangement shall be made by the issuer for collection of the applications by
appointing mandatory collection centres as per these Guidelines.

214
((xx)(a) The online, real time graphical display of demand and bid prices at the bidding
terminals, shall be made. The book running lead manager shall ensure the
availability of adequate infrastructure for data entry of the bids on a real time
basis.)

(xxi) The investors who had not participated in the bidding process or have not
received intimation of entitlement of securities may also make an application.

11.3.2 Additional Disclosures

Apart from meeting the disclosure requirements as specified in these Guidelines,

the following disclosures shall be suitably made:

215
(i) (The particulars of syndicate members, brokers, registrars, bankers to the
issue, etc.)

(ii) The following statement shall be given under the 'basis for issue price':-

"The issue price has been determined by the Issuer in consultation with the Book
Runner(s), on the basis of assessment of market demand for the offered
securities by way of Book-building."

216
(iii) (The following accounting ratios shall be given under the basis for issue price
for each of the accounting periods for which the financial information is given:

1. EPS, pre -issue, for the last three years (as adjusted for changes in capital).

2. P/E pre-issue.

214
Inserted vide SEBI Circular No. RMB (Compendium) Series Circular No. 1 (2001-2002) dated November 29, 2001.

215
Substituted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 for the following:
“The particulars of syndicate members along with the details of registrars, bankers to the issue, etc.”

216
Substituted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 for the following:
“The following accounting ratios shall be given under the basis for issue price for each of the accounting periods for
which the financial information is given:
1 EPS, pre-issue, for the last three years (as adjusted for changes in capital).
2 P/E, pre-issue and comparison thereof with industry P/E where available (giving the source from which industry
P/E has been taken).
3 Average return on net-worth in the last three years.
4. Net-Asset value per share based on last bal ance sheet.
5. The accounting ratios disclosed in the offer document shall be calculated after giving effect to the consequent
increase of capital on account of compulsory conversions outstanding, as well as on the assumption that the
options outstanding, if any, to subscribe for additional capital shall be exercised.
Page 167 of 332
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3. Average return on net-worth in the last three years.

4. Net-Asset value per share based on last balance sheet.

5. Comparison of all the accounting ratios of the issuer company as mentioned

above with the industry average and with the accounting ratios of the peer group
(i.e. companies of comparable size in the same industry. (Indicate the source
from which industry average and accounting ratios of the peer group has been
taken).

6. The accounting ratios disclosed in the offer document shall be calculated after
giving effect to the consequent increase of capital on account of compulsory
conversions outstanding, as well as on the assumption that the options
outstanding, if any, to subscribe for additional capital shall be exercised).

217
(iv) (Deleted)

218
((v) the proposed manner of allocation among respective categories of investors, in
the event of under subscription.)

11.3.3 Underwriting

219
(i) (In case the issuer company is making an issue of securities:

a. under sub clause(a) of clause 11.3, 100% of the net offer to the public;

b. under sub clause (b) of clause 11.3, the book built portion - 75% of the net offer
to the public,

shall be compulsorily underwritten by the syndicate members/book runner(s).

220
(Provided that nothing contained in sub-clause (i) shall apply to 50% of the
net offer to the public, mandatorily to be allotted to the Qualified Institutional
Buyers under proviso to clause 2.2.2 or clause 2.3.2 of these guidelines, in case

217
Omitted the following sub-clause, vide SEBI Circular No. SEBI/CFD/DIL/DIP/16/2005/19/9 dated September 19, 2005:
“the broad parameters on which allocation is proposed to be made to QIBs.”

The sub-clause was initially inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/15/2005/29/3 dated March 29, 2005.

218
Inserted sub-clause, vide SEBI Circular No. SEBI/CFD/DIL/DIP/15/2005/29/3 dated March 29, 2005.

219
Substituted vide SEBI Circular No. RMB (Compendium) Series Circular No. 1 (2001- 2002) dated November 29, 2001
for the following:
"The entire offer other than to the categories referred to in clause 11.3 (iii) above shall be fully underwritten by the
‘syndicate members’/ Book Runner(s)".

220
Substituted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 for the following:
“Provided that nothing contained in sub-clause (i) shall apply to 60% of the net offer to the public, mandatorily to be
allotted to the Qualified Institutional Buyers under proviso to clause 2.2.2 or clause 2.3.2 of these guidelines, in case
the company is making an issue of securities under clause 2.2.2 or clause 2.3.2).”
Page 168 of 332
 (Updated till May 8, 2006 )

the company is making an issue of securities under clause 2.2.2 or clause 2.3.2,
as the case may be.)

(ii)
(a) The ‘syndicate members’ shall enter into an underwriting agreement with the
Book Runner(s) indicating the number of securities which they would subscribe at
the predetermined price.

(b) The Book Runner(s) shall in turn enter into an underwriting agreement with the
Issuer company.

(iii) In the event of the syndicate members not fulfilling their underwriting obligations
the Book Runner(s) shall be responsible for bringing in the amount devolved.

221
(iv) (Deleted)

11.3.4 Procedure for bidding:

11.3.4.1 The method and process of bidding shall be subject to the following:

222
(i) (Bid shall be open for atleast 223 (three working days) and not more than
224
(seven working days), which may be e xtended to a maximum of 225(ten working
days ) in case the price band is revised in accordance with clause 11.3.1.)

(ii) The advertisement mentioned at clause 11.3.1 (xi) shall also contain the
following:

(a) the date of opening and closing of the bidding(not less than 5 days).

(b) the names and addresses of the syndicate members as well as the bidding
terminals for accepting the bids.

(c) the method and process of bidding.

(iii) Bidding shall be permitted only if an electronically linked transparent facility is

used.

221
Omitted the following clause vide SEBI Circular No. RMB (Compendium) Series Circular No. 1 (2001-2002) dated
November 29, 2001:
"There shall not be any undersubscription in the category reserved for persons applying upto 10 tradeable lots as the
Underwriters shall bring in the amount devolved subject to the fulfillment of the minimum shareholders criterion."

222
Substituted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 for “ Bid shall be open for atleast 5 days.”

223
Substituted vide SEBI Circular No. SEBI/CFD/DIL/DIP/15/2005/29/3 dated March 29, 2005 for the words and figure “5
days”.

224
Substituted vide SEBI Circular No. SEBI/CFD/DIL/DIP/15/2005/29/3 dated March 29, 2005 for the words and figure “10
days”.
225
Substituted vide SEBI Circular No. SEBI/CFD/DIL/DIP/15/2005/29/3 dated March 29, 2005 for the words and figure “13
days”.
Page 169 of 332
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(iv) The ‘syndicate members’ shall be present at the bidding centres so that at least
one electronically linked computer terminal at all the bidding centres is available
for the purpose of bidding.

(v)
226
(a) (The number of bidding centres, in case 75% of the net offer to the public is
offered through the book building, process shall not be less than the number of
mandatory collection centres as specified in these regulations. In case 100% of
the net offer to the public is made through book building process, the bidding
centres shall be at all the places, where the recognised stock exchanges are
situated.)

(b) The same norms as applicable for collection centres shall be applicable for the
bidding centres also.

227
(vi) (Individual as well as qualified institutional buyers shall place their bids only
through the ‘brokers’ who shall have the right to vet the bids. The applicant shall
enclose the proof of DP ID and Client ID along with the application, while making
bid)

228
((vi) (a) During the period the issue is open to the public for bidding, the applicants may
approach the brokers of the stock exchange/s through which the securities are
offered under on-line system, to place an order for bidding to the securities. Every
broker shall accept orders from all clients/investors who place orders through
him.)

(vi) (b) 229

(vi) (c)230

226
Substituted vide SEBI Circular No. RMB (Compendium) Series Circular No. 1 (2001- 2002) dated November 29, 2001
for the following:
"The number of bidding centres shall not be less than the number of mandatory collection centres specified in these
Guidelines."
227
Substituted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 for the following:
227
“Individual as well as (qualified institutional buyers) shall place their bids only through the ‘syndicate members’ who
shall have the right to vet the bids.”

Prior to the above, the words “institutional investors” w ere substituted by “qualified institutional buyers” vide SEBI
Circular No. RMB (Compendium) Series Circular No. 1 (2001- 2002) dated November 29, 2001

228
Inserted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003.

229
Inserted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 the following clause, which has been deferred
vide press release no. PR No.246/2003 dated October 13, 2003:
“The broker shall collect the client registration form duly filled up and signed from the applicants before placing the
order in the system as per "Know your client rule" as specified by SEBI and as may be modified from time to time.”
230
Inserted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 the following clause, which has been deferred
vide press release no. PR No.246/2003 dated October 13, 2003:
“The broker shall, thereafter, enter the buy order in the system, on behalf of the clients and enter important details
including the name, address, telephone number, and category of the applicant, the number of shares applied for,
amount paid, beneficiary ID, DP code and Bid-cum Application Form number, Bid price, etc., and give an order
number/order confirmation slip to the investor.”

Page 170 of 332

 (Updated till May 8, 2006 )

(vi) (d) 231

232
(vii) (The investors shall have the right to revise their bids provided that Qualified
Institutional Buyers shall not be allowed to withdraw their bids after the closure of
the bidding.)

(viii) Bidding Form

(a) There shall be a standard bidding form to ensure uniformity in bidding and
accuracy.

(b) The bidding form shall contain information about the investor, the price and the
number of securities that the investor wishes to bid.

(c) The bidding form before being issued to the bidder shall be serially numbered at
the bidding centres and date and time stamped.

(d) The serial number may be system generated or stamped with an automatic
numbering machine.

(e) The bidding form shall be issued in duplicate signed by the inve stor and
countersigned by the syndicate member, with one form for the investor and the
other for the syndicate member(s)/Book Runner(s).

(ix) At the end of each day of the bidding period the demand shall be shown
graphically on the terminals for information of the syndicate members as well as
the investors.

233
((x) The identities of the Qualified Institutional Buyers making the bidding, shall not be
made public)

(xi)234

231
Inserted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 the following clause, which has been deferred
vide press release no. PR No.246/2003 dated October 13, 2003:
“The broker shall open a separate bank account [Escrow Account] with the clearing house bank for primary market
issues and the amount collected by the broker from his clients/investors as margin money shall be deposited in this
account.”

232
Substituted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 for “The investors shall have the right to
revise their bids”

233
Inserted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003.

234
Inserted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 the following clause, which has been deferred
vide press release no. PR No.246/2003 dated October 13, 2003::
“The Stock exchange shall, by the end of each day while the issue is open for subscription, send the order data to the
Registrar to the Issue and Lead Managers / Book Runners. This data shall consist of only valid orders (excluding those
that are cancelled). On the date of closure of the issue, the final status of orders received shall be sent to the Registrar
to the issue and Lead Managers / Book Runners”

Page 171 of 332

 (Updated till May 8, 2006 )
235
((xii) The stock exchanges shall display data pertaining to book built issues in a
uniform format, interalia giving category wise details of bids received Indicative
format is given in Schedule XXX. The data pertaining to an issue shall be
displayed on the site for a period of atleast three days after closure of bids.)

11.3.5 Allocation / Allotment Procedure

236
(i) (In case an issuer company makes an issue of 100% of the net offer to public
through 100% book building process :

a) not less than 237 (35%) of the net offer to the public shall be available for allocation
to retail individual investors;

b) not less than 238 (15%) of the net offer to the public shall be available for allocation
to non institutional investors i.e. investors other than retail individual investors and
Qualified Institutional Buyers;

c) not more than 50% of the net offer to the public shall be available for allocation to
Qualified Institutional Buyers.

Provided that, 239(50% of net offer to public) shall be mandatorily allotted to the
Qualified Institutional Buyers, in case the issuer company is making a public
issue under Clause 2.2.2 and 2.3.2 of these guidelines)

240
(Provided further that, in respect of issues made under Rule 19(2)(b) of
Securities Contract (Regulation) Rules 1957, with 60% mandatory allocation to
Qualified Institutional Buyers, the percentage allocation to retail individual
investors and non institutional investors in terms of clause 11.3.5(i)(a) shall be
30% and 10% respectively.)

235
Inserted sub-clause, vide SEBI Circular No. SEBI/CFD/DIL/DIP/15/2005/29/3 dated March 29, 2005.

236
Substituted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 for the following:
“In case an issuer company makes an issue of 100% of the net offer to public through 100% book building process -
a) not less than 25% of the net offer to the public shall be available for allocation to retail individual investors i.e.
investors applying for upto 1000 securities;
b) not less than 15% of the net offer to the public shall be available for allocation to non institutional investors i.e.
investors applying for more than 1000 securities;
c) not more than 60% of the net offer to the public shall be available for allocation to Qualified Institutional Buyers.”

Initially substituted vide SEBI Circular No. RMB (Compendium) Series Circular No. 1 (2001- 2002) dated November 29,
2001 for the following:
"Atleast 15% of the issue size shall be reserved for allocation to individual investors applying upto 10 tradeable lots
through the syndicate member."

237
Substituted vide SEBI Circular No. SEBI/CFD/DIL/DIP/15/2005/29/3 dated March 29, 2005 for the figures “25%”.
238
Substituted vide SEBI Circular No. SEBI/CFD/DIL/DIP/15/2005/29/3 dated March 29, 2005 for the figures “25%”.

239
Substituted vide SEBI Circular No. SEBI/CFD/DIL/DIP/16/2005/19/9 dated September 19, 2005 for the letters and
figures “50% of the issue size”.

240 nd
Inserted 2 proviso vide SEBI Circular No. SEBI/CFD/DIL/DIP/15/2005/29/3 dated March 29, 2005.
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241
(ii) (In case an issuer company makes an issue of 75% of the net offer to public
through book building process and 25% at the price determined through book
building –

a. in the book built portion, not less than 25% of the net offer to the public, shall be
available for allocation to non Qualified Institutional Buyers and not more than
50% of the net offer to the public shall be available for allocation to Qualified
Institutional Buyers.

b. the balance 25% of the net offer to the public, offered at a price determined
through book building, shall be available only to retail individual investors who
have either not participated or have not received any allocation, in the book built
portion.

Provided that, 242(50% of net offer to public) shall be mandatorily allotted to the
Qualified Institutional Buyers, in case the issuer company is making a public
issue under Clause 2.2.2 and 2.3.2 of these guidelines)

243
((ii-a) Out of the portion available for allocation to qualified institutional buyers under
sub clause (i) or (ii) or any proviso thereof, as the case may be, 5% shall be
allocated proportionately to mutual funds. Mutual fund applicants shall also be
eligible for proportionate allocation under the balance available for Qualified
Institutional Buyers as illustrated in Schedule XIX-A.)

244
(iii) (Allotment to retail individual investors, non-institutional investors and qualified
institutional buyers shall be made proportionately as illustrated in Schedule XVIII.)

241
Substituted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 for the following:
“In case an issuer company makes an issue of 75% of the net offer to public through book building process and 25% at
the price determined through book building -
a. in the book built portion, not less than 15% of the net offer to the public, shall be available for allocation to non
institutional investors and not more than 60% of the net offer to the public shall be available for allocation to
Qualified Institutional Buyers.
b. the balance 25% of the net offer to the public, offered at a price determined through book building, shall be
available only to retail individual investors who have either not participated or have not received any allocation, in
the book built portion.

Provided that, 60% of the issue size shall be allotted to the Qualified Institutional Buyers, in case the issuer company
is making a public issue under Clause 2.2.2 or clause 2.3.2 of these guidelines.” Initially substituted Vide circular
dated November 29, 2001 for "10% of the issue size offered to the public through the prospectus shall be reserved for
allocation to individual investors who had not participated in the bidding process or have not received an intimation for
entitlement of securities under clause 11.3 (xix)."

242
Substituted vide SEBI Circular No. SEBI/CFD/DIL/DIP/16/2005/19/9 dated September 19, 2005 for the letters and
figures “50% of the issue size”.

243
Inserted sub-clause, vide SEBI Circular No. SEBI/CFD/DIL/DIP/16/2005/19/9 dated September 19, 2005.

244
Substituted the sub-clause vide SEBI Circular No. SEBI/CFD/DIL/DIP/16/2005/19/9 dated September 19, 2005 for the
following:
“Allotment to (retail individual investors and non institutional investors.), shall be made on the basis of the proportionate
allotment system as specified in Schedule XVIII.”

Of the above, the words “retail individual investors and non institutional investors” were initially substituted for the
words “investors under sub-clauses (i) and (i) of this clause” vide SEBI Circular No. RMB (Compendium) Series
Circular No. 1 (2001-2002) dated November 29, 2001
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245
(iv) (In the event of under subscription in any category, the undersubscribed
portion shall be allocated to the bidders as per disclosures made in terms of
clause 11.3.2(v).

Provided that, the unsubscribed portion n i the "Qualified Institutional Buyer"

category, shall not be available for subscription to other categories, in case the
issuer company has made an issue of securities under clause 2.2.2 or clause
2.3.2 of these guidelines.)

(v)
246
(a) (Deleted)

247
(b) (Deleted)

248
(vi) (Allotment shall be made not later than 15 days from the closure of the issue
failing which interest at the rate of 15% shall be paid to the investors.)

249
(vii) (Schedule XX may be referred to for Clarificatory Examples for issue size and
allocation has been specified in Schedule XX.)

245
Substituted the sub-clause vide SEBI Circular No. SEBI/CFD/DIL/DIP/15/2005/29/3 dated March 29, 2005 for the
following:
“In case of under subscription in any category, the undersubscribed portion may be allocated to the bidders in the other
categories.

Provided that, the unsubscribed portion in the "Qualified Institutional Buyer" category, shall not be available for
subscription to other categories, in case the issuer company has made an issue of securities under clause 2.2.2 or
clause 2.3.2 of these guidelines.”

Prior to the above substitution, the sub-clause was substituted vide SEBI Circular No. RMB (Compendium) Series
Circular No. 1 (2001-2002) dated November 29, 2001 for the following:
“In case of undersubscription in the category referred to in clause (ii) of this clause, the Issuer company has the option
to allocate it to whichever category it deems fit or let the undersubscribed portion lapse."

246
Omitted the following sub-clause, vide SEBI Circular No. SEBI/CFD/DIL/DIP/16/2005/19/9 dated September 19, 2005:
“The allocation to QIBs shall be made as per disclosures made in terms of clause 11.3.2(iv).”

The above sub-clause was earlier substituted for the following sub-clause, vide SEBI Circular No.
SEBI/CFD/DIL/DIP/15/2005/29/3 d ated March 29, 2005:
“The allocation to the Qualified Institutional Buyers) shall be determined by the Book Runner(s) based on prior
commitment, investor quality, price aggression, earliness of bids, etc.”

Prior to the above substitution, the sub-clause was substituted vide SEBI Circular No. RMB (Compendium) Series
Circular No. 1 (2001- 2002) dated November 29, 2001 for the following:
"For the class of investors other than those mentioned at clauses (i) and (ii) of this clause, the allocation".

247
Omitted vide SEBI Circular No. RMB (Compendium) Series Circular No. 1 (2001- 2002) dated November 29, 2001the
following sub-clause, which has been wrongly numbered as sub-clause (v) (a) instead of sub-clause (v) (b):
"The minimum shareholders criterion shall not be applicable to this category."
248
Substituted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 for the following clause and the aforesaid
substituted clause has been deferred vide press release no. PR No.246/2003 dated October 13, 2003:
“After finalisation of basis of allocation, the Registrar to the Issue/company shall send the computer file containing the
allocation details i.e. the allocation numbers, allocated quantity of successful applicants, etc. along with broker-wise
funds pay-in obligation, to the Broker to the Issue and the stock exchange (s).”
249
Substituted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 for the following clause and the aforesaid
substituted clause has been deferred vide press release no. PR No.246/2003 dated October 13, 2003:
“The Company, Lead Manager / Book Runner shall announce the pay-in day and intimate the same to Brokers and
stock exchange. It shall be responsibility of the broker to deposit the amount in the Escrow Account to the extent of
allocation to his clients on the pay-in date”
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250
(viii) (Model Time Frame for Book Building is specified in Schedule XXI.)

251
(ix) (The broker shall refund the margin money collected earlier, within 3 days of
receipt of basis of allocation, to the applicants who did not receive allocation)

252
((x))

253
((xi))

254
((xii))

255
( (xiii))

250
Substituted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 for the following clause and the aforesaid
substituted clause has been deferred vide press release no. PR No.246/2003 dated October 13, 2003:
“On receipt of the basis of allocation data, the brokers shall immediately intimate the fact of allocation to their client
/applicant. The broker shall ensure that each successful client/applicant pays submits the duly filled-in and signed
application form to him along with the amount payable towards the application money by the pay-in date. Amount
already paid by the applicant as margin money shall be adjusted towards the total allocation money payable. The
broker shall, thereafter, hand over the application forms of the successful applicants who have paid the application
money, to the exchange, which shall submit the same to the Registrar to Issue/company for their records”

251
Substituted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 for the following:
“In case the issuer company has made an issue of 75% of the net offer to public through book building process and
25% at the price determined through book building -
a. the offer of 25% of the net offer to the public, made at a price determined through book building, shall open within
15 days from the date of closure of bidding ;
b. the offer for subscription to the public, shall remain open for a period of atleast 3 working days after completing all
the requirements of advertisement and despatch of issue material to all the stock exchanges ;
c. during the time when the offer is open, the investors who have received an intimation of entitlement of securities
under sub clause (xviii) of clause 11.3.1, shall submit the application forms along with the application moneys ;
d. the other retail individual investors who had not participated in the bidding process or have not received intimation
of entitlement of securities under sub clause (xviii) of clause 11.3.1 may also make an application.”

Initially substituted vide SEBI Circular No. RMB (Compendium) Series Circular No. 1 (2001- 2002) dated November
29, 2001 for the following clause:
"(a) The offer shall remain open for subscription from the public for a period of atleast 3 working days after completing
all the requirements of advertisement and despatch of issue material to all the stock exchanges.
(b) During the time when the offer is open, the investors who have received an intimation of entitlement of securities
under the clause (xviii) shall submit the application forms along with the application moneys.
(c) The other individual investors who had not participated in the bidding process or have not received intimation of
entitlement of securities under clause (xviii) may also make an application."
252
Inserted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 the following clause, which has been deferred
vide press release no. PR No.246/2003 dated October 13, 2003:
The brokers shall give details of the amount received from each client/investors and the names of clients/investors who
have not paid the application money to Registrar / Book Runner the exchange. The brokers shall also give soft copy of
this data to the exchange.

253
Inserted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 the following clause, which has been deferred
vide press release no. PR No.246/2003 dated October 13, 2003:
“In the event of the successful applicants failing to pay the application money, the broker through whom such client
placed orders, shall bring in the funds to the extent of the client’s default. If the broker does not bring in the funds, he
shall be declared as a defaulter by the stock exchange and action as prescribed under the Bye- Laws of the stock
exchange shall be initiated against hi m. In such an event, the Book Runners in case of issues through book building
process, who have underwritten the issue, shall bring-in the shortfall.
254
Inserted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 the following clause, which has been deferred
vide press release no. PR No.246/2003 dated October 13, 2003:
On pay-in date, the clearing house shall, without any instruction from the broker, debit the escrow account of each
broker to the extent of allocation made to his clients/investors and credit the amount so collected from each broker to
the ‘Issue Account’.
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256
((xiv))

257
(xv)) On payment and receipt of the sum payable on application for the amount
towards minimum subscription, the company shall allot the shares to the
applicants as per these Guidelines.

258
((xvi))

259
((xvii))

260
((xviii))

261
((xix))

262
((xx))

263
((xxi))

255
Inserted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 the following clause, which has been deferred
vide press release no. PR No.246/2003 dated October 13, 2003:
The concerned Exchange shall not use the Settlement/Trade Guarantee Fund of the Exchange for honoring brokers
commitments in case of failure of broker to bring in the funds.

256
Inserted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 the following clause and the aforesaid inserted
clause was deferred vide press release no. PR No.246/2003 dated October 13, 2003:
“The broker shall open an ‘Escrow Securities Account’ with any depository for the purpose of receiving credit of
securities on behalf of the clients.

257
Inserted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003.

258
Inserted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 the following clause, which has been deferred
vide press release no. PR No.246/2003 dated October 13, 2003:
“After the allotment, the Registrar to the issue shall post the share certificates to the investors or, instruct the
depository to credit the Escrow Securities Account of each Broker, as the case may be.
259
Inserted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 the following clause, which has been deferred
vide press release no. PR No.246/2003 dated October 13, 2003:
“On receipt of the credit of securities to the Escrow Securities Account, the Broker shall transfer the shares to the
clients’/applicants’ depository account, after receipt of confirmation of full payment from the clients/applicants. For this
purpose broker shall be considered as Agent of the client/applicant. Broker shall confirm to the Book-runner/Registrar
to the issue that shares have been credited to the account of clients /applicants not later than the day of
commencement of trading, in case full payment had been received.”

260
Inserted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 the following clause, which has been deferred
vide press release no. PR No.246/2003 dated October 13, 2003:
“Any cases of dispute, amongst the broker and the clients, would be referred to arbitration as per the by-laws /
regulations of the stock exchange”
261
Inserted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 the following clause, which has been deferred
vide press release no. PR No.246/2003 dated October 13, 2003:
“The Allotment details shall be put on the website (if available) of the Registrar to the issue and the issuer. Further,
online messaging facility of NSDL/CDSL or of stock exchanges may be used to communicate the Allotment details to
Brokers, as an alternative of physical Confirmation of Allocation Note”
262
Inserted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 the following clause, which has been deferred
vide press release no. PR No.246/2003 dated October 13, 2003:
“Trading shall commence within 6 days from the closure of the issue failing which interest at the rate of 15% p.a. shall
be paid to the investors.”

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264
((xxii))

265
((xxiii)) In case the issuer company has made an issue of 75% of the net offer to public
through book building process and 25% at the price determined through book
building:

a) the offer of 25% of the net offer to the public, made at a price determined through
book building, shall open within 15 days from the date of closure of bidding;

b) the offer for subscription to the public, shall remain open for a period of atleast 3
working days after completing all the requirements of advertisement and
despatch of issue material to all the stock exchanges;

c) during the time when the offer is open, the investors who have received an
intimation of entitlement of securities under sub clause (xviii) of clause 11.3.1,
shall submit the application forms along with the application moneys;

d) the other retail individual investors who had not participated in the bidding
process or have not received intimation of entitlement of securities under sub
clause (xviii) of clause 11.3.1 may also make an application.”

11.3.6 Maintenance of Books and Records

(i) A final book of demand showing the result of the allocation process shall be
maintained by the book runner/s.

(ii) The Book Runner/s and other intermediaries in the book building process
associated shall maintain records of the book building prices.

(iii) The Board shall have the right to inspect the records, books and documents
relating to the Book building process and such person shall extend full co-
operation.

263
Inserted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 the following clause, which has been deferred
vide press release no. PR No.246/2003 dated October 13, 2003:
“Schedule XX may be referred to for Clarificatory Examples for issue size and allocation has been specified in
Schedule XX.”

264
Inserted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 the following clause, which has been deferred
vide press release no. PR No.246/2003 dated October 13, 2003.
“Model Time Frame for Book Building is specified in Schedule XXI.”

265
Inserted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003.
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266
(CHAPTER XI A

GUIDELINES ON INITIAL PUBLIC OFFERS THROUGH THE STOCK EXCHANGE ON-

LINE SYSTEM (e -IPO).

11A.1 A company proposing to issue capital to public through the on-line system of
the stock exchange for offer of securities shall comply with the requirements as
contained in this Chapter in addition to other requirements for public issues as
given in these Guidelines, wherever applicable.

11A.2 Agreement with the Stock exchange.

11A.2.1 The company shall enter into an agreement with the Stock Exchange(s) which
have the requisite system of on-line offer of securities.

267
(Deleted)

11A.2.2 The agreement mentioned in the above clause shall specify inter-alia, the
rights, duties, responsibilities and obligations of the company and stock
exchange (s) inter se. The agreement may also provide for a dispute resolution
mechanism between the company and the stock exchange.

11A.3 Appointment of Brokers

11A.3.1 The stock exchange, shall appoint brokers of the exchange, who are
registered with SEBI, for the purpose of accepting applications and placing
orders with the company.

11A.3.2 For the purposes of this Chapter, the brokers, so appointed accepting
applications and application monies, shall be considered as ‘collection
centres’.

11A.3.3 The broker/s so appointed, shall collect the money from his/their client for
every order placed by him/them and in case the client fails to pay for shares
allocated as per the Guidelines, the broker shall pay such amount.

11A.3.4 The company/lead manager shall ensure that the brokers having terminals are
appointed in compliance with the requirement of mandatory collection centres,
as specified in clause 5.9 of Chapter V of the Guidelines.

11A.3.5 The company/lead manager shall ensure that the brokers so appointed are
financially capable of honouring their commitments arising out of defaults of
their clients, if any.

266
Inserted Chapter, vide SEBI Circular No. DIP (Compendium) Series Circular No. 5 dated November 30, 2000.

267
Omitted the following proviso vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003:
“Provided that, where the Regional Stock Exchange has the requisite system of on-line offer of securities, the
company shall also, enter into an agreement with the Regional Stock Exchange for offering securities to public through
on-line system.”
Page 178 of 332
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11A.3.6 The company shall pay to the broker/s a commission/fee for the services
rendered by him/them. The exchange shall ensure that the broker does not
levy a service fee on his clients in lieu of his services.

11A.4 Appointment of Registrar to the Issue

11A.4.1 The company shall appoint a Registrar to the Issue having electronic
connectivity with the Stock Exchange/s through which the securities are
offered under the system.

11A.5 Listing

268
11A.5.1 (The company may apply for listing of its securities on an exchange other
than the exchange through which it offers its securities to public through the
on-line system.)

11A.6 Responsibility of the Lead Manager

11A.6.1 The Lead Manger shall be responsible for co-ordination of all the activities
amongst various intermediaries connected in the issue / system.

11A.6.2 The names of brokers appointed for the issue alongwith the names of the other
intermediaries, namely, Lead managers to the issue and Registrars to the
Issue shall be disclosed in the prospectus and application form.

11A.7 Mode of operatio n

11A.7.1 The company shall, after filing the offer document with ROC and before
opening of the issue, make an issue advertisement in one English and one
Hindi daily with nation wide circulation, and one regional daily with wide
circulation at the place where th e registered office of the issuer company is
situated.

11A.7.2 The advertisement shall contain the salient features of the offer document as
specified in Form 2A of the Companies (Central Government’s) General Rules
and Forms, 1956. The advertisement in addition to other required information,
shall also contain the following:

i. the date of opening and closing of the issue

ii. the method and process of application and allotment

iii. the names, addresses and the telephone numbers of the stock brokers and
centres for accepting the applications.

268
Substituted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 for the following:
“Subject to the requirement of listing on the Regional Stock Exchange, the company may apply for listing of its
securities on an exchange other than the exchange through which it offers its securities to public through the on-line
system.”
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11A.7.3 During the period the issue is open to the public for subscription, the applicants
may
a) approach the brokers of the stock exchange/s through which the securities are
offered under on-line system, to place an order for subscribing to the
securities. Every broker shall accept orders from all clients who place orders
through him;

b) directly send the application form alongwith the cheque/Demand Draft for the
sum payable towards application money to the Registrar to the Issue or place
the order to subscribe through a stock- broker under the on -line system.

11A.7.4 In case of issue of capital of Rs. 10 crores or above the Registrar to the Issue
shall open centres for collection of direct applications at the four metropolitan
centres situated at Delhi, Chennai, Calcutta and Mumbai.

11A.7.5 The broker shall collect the client registration form duly filled up and signed
from the applicants before placing the order in the system as per "Know your
client rule" as specified by SEBI and as may be modified from time to time.

11A.7.6 The broker shall, thereafter, enter the buy order in the system, on behalf of the
clients and enter details including the name, address, telephone number and
category of the applicant, the number of shares applied for, beneficiary ID, DP
code etc. and give an order number/order confirmation slip to the applicant.

11A.7.7 The applicant may withdraw applications in terms of the Companies Act, 1956.

11A.7.8 The broker may collect an amount to the extent of 100% of the application
money as margin money from the clients before he places an order on their
behalf.

11A.7.9 The broker shall open a separate bank account [Escrow Account] with the
clearing house bank for primary market issues and the amount collected by the
broker from his clients as margin money shall be deposited in this account.

11A.7.10 The broker shall, at the end of each day while the issue is open for
subscription, download/forward the order data to the Registrar to the Issue on
a daily basis. This data shall consist of only valid orders (excluding those that
are cancelled). On the date of closure of the issue, the final status of orders
received shall be sent to the Registrar to the issue/company.

269
11A.7.11 (On the closure of the issue, the Designated Stock Exchange, alongwith the
Lead merchant banker and Regis trars to the Issue shall ensure that the basis
of allocation is finalised in fair and proper manner on the lines of the norms

269
Substituted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 for the following:
“On the closure of the issue, the Regional Stock Exchange, alongwith the Lead merchant banker and Registrars to the
Issue shall ensure that the basis of allocation is finalised in fair and proper manner on the lines of the norms with
respect to basis of allotment as specified in Chapter VII of the Guidelines, as may be modified from time to time.”
Page 180 of 332
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with respect to basis of allotment as specified in Chapter VII of the Guidelines,

as may be modified from time to time.)

11A.7.12 After finalisation of basis of allocation, the Registrar to the Issue/company shall
send the computer file containing the allocation details i.e. the allocation
numbers, allocated quantity etc., of successful applicants to the Exchange.
The Exchange shall process and generate the broker-wise funds pay-in
obligation and shall send the file containing the allocation details to member
brokers.

11A.7.13 On receipt of the basis of allocation data, the brokers shall immediately
intimate the fact of allocation to their client /applicant. The broker shall ensure
that each successful client/applicant submits the duly filled-in and signed
application form to him along with the amount payable towards the application
money. Amount already paid by the applicant as margin money shall be
adjusted towards the total allocation money payable. The broker shall,
thereafter, hand over the application forms of the successful applicants who
have paid the application money, to the exchange, which shall submit the
same to the Registrar to Issue/company for their records.

11A.7.14 The broker shall refund the margin money collected earlier, within 3 days of
receipt of basis of allocation, to the applicants who did not receive allocation.

11A.7.15 The brokers shall give details of the amount received from each client and the
names of clients who have not paid the application money to the exchange.
The brokers shall also give soft copy of this data to the exchange.

11A.7.16 On the pay- in day, the broker shall deposit the amount collected from the
clients in the separate bank account opened for primary issues with the
clearing house/bank. The clearing house shall debit the primary issue account
of each broker and credit the amount so collected from each broker to the
"Issue Account"

11A.7.17 In the event of the successful applicants failing to pay the application money,
the broker through whom such client placed orders, shall bring in the funds to
the extent of the client’s default. If the broker does not bring in the funds, he
shall be declared as a defaulter by the exchange and action as prescribed
under the Bye-Laws of the Stock Exchange shall be initiated against him. In
such a case, if the minimum subscription as disclosed in the prospectus is not
received, the issue proceeds shall be refunded to the applicants.

11A.7.18 The subscriber shall have an option to receive the security certificates or hold
the securities in dematerialised form as specified in the Guidelines

11A.7.19 The concerned Exchange shall not use the Settlement/Trade Guarantee Fund
of the Exchange for honoring brokers commitments in case of failure of broker
to bring in the funds.

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11A.7.20 On payment and receipt of the sum payable on application for the amount
towards minimum subscription, the company shall allot the shares to the
applicants as per these Guidelines. The Registrar to the issue shall post the
share certificates to the investors or, instruct the depository to credit the
depository account of each investor, as the case may be.

11A.7.21 Allotment of securities shall be made not later than 15 days from the closure of
the issue fail ing which interest at the rate of 15% shall be paid to the investors.

11A.7.22 In cases of applicants who have applied directly or by post to the Registrar to
the issue, and have not received allocation, the Registrar to the issue shall
arrange to refund the application monies paid by them within the time
prescribed.

11A.7.23 The brokers and other intermediaries engaged in the process of offering
shares through the on-line system shall maintain the following records for a
period of 5 years :

i. orders received

ii. applications received

iii. details of allocation and allotment

iv. details of margin collected and refunded

v. details of refund of application money

11A.7.24 SEBI shall have the right to carry out an inspection of the records, books and
documents relating to the above, of any intermediary connected with this
system and every intermediary in the system shall at all times co-operate with
the inspection by SEBI. In addition the stock exchange have the right of
supervision and inspection of the activities of its member brokers connected
with the system.)

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CHAPTER XII

GUIDELINES FOR ISSUE OF CAPITAL BY DESIGNATED FINANCIAL INSTITUTIONS

12.0 The following guidelines shall be applicable to the Designated Financial Institutions
(DFIs) approaching capital market for funds through an offer document.

12.1 Promoters' contribution

12.1.1 There shall be no requirement of minimum promoters' contribution in respect of any

issue by DFIs.

12.1.2 In case any DFI proposes to make a reservation for promoters, such contribution
from the promoters shall come only from actual promoters and not from directors,
friends, relatives, associates, etc.

12.2 Reservation for employees

12.2.1 The DFIs may make a reservation out of the proposed issues for allotment only to
their permanent employees including their Managing Director(s) or any whole time
Director.

12.2.2 Such reservation shall be restricted to the number of permanent employees on the
pay rolls of the DFIs as on the date of the offer document multiplied by 200 shares
of Rs. 10/- each or 20 shares of Rs. 100/- each as the case may be pe r employee,
subject to a maximum of 5% of the issue size.

12.2.3 The shares allotted under the reserved category shall be subject to a lock in for a
period of 3 years.

12.2.4 In case of public issue, unsubscribed portion, if any, in the reserved category shall
be added back to the public offer.

12.2.5 In case of rights issue, unsubscribed portion if any, shall lapse.

12.2.6 Where the Managing Director or the Whole Time Director represents the
promoters, he may acquire securities as part of the promoters' contribution but not
under the reservation made for the employees in the proposed issue.

12.3 Pricing of issues

12.3.1 The DFIs may freely price their issues subject to the following conditions:

(a)
(i) The DFIs have 3 years' track record of consistent profitability with profits shown in
their respective audited profit and loss accounts after providing for interest, tax and
depreciation in 3 out of immediately preceding 5 years with profit during the last 2
years prior to the issue.

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(ii) Where interest charged on debts outstanding for more than three years has been
taken into Profit & Loss Account, the same shall be excluded for reckoning net
profit.

(b)
(i) DFI determines the issue price in consultation with the lead manager;

(ii) the issue price shall be authorised by a resolution passed at a duly convened
meeting of the shareholders / company's Board.

(c) The offer document shall contain justification for the premium disclosing the
following:

i) mode of calculation of the parameters including selection of any particular

capitalisation rate and reasons therefor.

ii) whether revaluation reserves have been taken into account for determining book
value; if so, the date of revaluation and whether such revaluation was done by an
approved valuer and certified by the auditors.

iii) revaluation reserves shall be excluded if such revaluation has been done within 3
years from the close of previous financial year.

iv) past performance with reference to the earnings per share and book value for the
past 5 years.

v) projected earning per share / book value for the next 3 years as per DFI’s own
assessment.

vi) stock market data covering average high & low price of the share for the last 2
years and monthly high & low for the last 6 months, wherever applicable.

vii) all other factors which have been taken into account by the issuer for determining
the premium.

12.4 Specific disclosures

12.4.1 The offer document of the DFI shall contain specific disclosures in respect of the
following:

a) the present equity and equity after conversion in case of FCDs / PCDs;

b) actual Debt Equity Ratio (DER) vis-à-vis the desirable DER of 12:1.

c) Notional Debt Service Coverage Ratio (NDSCR) vis -a-vis the desirable minimum
ratio of 1.2 to be maintained for each year.

Explanation:

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1.
(i) NDSCR in any year would be the ratio of 2 numbers where the
numerator is the sum of net profit after tax, interest on loans, non-cash
profits like depreciation and repayments received out of relending;

(ii) While the denominator is the sum of interest on borrowings, principal

instalments on loans to be repaid and the apportioned principal
instalments during the year on debentures.

2. While the DFI may have the discretion to make its own apportionment, a
minimum of 10% of redemption value shall be apportioned each year.

3. In the case of PCDs/FCDs convertible beyond 18 months and optional at the

hands of debenture holders, at least 50% of the debenture value shall be
reckoned as probable redeemable debt and apportioned accordingly.

d) servicing behaviour on existing debentures, payment of interest or principal on due

dates on term loans, debentures, bonds and fixed deposits;

e) outstanding principal or interest or lease rentals, etc. due from borrowing

companies.

f)
(i) the assets representing "loan and other assistance" portfolios may be classified into
four broad groups as Standard Assets, Sub-standard Assets, Doubtful Assets and
Loss Assets, and provisions made accordingly, as specified by the Reserve Bank of
India.

(ii) the accounting policies and the aggregate of provisions made for Bad & Doubtful
Debts.

(iii) the classification of assets and the provisioning for bad and doubtful debts has been
duly certified by the statutory auditors of the DFIs.

12.5 Issue of debentures including bonds

12.5.1 Credit rating of debentures or bonds shall be compulsory, if conversion or

redemption, falls after 18 months.

12.5.2
(a) Premium amount on conversion, time of conversion, in stages, if any, shall be pre-
determined and stated in the offer document.

(b) Redemption amount, period of maturity, yield on redemption for the PCDs / NCDs
shall be indicated in the offer document.

12.5.3
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(a) Issue of debentures / bonds with maturity of 18 months or less are exempt from the
requirement of appointment of Trustee.

(b) In case of debenture / bonds with maturity beyond 18 months, a trustee or an agent,
by whatever name called shall be appointed to take care of the interest of debenture
/ bond holders irrespective of whether or not the debentures / bonds are secured.

(c) Where the debentures / bonds are unsecured, the issuing DFI, incorporated as
companies, shall ensure compliance with the provisions of the Companies
(Acceptance of Deposits) Rules, 1975, as unsecured debentures / bonds are
treated as "deposits" for purposes of these rules.

(d) The name of the trustee / agent shall be stated in the offer document and the trust
deed or any other documents for the purpose shall be executed within six months of
the closure of the issue.

12.5.4
(a) Any conversion in part or whole of the debentures shall be optional at the hands of
the debenture holder, if the conversion takes place after 18 months from the date of
allotment.

(b) In case of debentu res with conversion period beyond 36 months, the issuer
designated DFI may exercise call option provided disclosure to this effect has been
made in the offer document.

12.5.5 The interest rate for the debentures shall be freely determinable by the issuer DFI.

12.5.6 The discount on the non-convertible portion of the PCD, where arrangements for
their buy-back have been made and the procedure for their purchase on spot
trading basis shall be disclosed in the offer document.

12.6 Rollover of debentures / bonds

12.6.1 In case non-convertible portion of PCDs or Non Convertible Bonds / Debentures are
to be rolled over with or without change in the interest rate(s), an option shall be
given to those debenture / bond holders, who desire to withdraw from the scheme.

12.6.2 Roll over may be given effect to only in cases, where debenture / bond holders
have sent their positive consent and not on the basis of the non-receipt of their
negative reply.

12.6.3 Before roll over of any non-convertible bonds or debentures or non -convertible
portion of the PCDs , fresh credit rating shall be obtained within a period of six
months prior to the due date for redemption and communicated to the bond /
debenture holders before roll over.

12.6.4 The letter of option regarding roll over shall be filed containing disclosure with
regard to the credit rating, bond / debenture holder resolution, option for conversion
and such other terms which the Board may stipulate from time to time.
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12.7 Protection of the interest of debenture / bond holders

12.7.1 Trustees to the debenture / bond issue shall be vested with the requisite powers for
protecting the interest of bond / debenture holders including a right to appoint a
nominee director on the Board of the DFI in consultation with other institutional
debentureholders in the event of default and such events of defaults should be
specified in the offer document.

Provided that the right to appoint a nominee on the Board of the DFIs may not be
insisted upon in cases where the composition of the Board of such DFI is
determined by the statute incorporating such DFI.

12.7.2 Trustees shall obtain a certificate annually from the DFI's auditors in respect of
maintenance of DER and NDSCR as per the norms mentioned in Clause 12.4.1 (b
& c) and with regard to provisioning as per Clause 12.4.1 (f) above.

Provided that if a DFI fails to meet such criteria, no dividend shall be declared by
such DFI for the relevant year except with the approval of the trustees and the rate
of dividend shall not exceed 10%.

12.8 New financial instruments

12.8.1 DFI issuing any new financial instruments such as Deep Discount Bonds,
Debentures with Warrants, Secured Premium Notes, etc., shall make adequate
disclosures, more particularly relating to the terms and conditions, redemption,
security, conversion and any other relevant features of suc h instruments

12.9 Bonus issues by DFIs

12.9.1 The issuer DFI shall forward a certificate duly signed by itself and duly counter-
signed by its statutory auditor or by a company secretary in practice to the effect
that the terms and conditions for issue of bonus sha res as laid down below have
been complied with:

a) The bonus issue is made out of free reserves built out of the genuine profits or
share premium collected in cash only;

b) Reserves created by revaluation or sale of fixed assets are not capitalised.

c) Any special reserve created for the purpose of seeking tax benefits, capital reserves
created as a result of sale of assets, any reserve created without accrual of cash
resources and any other reserve not being in the nature of free reserves, even
though such reserves cannot be capitalised, can be considered as free reserve for
the purpose of calculation of residual reserves only.

d) All contingent liabilities disclosed in the audited accounts, which have a bearing on
the net profits, shall be taken into account in th e calculation of the residual reserves;

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e) The residual reserves after the proposed capitalisation shall be at least 40 percent
of the increased paid -up capital.

f) 30 per cent of the average profits before tax of the DFI for the previous three years
shall yield a rate of dividend on the expanded capital base of the DFI at 10%.

g) The DFI has not failed in the maintenance of required DER, NDSCR during the last
3 years.

h) No bonus issue shall be made:

i) in lieu of dividend;

ii) unless the partly-paid shares, if any, are fully paid-up;

iii) if there is default in payment of interest or principal in respect of fixed deposits and
interest on existing debentures / bonds or principal on redemption thereof; and

iv) if there is default in payment of statutory dues of the employees such as

contribution to provident fund, gratuity, bonus etc.

i) Any proposal for issue of bonus shall be given effect to within a period of six months
from the date of approval of such proposal by the Board of the DFI or, the general
body, as the case may be, whichever is later.

j) The shareholder shall be informed about the ability of the DFI about the estimated
rate of dividend payable by the DFI during the year or the next following year after
issue of bonus shares.

k)
(i) No DFI shall, pending conversion of FCDs/PCDs, issue any shares by way of rights
or bonus unless similar benefit is extended to the holders of such FCDs/PCDs
through reservation of shares in proportion to such convertible part of FCDs/PCDs
falling due for conversion within a period of 12 months from the date of rights /
bonus issue.

(ii) The shares so reserved may be issued at the time of such conversions on the same
terms on which the rights or bonus issues were made.

12.10 Other Requirements

12.10.1 Where a DFI's shareholding is held by various merchant bankers, the appointment
of any one of them as a lead manager shall be on the basis of least shareholding.

12.10.2 Subscription list for public issues shall be kept open for minimum of at least 3
working days and maximum 21 working days and the same shall be disclosed in the
offer document.

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12.10.3 Rights issues shall be kept open for a minimum of 15 days but not exceeding 60
days.

12.10.4
(a) The prospectus shall specify the minimum and maximum target amount proposed
to be raised through the issue.

(b) The maximum target amount shall not exceed twice the minimum target.

270
(Provided that the aforesaid clause shall not be applicable to the information
memorandum / prospectus in respect of issues made under the shelf prospectus.

Provided further that the issue size and over subscription limits disclosed in the
information memorandum / prospectus (in respect of issues made under a shelf
prospectus) shall not exceed the respective limits disclosed in the shelf
prospectus.)

271
((c) After disclosing the issue size and over subscription limits in the shelf prospectus,
the DFI can raise and retain any amount through tranche issues subject to the
limits specified in shelf prospectus.)

272
(Provided that DFI has disclosed the minimum amount proposed to be raised
and the maximum over subscription proposed to be retained in the information
memorandum / prospectus. issued in respect of issues under shelf prospectus.)

273
((d) The aggregate amount collected through one or more tranches shall not exceed
the maximum target amount specified in the shelf prospectus.)

12.10.5
(a) The requirement as to the minimum subscription of 90% applicable to the issues
made by companies shall not apply to an issue made by DFI.

(b) DFI is free to retain any amount received by it even if it is less than the minimum
target amount.

12.10.6 Where in terms of the consent issued by the Controller of Capital Issues, the price /
time of conversion of PCDs / FCDs is to be determined at a later date by the
Controller, such price and the timing of conversion shall be determined at a general
meeting of the shareholders subject to-

the consent of the holders of PCDs / FCDs for the conversion terms shall be
obtained individually and conversion shall be given effect to only if the concerned

270
Inserted proviso vide SEBI Circular No. SEBI/CFD/DIL/DIP/13/2004/28/5 dated May 28, 2004.

271
Inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/13/2004/28/5 dated May 28, 2004.

272
Inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/13/2004/28/5 dated May 28, 2004.

273
Inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/13/2004/28/5 dated May 28, 2004.
Page 189 of 332
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debentureholders send their positive consent and not on the basis of non-receipt of
their negative reply; and

12.10.7 such holders of debentures, who do not give such consent, shall be given an option
to get the convertible portion of debentures redeemed or repurchased by the DFI at
a price, which shall not be less than the face value of the debentures.

12.10.8 Where the consent from the Controller of Capital Issues stipulates a cap price for
conversion of FCDs / PCDs and the cap price has been disclosed to the investors
before subscription is made, the Board of the DFI may determine the price at which
the debentures may be converted and in such cases an option may not be given to
debenture holders.

12.10.9 The provisions of the Companies Act, 1956 and other applicable laws / listing
requirements of the stock exchange, etc., wherever applicable, shall be complied
with by the DFIs in connection with issue of shares, debentures and bonds etc.

12.11 Utilisation of money before allotment

12.11.1 DFIs may utilise the moneys raised by them out of the public issues of debt
instruments before allotment and/o r listing of the instruments, provided that:

i) the DFI pays interest to the investors from a date not later than the date from
which such permission to utilize the funds is granted;

ii) the DFI undertakes to refund the entire money to the investors in the event of its
inability to obtain listing permission from any of the stock exchanges where
application for listing of such instruments has been made; and

iii) the DFI has complied with the provisions of the Companies Act, 1956 wherever
applicable.

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274
(CHAPTER XII-A

SHELF PROSPECTUS

12A.1 Applicability

(a) This Chapter shall apply to issues of debt securities to be made by public
sector banks, scheduled commercial banks and public financial institutions.

(b) Unless otherwise specified in this Chapter, the provisions of these Guidelines
relating to public issues shall apply in respect of such issues.

12A.2 Procedure

12A.2.1 A public sector bank, scheduled commercial bank or public financial institution
proposing to issue a shelf prospectus shall file a draft shelf prospectus with the
Board.

12A.2.2 Where a draft shelf prospectus is filed with the Board, the provisions of
Chapter V of these Guidelines shall apply as if it were a draft prospectus filed
under clause 2.1.1.

12A.2.3 The shelf prospectus shall, in addition to other requisite disclosures as per
these Guidelines, also disclose the aggregate amount proposed to be raised
through all the stages of offers of securities made under the shelf prospectus.

12A.2.4 The observation letter issued by the Board shall be valid for a period of 365
days from the date of issuance.

12A.3 Information memorandum

12A.3.1 A public sector bank, scheduled commercial bank or public financial institution
shall file the shelf prospectus after incorporating the updations in terms of
information memorandum in respect of the second or any subsequent offer of
securities with the Board.

12A.3.2 The shelf prospectus as updated in terms of Clause 12A.3.1 shall be uploaded
on the website of SEBI and on the website of the lead manager.

12A.3.3 The public sector bank, scheduled commercial bank or public financ ial
institution shall open the particular stage of offer of securities after filing the
information memorandum/shelf prospectus as updated in terms of Clause
12A.3.1 with the Registrar of Companies and with the Board.)

274
Inserted Chapter, vide circular no. SEBI/CFD/DIL/DIP/12/2004/8/4 dated April 8, 2004.
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CHAPTER XIII

GUIDELINES FOR PREFERENTIAL ISSUES

13.0 The preferential issue of equity shares/ Fully Convertible Debentures (FCDs)/ Partly
Convertible Debentures (PCDs) or any other financial instruments which would be
converted into or exchanged with equity shares at a later date, by listed com panies
whose equity share capital is listed on any stock exchange, to any select group of
persons under Section 81(1A) of the Companies Act 1956 on private placement
basis shall be governed by these guidelines.

13.1 Such preferential issues by listed companies by way of equity shares/ Fully
Convertible Debentures (FCDs)/ Partly Convertible Debentures (PCDs) or any other
financial instruments which would be converted into / exchanged with equity shares
at a later date, shall be made in accordance with the pricing provisions mentioned
below:

13.1.1 Pricing of the issue

13.1.1.1 The issue of shares on a preferential basis can be made at a price not less than the
higher of the following:

i) The average of the weekly high and low of the closing prices of the related shares
quoted on the stock exchange during the six months preceding the relevant date;
OR
ii) The average of the weekly high and low of the closing prices of the related shares
quoted on a stock exchange during the two weeks preceding the relevant date.

Explanation:

a) "relevant date" for the purpose of this clause means the date thirty days prior
to the date on which the meeting of general body of shareholders is held, in
terms of Section 81(1A) of the Companies Act, 1956 to consider the proposed
issue.

b) "stock exchange" for the purpose of this clause means any of the recognised
stock exchanges in which the shares are listed and in which the highest
trading volume in respect of the shares of the company has been recorded
during the preceding six months prior to the relevant date.

13.1.2 Pricing of shares arising out of warrants, etc.

13.1.2.1
(a) Where warrants are issued on a preferential basis with an option to apply for and be
allotted shares, the issuer company shall determine the price of the resultant shares
in accordance with Clause 13.1.1.1 above.

(b) The relevant date for the above purpose may, at the option of the issuer be either
the one referred in explanation (a) to Clause 13.1.1.1 above or a date 30 days prior
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to the date on which the holder of the warrants becomes entitled to apply for the
said shares.

13.1.2.2 The resolution to be passed in terms of Section 81(1A) shall clearly specify the
relevant date on the basis of which price of the resultant shares shall be calculated.

13.1.2.3
(a) An amount equivalent to atleast ten percent of the price fixed in terms of Clause
13.1.1.1 above shall become payable for the warrants on the date of their allotment.

(b) The amount referred to in sub-clause (a), shall be adjusted against the price
payable subsequently for acquiring the shares by exercising an option for the
purpose.

(c) The amount referred to in sub-clause (a) shall be forfeited if the option to acquire
shares is not exercised.

13.1.3 Pricing of shares on conversion

13.1.3.1 Where PCDs/ FCDs/ other convertible instruments, are issued on a preferential
basis, providing for the issuer to allot shares at a future date, the issuer shall
determine the price at which the shares could be allotted in the same manner as
specified for pricing of shares allotted in lieu of warrants as indicated in Paras
13.1.2.1& 13.1.2.2 a bove.

275
(13.1A The explanatory statement to the notice for the general meeting in terms of
Section 173 of the Companies Act, 1956 shall contain:

i. the object/s of the issue through preferential offer,

ii. intention of promoters/ directors/ key management persons to subscribe to the

offer,

iii. shareholding pattern before and after the offer,

iv. proposed time within which the allotment shall be complete

v. the identity of the proposed allottees and the percentage of post preferential issue
capital that may be held by them.)

276 277
( (13.1B) A listed company shall not make any preferential issue of equity shares, Fully
Convertible Debentures, Partly Convertible Debentures or any other
instrument which may be converted into or exchanged with equity shares at a

275
Inserted vide SEBI Circular No. DIP (Compendium) Circular No. 3 dated August 04, 2000.

276
Inserted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003.

277
Renumbered as “13.1B”, vide SEBI Circular No. SEBI/CFD/DIL/DIP/14/2005/25/1 dated January 25, 2005.
Page 193 of 332
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latter date if the same is not in compliance with the conditions for continuous
listing.)

13.2 Currency of financial instruments

13.2.1 In case of Warrants/ PCDs/ FCDs/ or any other financial instruments with a
provision for the allotment of equity shares at a future date, either through
conversion or otherwise, the currency of the instruments shall not exceed beyond
18 months from the date of issue of the relevant instrument.

13.3 Non-transferability of financial instruments

13.3.1
(a) The instruments allotted on a preferential basis to the promoter / promoter group
as defined in Chapter VI in Clause [6.4.2 (m)] of these guidelines, shall be subject
to lock-in of 3 years from the date of their allotment.

(b) In any case, not more than 20% of the total capital of the company, including
capital brought in by way of preferential issue, shall be subject to lock-in of three
years from the date of allotment.

278
((c) In addition to the requirements for lock in of instruments allotted on preferential
basis to promoters/ promoter group as per clause 13.3.1 (a) and (b), the
instruments allotted on preferential basis to any person including promoters/
promoters group shall be locked-in for a period of one year from the date of their
allotment. 279)

280
((d)) The lock-in on shares acquired by conversion of the convertible
instrument/exercise of warrants, shall be reduced to the extent the convertible
instrument warrants have already been locked-in.

281
((e) the lock-in period in respect of the shares issued on preferential basis pursuant to
a scheme approved under Corporate Debt Restructuring framework of Reserve
Bank of India, shall commence from the date of allotment and shall continue for a
period of one year and in case of allotment of partly paid up shares the lock-in
period shall commence from the date of allotment and continue for a period of
one year from the date when shares become fully paid up.

278
Inserted vide SEBI Circular No. DIP (Compendium) Circular No. 3 dated August 04, 2000.

279
Omitted the following words vide SEBI Circular No. SEBI/CFD/DIL/DIP/12/2004/8/4 dated April 8, 2004:
“except on such allotments on preferential basis which involve swap of equity shares / securities convertible into equity
shares at a later date, for acquisition”.

280
Renumbered from sub-clause (c) to sub-clause (d) vide SEBI Circular No. DIP (Compendium) Circular No. 3 dated
August 04, 2000.

281
Inserted clauses (e) to (h) vide SEBI Circular No. SEBI/CFD/DIL/DIP/12/2004/8/4 dated April 8, 2004.
Page 194 of 332
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(f) no listed company shall make preferential issue of equity shares / warrants /
convertible instruments to any person unless the entire shareholding of such
persons in the company, if any, is held by him in dematerialized form.

(g) where the shares / warrants/ convertible instruments are issued on preferential
basis, the entire pre preferential allotment shareholding of such allottees shall be
under lock – in from the relevant date upto a period of six months from the date of
preferential allotment.

(h) where the shares / warrants / convertible instruments are issued on preferential
basis, the shareholders who have sold their shares during the six months period
prior to the relevant date shall not be eligible for allotment of shares on
preferential basis.)

Explanation:

(a) For the purpose of this clause “total capital” of the company shall mean -

(i) equity share capital issued by way of public/ rights issue including equity
shares emerging at a later date out of any convertible securities/ exercise of
warrants and

(ii) equity shares or any other security convertible at a later date into equity
issued on a preferential basis in favour of promoter/ promoter groups.

(b)
(i) For computation of 20% of the total capital of the company, the amount of
minimum promoters’ contribution held and locked-in, in the past as per
guidelines shall be taken into account.

(ii) The minimum promoters’ contribution shall not again be put under fresh
lock-in, even though it is considered for computing the requirement of 20%
of the total capital of the company, in case the said minimum promoters’
contribution is free of lock-in at the time of the preferential issue.

282
(13.3.2 These locked in shares/instruments may be transferred to and amongst promoter/
promoter group or to a new promoter(s) or person(s) in control of the company,
subject to continuation of lock-in in the hands of transferee(s) for the remaining
period and compliance of Securities and Exchange Board of India (Substantial
Acquisition of shares and Takeovers) Regulations, 1997, as applicable.)

13.4 Currency of shareholders resolutions

282
Substituted for the following clause vide SEBI Circular No. RMB (Compendium) series 2003-04 circular no.9 dated May
2, 2003:
“These locked in shar es/instruments can be transferred to and amongst promoter/promoter group subject to
continuation of lock-in in the hands of transferees for the remaining period and compliance of Securities and Exchange
Board of India (Substantial Acquisition of shares and Takeovers) Regulations, 1997, if applicable”
Page 195 of 332
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13.4.1 Allotment pursuant to any resolution passed at a meeting of shareholders of a

283
(company) granting consent for preferential issues of any financial instrument,
shall be completed within a period of 284 (fifteen days) from the date of passing of the
resolution.

285
(Provided that where the allotment on preferential basis is pending on account
of pendency of any approval of such allotment by any regulatory authority or the
Central Government, the allotment shall be completed within 15 days from the
date of such approval.)

286
(13.4.2 The equity shares and securities convertible into equity shares at a later date,
allotted in terms of the above said resolution shall be made fully paid up at the
time of their allotment. )

Provided that payment in case of warrants shall be made in terms of clause

13.1.2.3 above.)

287
(13.4.2A Nothing contained in clauses 13.4.1 and 13.4.2 shall apply in case of allotment
of shares and securities convertible into equity shares at a later date on
preferential basis pursuant to a scheme of corporate debt restructuring as per the
Corporate Debt Restructuring framework specified by the Reserve Bank of In dia.

288
(13.4.3) If allotment of instruments and dispatch of certificates is not completed within
289
(fifteen days) from the date of such resolution, a fresh consent of the
shareholders shall be obtained and the relevant date referred to in explanation (a) in
paragraph 13.1.1.1 above will relate to the new resolution.)

290
13.5 (Other Requirements)

13.5.1
(a) In reply to case of every issue of shares/ warrants/ FCDs/ PCDs/ or other financial
instruments having conversion option, the statutory auditors of the issuer

283
Substituted vide vide SEBI Circular No. DIP (Compendium) Circular No. 3 dated August 04, 2000 for the words “DFI”.

284
Substituted vide SEBI Circular No. SEBI/CFD/DIL/DIP/12/2004/8/4 dated April 8, 2004 for the w ords “three months”.

285
Inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/12/2004/8/4 dated April 8, 2004.

286
Inserted vide SEBI Circular No. DIP (Compendium) Circular No. 3 dated August 04, 2000.

287
Inserted clause 13.4.2A, vide SEBI Circular No. SEBI/CFD/DIL/DIP/12/2004/8/4 dated April 8, 2004.

288
Renumbered from Clause no. 13.4.1 (b) to Clause no. 13.4.3 vide SEBI Circular No. DIP (Compendium) Circular No. 3
dated August 04, 2000.

289
Substituted vide SEBI Circular No. SEBI/CFD/DIL/DIP/14/2005/25/1 dated January 25, 2005 for “three months”.

290
Substituted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 for the words “Certificate from Auditors”.
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291
(company) shall certify that the issue of said instruments is being made in
accordance with the requirements contained in these guidelines.

(b) Copies of the auditors certificate shall also be laid before the meeting of the
shareholders convened to consider the proposed issue.

292
((c) In case of preferential allotment of shares to promoters, their relatives, associates
and related entities, for consideration other than cash, valuation of the assets in
consideration for which the shares are proposed to be issued shall be done by an
independent qualified valuer and the valuation report shall be submitted to the
exchanges on which shares of the issuer company are listed.

Explanation:

For the purpose of this clause the word valuer shall have the same meaning as
assigned to the term under clause (r) of sub-regulation (1) of Regulation 2 of the
SEBI (Issue of Sweat Equity) Regulations, 2002.)

293
(13.5A The details of all monies utilised out of the preferential issue proceeds shall be
disclosed under an appropriate head in the balance sheet of the company
indicating the purpose for which such monies have been utilised. The details of
unutilised monies shall also be disclosed under a separate head in the balance
sheet of the company indicating the form in which such unutilised monies have
been invested.)

13.6 Preferential allotments to FIIs

13.6.1 Preferential allotments, if any to be made in case of Foreign Institutional Investors,

shall also be governed by the guidelines issued by the Government of India/ Board/
Reserve Bank of India on the subject.

13.7 Non-Applicability of the guidelines

13.7.1 Clauses 13.1 to 13.5 shall not be applicable in the following cases:

(i) where the further shares are allotted in pursuance to the merger and amalgamation
scheme approved by the High court.

(ii)
(a) where further shares are allotted to a person/ group of persons in accordance
with the provisions of rehabilitation packages approved by BIFR.

291
Substituted vide vide SEBI Circular No. DIP (Compendium) Circular No. 3 dated August 04, 2000 for the words “DFI”.

292
Inserted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003.

293
Inserted vide SEBI Circular No. DIP (Compendium) Circular No. 3 dated August 04, 2000.
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(b) In case, such persons are promoters or belong to promoter group as defined in
294
(Explanation I and II 295(to clause 6.8.3.2)) of Chapter VI of these guidelines, the
lock-in provisions shall continue to apply unless otherwise stated in the BIFR order.

(iii) where further shares are allotted to All India public financial institutions in
accordance with the provision of the loan agreements signed prior to August 4,
1994.

294
Substituted vide SEBI Circular No. DIP (Compendium) Circular No. 3 dated August 04, 2000 for “Clause 6.4.2 (m)”.

295
Substituted vide SEBI Circular No. SEBI/CFD/DIL/DIP/14/2005/25/1 dated January 25, 2005 for “ , Clause 6.4.2.1 ”.
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(CHAPTER XIII-A

GUIDELINES FOR QUALIFIED INSTITUTIONS PLACEMENT

13A.1 Applicability

13A.1.1 This Chapter shall apply to any issue of equity shares / fully convertible
debentures (FCDs) / partly convertible debentures (PCDs) or any securities
other than warrants, which are convertible into or exchangeable with equity
shares at a later date (hereinafter referred to as “specified securities”), made to
Qualified Institutional Buyers (QIBs) pursuant to this chapter, by a listed
company which fulfills the following conditions:
(a) its equity shares of the same class are listed on a stock exchange
having nation wide trading terminals; and
(b) it is in compliance with the prescribed minimum public shareholding
requirements of the listing agreement.

Explanation:

(i) The term “Qualified Institutional Buyers” shall have the same meaning
as assigned to it in clause 2.2.2B (v).
(ii) For the purpose of sub-clause (a) of clause 13A.1.1, securities that are
convertible into or exchangeable with securities which are listed on a
stock exchange having nation wide trading terminals, shall be deemed
to be securities of the class into which they are convertible or with which
they are exchangeable.

13A.2 Investors

13A.2.1 Only QIBs shall be eligible for allotment of specified securities issued pursuant
to this Chapter.

13A.2.2 Minimum of 10 per cent of specified securities issued pursuant to this chapter
shall be allotted to mutual funds.

13A.2.3 If no mutual fund is agreeable to take up the minimum portion mentioned in

clause 13A.2.2 or any part thereof, such minimum portion or part thereof may
be allotted to other QIBs.

13A.2.4 No allotment shall be made under this chapter, either directly or indirectly, to
any QIB being a promoter or any person related to promoter/s.

Explanation:

For the purpose of this clause, QIB who has all or any of the following rights
shall also be deemed to be a person related to promoter/s:

296
Inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/22/2006/8/5 dated May 8, 2006
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(a) rights under a shareholders’ agreement or vo ting agreement entered

into with promoters or persons related to the promoters;
(b) veto rights; or
(c) right to appoint any nominee director on the board of the issuer.

Provided that a QIB who does not hold any shares in the issuer and who has
acquired the aforesaid rights in the capacity of a lender shall not be deemed to
be a person related to promoter/s.

13A.2.5 Investors shall not be allowed to withdraw their bids after the closure of issue.

13A.3 Pricing

13A.3.1 An issue of specified securities made under this Chapter shall be made at a price
not less than the higher of the following:

iii) The average of the weekly high and low of the closing prices of the related shares
quoted on the stock exchange during the six months preceding the relevant date;
OR
iv) The average of the weekly high and low of the closing prices of the related shares
quoted on the stock exchange during the two weeks preceding the relevant date.

Explanation:

c) "relevant date" for the purpose of this clause means the day which is thirty
days prior to the date on which the meeting of general body of shareholders is
held, in terms of sub-section (1A) of Section 81 of the Companies Act, 1956
or other applicable provision to consider the proposed issue.

d) "stock exchange" for the purpose of this clause means any of the recognised
stock exchanges in which the equity shares of the issuer of the same class
are listed and in which the highest trading volume in such shares has been
recorded during the six months immediately preceding the relevant date.

13A.3.2 Pricing of shares on conversion

13A.3.2.1 Where securities which are convertible into or exchangeable with equity
shares at a later date are issued pursuant to this Chapter, the issuer shall
determine the price of the resultant shares in terms of clause 13A.3.1 above,
subject to clause 13A.3.2.2.

13A.3.2.2 The relevant date for the above purpose may, at the option of the issuer, be
either the one referred in Explanation (a) to clause 13A.3.1 or a day thirty days
prior to the date on which the holder of the securities which are convertible into
or exchangeable with equity shares at a later date becomes entitled to apply
for the said shares.

13A.3.3 The specified securities allotted pursuant to this Chapter shall be made fully
paid up at the time of their allotment.
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13A.4 Adjustments in price

13A.4.1 The prices considered for determination of issue price of specified securities
as provided in clause 13A.3.1 and 13A.3.2.1 shall be subject to appropriate
adjustments if the issuer company:
a. makes an issue of shares by way of capitalization of profits or reserves
(other than by way of a dividend on shares);
b. makes an issue of shares on rights basis
c. consolidates its outstanding shares into a smaller number of shares;
d. divides its outstanding s hares (including by way of stock split);
e. re-classifies any of its shares into other securities of the company;
f. is involved in such other similar events or circumstances, which in the
opinion of the concerned Stock Exchange, requires adjustments.

13A.5 Currency of the Security

13.A.5.1 In case of a security which is convertible into or exchangeable with equity

shares at a later date, the same may be converted/ exchanged in to equity
shares at any time after the date of allotment of the security, no later than sixty
months from the date of allotment.

13.A.6 Shareholders’ Resolution

13A.6.1 Allotment of specified securities issued pursuant to this Chapter shall be

completed within twelve months from the date of passing of the resolution in
terms of sub-section (1A) of Section 81 of the Companies Act, 1956 or any
other applicable provision.

13A.6.2 The resolution passed at the meeting of shareholders referred to in clause

13A.6.1 above shall specify that the allotment is proposed to be made to QIBs
pursuant to this Chapter and shall also specify the relevant date on the basis
of which price of the resultant shares as specified under clause 13A.3.2.2 shall
be determined.

13A.6.3 The placements made pursuant to authority of the same shareholders’

resolution shall be separated by at least six months between each placement.

13A.7 Placement Document

13A.7.1 Specified securities shall be issued pursuant to this Chapter on the basis of a
placement document.

13A.7.2 The placem ent document shall contain all material information, including the
information specified in Schedule XXIA.

13A.7.3 The placement document shall be a private document provided to select

investors, through serially numbered copies.

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13A.7.4 The placement document shall also be placed on the website of the concerned
stock exchange and of the issuer with a disclaimer to the effect that it is in
connection with an issue to QIBs under this Chapter and that no offer is being
made to the public or to any other category of investors.

13A.7.5 A copy of the placement document shall be filed with the Board for record
purpose within 30 days of the allotment of specified securities.

13A.8 Number of allottees

13A.8.1 The minimum number of allottees for each placement of specified securities
made pursuant to this Chapter shall not be less than:
(a) two, where the issue size is less than or equal to Rs. 250 crores;
(b) five, where the issue size is greater than Rs. 250 crores.

Provided that no single allottee shall be allotted more than 50% of the issue
size.

Provided further that QIBs belonging to the same group or those who are
under common control shall be deemed to be a single allottee for the purpose
of this clause.

Explanation:

For the purpose of this clause –

i. The expression ‘QIBs belonging to the same group’ shall derive meaning
from the concept of ‘companies under the same group’ as provided in
sub-section (11) of Section 372 of the Companies Act, 1956;

ii. “Control” shall have the same meaning as is assigned to it by clause (c)
of Regulation 2 of the Securities and Exchange Board of India
(Substantial Acquisition of Shares and Takeovers) Regulations, 1997.

13A.9 Restrictions on amount raised

13A.9.1 The aggregate of the proposed placement and all previous placements made
in the same financial year pursuant to this Chapter shall not exceed five times
the net worth of the issuer as per the audited balance sheet of the previous
financial year.

13A.10 Transferability of specified securities

13A.10.1 Specified securities allotted pursuant to this Chapter shall not be sold by QIB
for a period of one year from the date of allotment, except on a recognised
stock exchange.

Explanation:

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For the purpose of this clause, it is clarified that any sale by way of a bulk or
block transaction in accordance with the procedures prescribed by the Board
and the stock exchange, shall also be treated as a sale on a recognised stock
exchange.

13A.11 Obligations of Merchant Bankers

13A.11.1 Any issue and allotment of specified securities pursuant to this Chapter shall
be managed by Merchant Banker(s) registered with SEBI.

13A.11.2 The merchant banker shall exercise due diligence.

13A.11.3 The merchant banker shall furnish to each stock exchange on which the same
class of shares or other securities are listed, a due diligence certificate stating
that the issue is being made pursuant to this Chapter and complies with its
requirements, along with the application made for seeking in-principle approval
for listing of the specified securities.

13A.11.4 The merchant banker shall also furnish to each stock exchange on which the
same class of shares or other securities are listed, the documents,
undertakings, etc, if any, specified in the listing agreement for the purpose of
seeking in-principle approval and final permission from Stock Exchanges for
listing of the specified securities.

13A.12 Issuer Certification

13A.12.1 The issuer shall furnish a copy of the placement document to each stock
exchange on which the same class of shares or other securities are listed.

13A.12.2 The issuer shall also furnish to each stock exchange on which the same class
of shares or other securities are listed, a certificate stating that the issue is
being made pursuant to this Chapter and complies with its requirements, along
with the application made for seeking in-principle approval for listing of the
specified securities.

13A.12.3 The issuer shall also furnish to each stock exchange on which the same class
of shares or other securities are listed, the documents, undertakings, etc, if
any, specified in the listing agreement for the purpose of seeking in -principle
approval and final permission from Stock Exchanges for listing of the specified
securities.

13A.13 Non-applicability of Chapter XIII

13A.13.1 Nothing contained in Chapter XIII shall apply to an issue of specified securities
made pursuant to this Chapter.

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CHAPTER XIV

GUIDELINES FOR OTCEI ISSUES

14.0 Any company making an initial public offer of equity share or any other security
convertible at a later date into equity shares and proposing to list them on the
Over The Counter Exchange of India (OTCEI) shall comply with all the
requirements specified in these guidelines:

14.1 Eligibility norms

14.1.1 Any company making an initial public offer of equity share or any other security
convertible at a later date into equity shares and proposing to list them on the
OTCEI, is exempted from the eligibility norms specified in Clause 2.2 of
Chapter II of these guidelines subject to its fulfilling the following besides the
listing criteria laid down by the OTCEI:

i. it is sponsored by a member of the OTCEI and;

ii. has appointed at least two market makers (one compulsory and one additional
market maker).

14.1.2 Any offer for sale of equity share or any other security convertible at a later
date into equity shares resulting out of a Bought out Deal (BOD) registered
with the OTCEI is exempted from the eligibility norms specified in Clause 2.2
of Chapter II of these guidelines subject to the fulfillment of the listing criteria
laid down by the OTCEI.

Provided that the issuer company which has made issue of capital under
Clause 14.1.1 & 14.1.2 above, shall not delist its securities from OTCEI for a
minimum period of three years from the date of admission to dealing of such
securities on OTCEI..

14.2 Pricing Norms

14.2.1 Any offer for sale of equity share or any other security convertible at a later
date into equity shares resulting out of a Bought out Deal (BOD) registered
with OTCEI is exempted from the pricing norms specified in Clause 3.2 of
Chapter III of these guidelines subject to the following conditions:

i) The promoters after such issue shall retain at least 20% of the total issued
capital with the lock-in of three years from the date of the allotment of
securities in the proposed issue; and

ii) At least two market makers (One Compulsory and one additional market
maker) are appointed in accordance with the Market Making guidelines
stipulated by the OTCEI.

14.3 Projections
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14.3.1 In case of securities proposed to be listed on OTCEI, for the purpose of Clause
(6.12.1) of Chapter VI of these guidelines, projections based on the appraisal
done by the sponsor who undertakes to do market making activity in the
securities offered in the proposed issue can be included in the offer document
subject to compliance with other conditions contained in the said clause.

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CHAPTER XV

GUIDELINES FOR BONUS ISSUES

15.0 A listed company proposing to issue bonus shares shall comply with the
following:

15.1.1
(a) No company shall, pending conversion of FCDs/PCDs, issue any shares by
way of bonus unless similar benefit is extended to the holders of such
FCDs/PCDs, through reservation of shares in proportion to such convertible
part of FCDs or PCDs.

(b) The shares so reserved may be issued at the time of conversion(s) of such
debentures on the same terms on which the bonus issues were made.

15.1.2 The bonus issue shall be made out of free reserves built out of the genuine
profits or share premium collected in cash only.

15.1.3 Reserves created by revaluation of fixed assets are not capitalised.

15.1.4 The declaration of bonus issue, in lieu of dividend, is not made.

15.1.5 The bonus issue is not made unless the partly-paid shares, if any existing, are
made fully paid-up.

15.1.6 The Company -

(a) has not defaulted in payment of interest or principal in respec t of fixed deposits
and interest on existing debentures or principal on redemption thereof and

(b) has sufficient reason to believe that it has not defaulted in respect of the
payment of statutory dues of the employees such as contribution to provident
fund, gratuity, bonus etc.

15.1.7 A company which announces its bonus issue after the approval of the Board of
Directors must implement the proposal within a period of six months from the
date of such approval and shall not have the option of changing the decision.

15.1.8
(i) The Articles of Association of the company shall contain a provision for
capitalisation of reserves, etc.

(ii) If there is no such provision in the Articles the company shall pass a
Resolution at its general body meeting making provisions in the Articles of
Associations for capitalisation.

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15.1.9 Consequent to the issue of Bonus shares if the subscribed and paid-up capital
exceed the authorised share capital, a Resolution shall be passed by the
company at its general body meeting for increasing the authorised Capital.

15.1.10 A certificate duly signed by the issuer company and counter signed by
statutory auditor or by Company Secretary in practice to the effect that the
provision of clause 15.1.1 to 15.1.9 have been complied with shall be
forwarded to the Board.

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CHAPTER XVI

OPERATIONAL GUIDELINES

16.0 The eligible merchant bankers shall ensure compliance with the following:

16.1 Submission of draft and final offer document

16.1.1
(a) The offer documents of size upto Rs. 20 crores shall be filed by lead merchant
bankers with the concerned regional office of Board under the jurisdiction of
which the registered office of the issuer company falls.

(b) The jurisdiction of regional offices/ head office shall be as per Schedule XXII.

16.1.2
(a) As per Clause 5.6 of Chapter V of the Guidelines, the draft offer document filed
with the Board shall be made public.

297
(b) (The lead merchant banker shall make ten (10) copies of the draft offer
document available to the dealing office of the Board, three (3) copies to the
Primary Market Department, SEBI, Head Office and 25 copies to the stock
exchange(s) where the issue is proposed to be listed.)

(c) Copies of the draft offer document shall be made available to the public by the
lead merchant bankers / Stoc k Exchange.

(d) The lead merchant banker and the Stock Exchanges(s) may charge such
reasonable charge for providing a copy of the draft offer document.

16.1.3
298
((a) The lead merchant banker shall submit the draft offer document on a computer
floppy to the dealing office of the Board and to the Primary Market Department,
SEBI, Head Office, as specified in Schedule XXIII.

(b) In case of book built issues the lead merchant banker shall submit a printed and
soft copy on a computer floppy, of the draft offer document incorporating the
Board’s observations and a printed copy of bid cum application form to the
Primary Market Department, SEBI, Head Office at least five days before opening
of bidding.)

16.1.4

297
Substituted for the following clause vide SEBI Circular No. DIP (Compendium) Circular No. 3 dated August 04, 2000:
"The lead merchant banker shall make10 copies of the draft offer document available to Board and 25 copies to the
Stock Exchange(s) where the issue is proposed to be listed".

298
Substituted for the following clause vide SEBI Circular No. DIP (Compendium) Circular No. 3 dated August 04, 2000:
"The Lead Merchant Banker shall also submit to Board the draft offer document on a computer floppy as per the format
specified in Schedule XXIII".
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(a) The Lead Merchant Bankers shall submit two copies of final printed copy of the
final offer document to dealing offices of Board 299 (within three (3) days of filing
offer document with Registrar of Companies / concerned Stock Exchange(s) as
the case may be)

300
(b) (The lead merchant banker shall submit one final printed copy of the final offer
document to Primary Market Department, SEBI, Head Office, within three (3)
days of filing the offer document with Registrar of Companies / concerned Stock
Exchange(s) as the case may be.)

301
((c) The lead merchant banker shall submit a computer floppy containing the final
prospectus/ letter of offer to Primary Market Department, SEBI, Head Office, as
specified in Schedule XXIII within three (3) days of filing the final prospectus/
letter of offer with the Registrar of Companies/ concerned Stock Exchange(s).
Along with the floppy, the lead manager shall submit an undertaking to SEBI
certifying that the contents of the floppy are is in HTML format and are identical to
the printed version of prospectus/ letter of offer filed with Registrar of Companies/
concerned Stock Exchange as the case may be.)

16.1.5
302
((a)) Whenever offer documents (for public/ rights issues, takeovers or for any other
purpose) are filed with any Department/ office of Board, the following details
303
(about themselves) 304 (certified as correct) shall be given by the lead merchant
banker in the forwarding letters:

i. Registration No.
ii. Date of Registration / Renewal of registration.
iii. Date of expiry of registration.
iv. If applied for renewal, date of application.
v. Any communication from the Board prohibiting from acting as a merchant banker.
vi. Any inquiry / investigation being conducted by the Board.
305
vii. (Deleted)
306
viii. (Deleted)
299
Substituted vide SEBI Circular No. RMB (Compendium) Series Circular No. 2 (1999-2000) dated February 16, 2000 for
"10 days prior to issue opening date".
300
Substituted vide SEBI Circular No. RMB (Compendium) Series Circular No. 2 (1999-2000) dated February 16, 2000 for
the following:
"the lead merchant banker shall make 10 copies of the draft offer document available to Board and 25 copies to the
Stock Exchange (s) where the issue is proposed to be listed”

301
Inserted vide SEBI Circular No. RMB (Compendium) Series Circular No. 2 (1999-2000) dated February 16, 2000.

302
Renumbered Clause no. 16.1.5 to Clause no. 16.1.5 (a) vide SEBI Circular No. DIP (Compendium) Circular No. 3
dated August 04, 2000.

303
Inserted vide SEBI Circular No. DIP (Compendium) Circular No. 3 dated August 04, 2000.

304
Inserted vide SEBI Circular No. RMB (Compendium) Series Circular No. 2 (1999-2000) dated February 16, 2000.

305
Omitted the following clause vide SEBI Circular No. DIP (Compendium) Circular No. 3 dated August 04, 2000:
"Period upto which registration / renewal fees has been paid."

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307
ix. (Deleted)
308
x. (Deleted)
309
xi. (Deleted)
310
xii. (Deleted)
311
xiii. (Deleted)

312
((b) The following details about the issuer company certified as correct shall be
furnished by the lead merchant banker along with their forwarding letter while
filing offer documents for public/ rights issue/ buyback/ takeovers:

(i) whether any promoter/ director/ group /associate company/entity of the is suer
company and/or any company/entity with which any of the above is associated as
promoter/ director/ partner/ proprietor, is/was engaged in securities related
business and registered with SEBI.

(ii) If any one or more of these persons/entities are/ were registered with SEBI, their
respective registration numbers.

Initially Inserted vide SEBI Circular No. RMB (Compendium) Series Circular No. 2 (1999-2000) dated February 16,
2000.

306
Omitted the following clause vide SEBI Circular No. DIP (Compendium) Circular No. 3 dated August 04, 2000:
"Whether any promoter/ director/ group and/ or associate company of the Lead Manager is associated with securities
related business and registered with SEBI."

Initially Inserted vide SEBI Circular No. RMB (Compendium) Series Circular No. 2 (1999-2000) dated February 16,
2000.
307
Omitted the following clause vide SEBI Circular No. DIP (Compendium) Circular No. 3 dated August 04, 2000:
“If any one or more of these persons/entities are registered with SEBI, their respective registration numbers."

Initially Inserted vide SEBI Circular No. RMB (Compendium) Series Circular No. 2 (1999-2000) dated February 16,
2000.

308
Omitted the following clause vide SEBI Circular No. DIP (Compendium) Circular No. 3 dated August 04, 2000:
"If registration has expired, reasons for non renewal."

Initially Inserted vide SEBI Circular No. RMB (Compendium) Series Circular No. 2 (1999-2000) dated February 16,
2000.

309
Omitted the following clause vide SEBI Circular No. DIP (Compendium) Circular No. 3 dated August 04, 2000:
“Details of any enquiry / investigation conducted by SEBI at any time."

Initially Inserted vide SEBI Circular No. RMB (Compendium) Series Circular No. 2 (1999-2000) dated February 16,
2000.

310
Omitted the following clause vide SEBI Circular No. DIP (Compendium) Circular No. 3 dated August 04, 2000:
"Penalty imposed by SEBI (Penalty includes deficiency/warning letter, adjudication proceedings, suspension/
cancellation / prohibitory orders)"

Initially Inserted vide SEBI Circular No. RMB (Compendium) Series Circular No. 2 (1999-2000) dated February 16,
2000.

311
Omitted the following clause vide SEBI Circular No. DIP (Compendium) Circular No. 3 dated August 04, 2000:
“Outstanding fees payable to SEBI by these entities, if any."

Initially Inserted vide SEBI Circular No. RMB (Compendium) Series Circular No. 2 (1999-2000) dated February 16,
2000.

312
Inserted vide SEBI Circular No. DIP (Compendium) Circular No. 3 dated August 04, 2000.
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(iii) If registration has expired, reasons for non renewal.

(iv) Details of any enquiry / investigation conducted by SEBI at any time.

(v) Penalty imposed by SEBI (Penalty includes deficiency/warning letter, adjudication

proceedings, suspension / cancellation / prohibitory orders).

(vi) Outstanding fees payable to SEBI by these entities, if any.

(c) The draft and final offer documents submitted to the Board on computer floppies
as per the clause 16.1.3 and 16.1.4(c) shall be accompanied by the information
as per format in Schedule XXIIIA.)

16.1.6 Offer documents not accompanied by the information referred to in clause

16.1.5 may be rejected.

16.1.7
(a) Lead Merchant Bankers shall obtain similar information from other intermediaries
to ensure that they comply with these guidelines and are eligible to be associated
with the concerned issue.

(b) The intermediaries shall also indicate in their letters that they have obtained such
information from other intermediaries.

16.1.8 Despatch of issue material

16.1.8.1
(a) Lead merchant bankers shall ensure that whenever there is a reservation for
NRIs, 10 copies of the prospectus together with 1000 application forms are
despatched in advance of the issue opening date directly along with a letter
addressed in person to Adviser (NRI), Indian Investment Centre, Jeevan Vihar
Bldg., Sansad Marg, New Delhi - 110001.

(b) Twenty copies of the prospectus and application forms shall be despatched in
advance of the issue opening date to the various Investors Associations.

16.1.9 Underwriting

16.1.9.1
(a) While selecting underwriters and finalising underwriting arrangements, lead
merchant bankers shall ensure that the underwriters do not overexpose
themselves so that it may become difficult to fulfil underwriting commitments.

(b) The overall exposure of underwriter(s) belonging to the same group or

management in an issue shall be assessed carefully by the lead Merchant
Banker.

(c) OTC Dealers registered with Board under Securities and Exchange Board of
India (Stock Brokers and Sub-Brokers) Rules and Regulations, 1992 shall be
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treated at par with the brokers of other stock exchanges in respect of underwriting
arrangement.

313
16.2 (Instructions on post-issue obligations)

16.2.0 The merchant banker shall ensure compliance with the following post-issue
obligations:

314
16.2.1 (Deleted)

16.2.2 Redressal of investor grievances

16.2.2.1
(a) The merchant bankers shall assign high priority to investor grievances and take
all preventive steps to minimise the number of complaints.

(b) The lead merchant banker shall set up proper grievance monitoring and redressal
system in co-ordination with the issuers and the Registrars to Issue, and take all
necessary measures to resolve the grievances quickly.

16.2.2.2 The merchant bankers shall actively associate with the post-issue refund and
allotment activities and regularly monitor investor grievances arising therefrom.

16.2.3 Submission of post issue monitoring reports

16.2.3.1
(a) The concerned lead merchant banker shall submit, in duplicate, the Post Issue
Monitoring Reports specified in Clause 7.2 of Chapter VII of these Guidelines,
within 3 working days from the due dates either by registered post or deliver at
respective regional offices/ head office at the addresses given in Schedule XXII.

(b) Where the offer document has been dealt with by any of the regional offices of
the Board, a copy of the report shall be sent to the Board's Head office, Mumbai.

16.2.3.2 The Lead Merchant Banker(s) shall inform the Board on important developments
about the particular issues being lead managed by them during the intervening
period of the reports.

313
Numbered the clause as “16.2”, vide SEBI Circular No. SEBI/CFD/DIL/DIP/14/2005/25/1 dated January 25, 2005.
314
Omitted the following clause vide SEBI Circular No. DIP (Compendium) Circular No. 3 dated August 04, 2000:
" Association of Resource Personnel
16.2.1.1
(a) In terms of Clause 7.1 of Chapter VII of these Guidelines in case of over-subscription in public issues, a Board
nominated public representative shall be associated in the process of finalisation of basis of allotment.
(b) The lead merchant banker shall intimate the person so nominated the date, time, venue etc. in respect of
process of finalisation of basis of allotment.
(c) The expenses of the public representatives associated in the allotment process of oversubscribed issues shall
be borne by the lead merchant bankers and recovered from the issuers.
(d) Honorarium at minimum of Rs.500/- per day plus normal conveyance charges shall be paid to the public
representatives.
(e) The Board's Regional Managers at New Delhi, Chennai and Calcutta shall be associated with the public
representatives".
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16.2.4 Issue of No objection certificate(NOC)

315
(16.2.4.1
(a) As per the Listing Agreement of the Stock Exchanges, the issuer companies shall
deposit 1% of the amount of securities offered to the public and/or to the holders
of the existing sec urities of the company, as the case may be, with the
designated Stock Exchange, which can be released by the concerned stock
exchange only after obtaining an NOC from the Board.

(b) An application for NOC shall be submitted by issuer company to the Board in the
format specified in Schedule XXIV.

16.2.4.2 The following conditions shall be complied before submitting the application for
issue of NOC:

a) Completion of 4 months from the date of obtaining the listing permission from the
concerned Designated Stock Exchange or the last date when the listing
permission was obtained from any of the other stock exchanges, where the
securities are proposed to be listed, whichever is later.

b) Satisfactory redressal of all complaints received at the Board against the

Company.

315
Substituted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 for the following:
“16.2.4.1
(a) As per the Listing Agreement of the Stock Exchanges, the issuer companies shall deposit 1% of the amount
of securities offered to the public and/or to the holders of the existing securities of the company, as the case
may be, with the regional Stock Exchange, which can be released by the concerned stock exchange only
after obtaining an NOC from the Board.

(b) An application for NOC shall be submitted by issuer company to the Board in the format specified in
Schedule XXIV.

16.2.4.2 The following conditions shall be complied before submitting the application for issue of NOC:
a) Completion of 4 months from the date of obtaining the listing permission from the concerned Regional Stock
Exchange or the last date when the listing permission was obtained from any of the other stock exchanges,
where the securities are proposed to be listed, whichever is later.

b) Satisfactory redressal of all complaints received at the Board against the Company.

c) Certificate from the Regional Stock Exchange to the issuer company to the effect that underwriting/brokerage
commission as well as Registrars/Lead merchant bankers fees have been duly paid by the company.

16.2.4.3. Applications for issue of NOC shall be filed by merchant bankers with the concerned regional office of Board
under the jurisdiction to which the registered office of the issuer company falls, as specified in Schedule XXII.

16.2.4.4. In cases where issues (i.e. public/rights/offer of sale or any other) fail and the investors monies are fully
refunded, an NOC from the Board may not be required and the concerned regional Stock Exchange can
refund the 1% security deposit after duly verifying that the refund orders have actually been despatched.

16.2.4.5
(a) The complaints with respect to non-receipt of underwriting /brokerage commission and non-receipt of
Registrars/Lead merchant bankers fees may be filed with the concerned Regional Stock Exchanges.

(b) Responses against complaints forwarded by the Board to the concerned companies shall be submitted to the
Board as per the proforma specified in Schedule XXV for updation of records.”
Page 213 of 332
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c) Certificate from the Designated Stock Exchange to the issuer company to the
effect that underwriting/brokerage commission as well as Registrars/Lead
merchant bankers fees have been duly paid by the company.

16.2.4.3 Applications for issue of NOC shall be filed by merchant bankers with the
concerned designated office of Board under the jurisdiction to which the
registered office of the issuer company falls, as specified in Schedule XXII.

16.2.4.4 In cases where issues (i.e. public/rights/offer of sale or any other) fail and the
investors monies are fully refunded, an NOC from the Board may not be required
and the concerned designated Stock Exchange can refund the 1% security
deposit after duly verifying that the refund orders have actually been despatched.

16.2.4.5
(a) The complaints with respect to non-receipt of underwriting /brokerage
commission and non-receipt of Registrars/Lead merchant bankers fees may be
filed with the concerned Designated Stock Exchanges.
(b) Responses against complaints forwarded by the Board to the concerned
companies shall be submitted to the Board as per the proforma specified in
Schedule XXV for updation of records.)

316
(16.3.0 Merchant Bankers)

317
(16.3.1) Registration and renewal of registration of Merchant Bankers

16.3.1.1
(a) Application for renewal of Certificate of Registration shall be made by the
Merchant Bankers as per regulation 9 of Securities and Exchange Board of India
(Merchant Bankers) Rules and Regulations, 1992.

(b) While filing the renewal application for the certificate of registration as merchant
banker, it shall provide a statement highlighting the changes that have taken
place in the information that was submitted to the Board for the earlier registration
and a declaration stating that no other changes other than as mentioned in the
above statement has taken place.

(c) Merchant Bankers while forwarding the renewal application in form A as per
Securities and Exchange Board of India (Merchant Bankers) Rules and
Regulations, 1992, shall also forward the additional information as specified in
Schedule XXVI.

16.3.2 Reporting requirements in respect of merchant banking activities

16.3.2.1
(a) In terms of regulation 28 of Securities and Exchange Board of India (Merchant
Bankers Regulation) 1992, the merchant bankers shall send half yearly report in
316
Inserted the heading vide SEBI Circular No. SEBI/CFD/DIL/DIP/14/2005/25/1 dated January 25, 2005.

317
Renumbered the clause as “16.3.1”, vide SEBI Circular No. SEBI/CFD/DIL/DIP/14/2005/25/1 dated January 25, 2005.
Page 214 of 332
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the format specified at Schedule XXVII relating to their merchant banking

activities.

(b) The report referred to in sub-clause (a) shall be submitted twice a year, as on
March 31 and September 30 and it should reach the Board within three months
from the close of the period to which it relates.

16.4 Registration with Association of Merchant Bankers of India (AMBI)

16.4.1 Registered Merchant Bankers shall inform the Board of their having become a
member of AMBI with relevant details.

16.5 Issue of Penalty Points

16.5.1
(a) Penalty points may be imposed on the merchant banker for violation of any of the
provisions of operational guidelines under these Chapters.

(b) The Merchant Banker, on whom penalty point of four or more has been imposed
may be restrained from filing any offer document or associating or managing any
issues for a particular period.

(c) The Board may initiate action under the SEBI (Merchant Bankers) Regulations
against the Merchant Bankers, irrespective of whether any penalty point is
imposed or not.

(d) Imposition of penalty point is not a condition precedent for initiation of proceeding
against the Merchant Banker under the Securities and Exchange Board of India
(Merchant Bankers) Regulations.

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CHAPTER XVII

MISCELLANEOUS

17.0 Directions by the Board

17.1 In case of violation of these Guidelines, the Board may in the interest of the
securities market and in the interest of the investors may pass the following
directions under section 11B:

(a) directing the persons concerned to refund any money collected under an issue to
the investors with or without requisite interest, as the case may be.

(b) directing the persons concerned not to access the capital market for a particular
period.

(c) directing the stock exchange concerned not to list or permit trading in the securities.

(d) directing the stock exchange concerned to forfeit the security deposit deposited by
the issuer company.

(e) any other direction which the Board may deem fit and proper in the circumstances
of the case.

Provided that before issuing any directions the Board may give a reasonable
opportunity to the person concerned.

Provided further that if any interim direction is sought to be passed, the Board may
give post decisional hearing to such person.

17.2 Action against intermediaries

17.2.1 The Board may initiate action including for suspension or cancella tion of certificate
of registration of any intermediary who fails to exercise due diligence or who fails to
comply with the obligations entrusted under the guidelines or who is alleged to have
violated any of these Guidelines.

Provided that no such certificate of registration shall be suspended or cancelled

unless the procedure specified in the regulations applicable to such intermediary is
followed.

318
(17.2A Exemption

17.2A.1 The Board may grant exemption from the application of any particular provision(s)
of these guidelines:

318
Inserted clauses 17.2A and 17.2A.1 vide SEBI Circular No. RMB (Compendium) Series Circular No. 10 dated June 2,
2003.
Page 216 of 332
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(a) on an application made by any listed company or intermediary connected with the
issue;

(b) of a technical violation or a possible technical violation; or,

(c) on being satisfied that the violation was caused or may be caused due to factors
beyond the control of the applicant.)

17.3 Repeal and Saving

17.3.1 The Securities and Exchange Board of India (Disclosure and Investor Protection)
Guidelines, 1992 and the clarifications issued from time to time are hereby
repealed.

17.3.2 Notwithstanding such repeal:-

(a) Anything done or any actin taken or purported to have been done or taken including
observation made in respect of any draft offer document, any enquiry or
investigation commenced or show cause notice issued in respect of the said
guidelines shall be deemed to have been done or taken under the corresponding
provisions of these guidelines;

(b) Any application made to the Board under the said Guidelines and pending before it
shall be deemed to have been made under the corresponding provisions of these
Guidelines.

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SCHEDULE I

(Clause 5.3.1.2)

MEMORANDUM OF UNDERSTANDING BETWEEN THE LEAD MERCHANT BANKER TO

THE ISSUE AND THE ISSUER COMPANY

THIS MEMORANDUM OF UNDERSTANDING MADE BETWEEN....... (name of the issuing

company), A COMPANY WITHIN THE MEANING OF THE COMP ANIES ACT, 1956 AND
HAVING ITS REGISTERED OFFICE AT ......... (registered office address of the issuing
company) (HEREINAFTER REFERRED TO AS "the Company") AND........ a Company
registered under the Companies Act 1956, and having its registered office at...................... with
the branch office at (hereinafter referred to as the "Lead Merchant Banker").

WHEREAS:

1. The Company is taking steps for issue of...................... (particulars of the issue) to the
public / existing shareholders of the Company; the said issue of shares/debentures is
hereinafter referred to as "the issue"; AND

2. The company has approached the Lead Merchant Banker to manage the issue and the
Lead Merchant Banker has accepted the engagement inter-alia subject to the company
entering into memorandum of understanding for the purpose being these presents;

NOW, THEREFORE, the Company and the Lead Merchant Banker do hereby agree as
follows:

1. Besides the Lead Merchant Banker, .........., ............, and ................., would be acting as
the co-managers to the issue.

2. The Company hereby declares that it has complied with or agrees to comply with all the
statutory formalities under the Companies Act, Guidelines for Disclosure and Investor
Protection issued by the Securities and Exchange Board of India (hereinafter referred to
as "the Board") and other relevant statutes to enable it to make the issue and in
particular in respect of the following matters:

(Give details and particulars of statutory compliances which the company has to fulfil
before making the issue)

Consent of the general body has been obtained vide........... (details of the resolution)
and in accordance to the terms of the Resolution passed by the General Meeting held
on .............. (date of the meeting).

3. The company undertakes and declares that any information made available to the Lead
Merchant Banker or any statement made in the Offer Documents shall be complete in
all respects and shall be true and correct and that under no circumstances it shall give
or withhold any information or statement which is likely to mislead the investors.

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4. The Company also undertakes to furnish complete audited annual report(s), other
relevant documents, papers, information relating to pending litigations, etc. to enable the
Lead Merchant Banker to corroborate the information and statements given in the Offer
Documents.

5. The Company shall, if so required, extend such facilities as may be called for by the
Lead Merchant Banker/(s) to enable him to visit the plant site, office of the Company or
such other place/(s) to ascertain for himself the true state of affairs of the company
including the progress made in respect of the project implementation, status and other
facts relevant to the issue.

6. The Company shall extend all necessary facilities to the Lead Merchant Banker to
interact on any matter relevant to the Issue with the solicitors / legal advisors, auditors,
co-managers, consultants, advisors to the Issue, the financial institutions, banks, or any
other organisation, and also with any other intermediaries who may be associated with
the issue in any capacity whatsoever.

7. The Company shall ensure that all advertisements prepared and released by the
Advertising Agency or otherwise in connection with the Issue conform to regulations,
guidelines etc. issued by the Board and instructions given by the Lead Merchant
Banker/(s) from time to time and that it shall not make any misleading, incorrect
statement in the advertisements, press releases, or in any material relating to the Issue
or at any Press / Brokers / Investors Conferences.

8. The Company shall not, without prior approval of the Lead Merchant Banker, appoint
other intermediaries or other persons such as Registrars to the Issue, Bankers to the
Issue, Refund Bankers, Advertising Agencies, Printers for printing application forms,
allotment advices / allotment letters, share certificates / debenture certificates, refund
orders or any other instruments, circulars, or advices.

9. In consultation with the Lead Merchant Banker, the company shall, whenever required,
enter into a Memorandum of Understanding with the concerned intermediary associated
with the issue, clearly setting forth their mutual rights, responsibilities and obligations. A
certified true copy of such Memorandum shall be furnished to the Lead Merchant
Banker.

10. The Company shall take such steps as are necessary to ensure the completion of
allotment and despatch of letters of allotment and refund orders to the applicants
including NRIs soon after the basis of allotment has been approved by the stock
exchanges and in any case not later than the statutory time limit and in the event of
failure to do so pay interest to the applicants as provided under the Companies Act,
1956.

11. The Company shall take steps to pay the underwriting commission and brokerage to the
underwriters and stock brokers, etc. within the time specified in any agreement with
such underwriters or within a reasonable time.

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12. The Company undertakes to furnish such information and particulars regarding the
issue as may be required by the Lead Merchant Banker to enable him to file a report
with the Board in respect of the issue.

13. The company shall keep the Lead Merchant Banker informed if it encounters any
problems due to dislocation of communication system or any other material adverse
circumstance which is likely to prevent or which has prevented the Company from
complying with its obligations, whether statutory or contractual, in respect of the matters
pertaining to allotment, despatch of refund orders / share certificates / debenture
certificates etc.

14. The company shall not resort to any legal proceedings in respect of any matter having a
bearing on the issue except in consultation with and after receipt of the advice from the
Lead Merchant Banker.

15. The company shall not access the money raised in the issue till finalisation of basis of
allotment or completion of offer formalities.

16. The company shall refund the money raised in the issue to the applicants if required to
do so for any reason such as failing to get listing permission or under any direction or
order of SEBI. The company shall pay requisite interest amount if so required under the
laws or direction or order of SEBI.

17. Clauses relating to rights of Lead Merchant Banker vis-à-vis the issuer shall be inserted.

18. Consequences of breach.

In Witness whereof the parties hereto have set their hands on the day and the year
hereinabove written.

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SCHEDULE II

(Clause 5.3.2.1)

INTERSE ALLOCATION OF RESPONSIBILITIES

I. The Lead Merchant Bankers shall make interse allocation of the activities / sub
activities.

II. The lead merchant banker shall ensure that activity wise allocation is properly
delineated and that the Board is advised the name of the Lead Merchant Banker
responsible for each set of activities / sub-activities, well before opening of issue. This
advice must be signed by all Lead Merchant Bankers to issue.

III. Where the circumstances warrant joint and several responsibility of Lead Merchant
Bankers for a particular activity, a co-ordinator designated from among the Lead
Merchant Bankers shall furnish to the Board, when called for, with information, report,
comments etc. on matters relating to the activity (of joint and several responsibility).

IV. The activities / sub-activities may be grouped on the following lines:

(a) Capital structuring with the relative components and formalities such as composition
of debt and equity, type of instruments.

(b) Drafting and Design of the offer document and of advertisement / publicity material
including newspaper advertisements and brochure / memorandum containing
salient features of the offer document.

(c) The designated Lead Merchant Banker shall ensure compliance with the Guidelines
for Disclosure and Investor Protection and other stipulated requirements and
completion of prescribed formalities with Stock Exchange, Registrar of Companies
and SEBI.

(d) Marketing of the issue, which will cover, inter alia, formulating marketing strategies,
preparation of publicity budget, arrangements for selection of (i) ad-media, (ii)
centres of holding conferences of brokers, investors etc. (iii) bankers to issue, (iv)
collection centres (v) brokers to issue and (vi) underwriters and the underwriting
arrangement, distribution of publicity and issue material including application form,
prospectus and brochure, and deciding on the quantum of issue material.

(e) Selection of various agencies connected with issue, namely Registrars to Issue,
printers and advertising agencies.

(f) Follow-up with bankers to the issue to get quick estimates of collection and advising
the issuer about closure of the issue, based on the correct figures.

(g) The post-issue activities will involve essential follow-up steps, which must include
finalisation of basis of allotment / weeding out of multiple applications, listing of
instruments and despatch of certificates and refunds, with the various agencies
Page 221 of 332
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connected with the work such as registrars to the issue, bankers to the issue, and
the bank handling refund business.

(h) Even if many of these post-issue activities would be handled by other

intermediaries, the designated Lead Merchant Banker shall be responsible for
ensuring that these agencies fulfil their functions and enable him to discharge this
responsibility through suitable agreements with the issuer company.

(i) Ordinarily, one Lead Merchant Banker shall be responsible for post issue activities.

Page 222 of 332

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319
(SCHEDULE III)

319
Substituted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 for the following:

“SCHEDULE III

(Clause 5.3.3.1)

FORMAT OF DUE DILIGENCE CERTIFICATE TO BE GIVEN BY LEAD

MERCHANT BANKER(S) ALONGWITH DRAFT OFFER DOCUMENT

To,

SECURITIES AND EXCHANGE BOARD OF INDIA

Dear Sirs,

SUB.: ISSUE OF ____________________ BY _______________LTD.

We, the under noted Lead Merchant Banker (s) to the above mentioned forthcoming issue state as follows :

1. We have examined various documents including those relating to litigation like commercial disputes, patent disputes,
disputes with collaborators etc. and other materials more particularly referred to in the Annexure hereto in
connection with the fi nalisation of the draft prospectus/letter of offer pertaining to the said issue;
(2) On the basis of such examination and the discussions with the company, its directors and other officers, other
agencies, independent verification of the statements concerning the objects of the issue, projected profitability, price
justification and the contents of the documents mentioned in the Annexure and other papers furnished by the
company, WE CONFIRM that:
(a) the draft prospectus/letter of offer forwarded to the Board is in conformity with the documents, materials and papers
relevant to the issue;
(b) all the legal requirements connected with the said issue as also the guidelines, instructions, etc. issued by the Board,
the Government and any other competent authority in this behalf have been duly complied with; and
(c) the disclosures made in the draft prospectus / letter of offer are true, fair and adequate to enable the investors to
make a well informed decision as to the investment in the proposed issue.
(3) We confirm that besides ourselves, all the intermediaries named in the prospectus/letter of offer are registered with
the Board and that till date such registration is valid.
(4) We have satisfied ourselves about the worth of the underwriters to fulfil their underwriting commitments.
(5) We certify that written consent from shareholders has been obtained for inclusion of their securities as part of
promoters’ contribution subject to lock-in and the securities proposed to form part of promoters’ contribution
subject to lock-in, will not be disposed / sold / transferred by the promoters during the period starting from the date of
filing the draft prospectus with the Board till the date of commencement of lock-in period as stated in the draft
prospectus.

PLACE: LEAD MERCHANT BANKER(S) TO THE ISSUE DATE: WITH

HIS/ THEIR SEAL (S)

ANNEXURE TO THE DUE DILIGENCE CERTIFICATE FOR THE ISSUE OF _______________________ BY

______________________________LIMITED

1. Memorandum and Articles of Association of the Company.

2. Letter of Intent/SIA Registration/Foreign Collaboration Approval/Approval for import of plant and machinery, if
applicable.
3. Necessary clearance from governmental, statutory, municipal authorities etc. for implementation of the project,
wherever applicable.
4. Documents in support of the track record and experience of the promoters and their professional competence.
5. Listing agreement of the Company for existing securities on the Stock Exchanges.
6. Consent letters from Company's auditors, Bankers to issue, Bankers to the Company, Lead Merchant Bankers,
Brokers and where applicable, Proposed Trustees.
7. Applications made by the company to the financial institutions/banks for financial assistance as per object of the
Issue and copies of relative sanction letters.
8. Underwriting letters from the proposed underwriters to the issue.
9. Audited Balance Sheets of the Company/Promoter companies for relevant periods.
9. Auditors certificate regarding tax-benefits available to the Company, Shareholders and Debenture holders.
11. Certificate from Architects or any other competent authority on project impl ementation schedule furnished by the
company, if applicable.
Page 223 of 332
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(Clause 5.3.3.1)

FORMAT OF DUE DILIGENCE CERTIFICATE TO BE GIVEN BY LEAD MERCHANT

BANKER(S) ALONGWITH DRAFT OFFER DOCUMENT

To,

SECURITIES AND EXCHANGE BOARD OF INDIA

Dear Sirs,

SUB.: ISSUE OF ____________________ BY _______________LTD.

We, the under noted Lead Merchant Banker (s) to the above mentioned forthcoming issue
state as follows:

1. We have examined various documents including those relating to litigation like

commercial disputes, patent disputes, disputes with collaborators etc. and other
materials more particularly referred to in the Annexure hereto in connection with the
finalisation of the draft prospectus/letter of offer pertaining to the said issue;

2. On the bas is of such examination and the discussions with the company, its directors
and other officers, other agencies, independent verification of the statements
concerning the objects of the issue, projected profitability, price justification and the
contents of the documents mentioned in the Annexure and other papers furnished by
the company, WE CONFIRM that:

(a) the draft prospectus/letter of offer forwarded to the Board is in conformity with the
documents, materials and papers relevant to the issue;

12. Reports from Government agencies / expert agencies / consultants / company regarding market demand and supply
for the product, industry scenario, standing of the foreign collaborators, etc.
13. Documents in support of the infrastructural facilities, raw material availability, etc.
14. Auditors' Report indicating summary of audited accounts for the period including that of subsidiaries of the company.
15. Stock Exchange quotations of the last 3 years duly certified by regional stock exchange in case of an existing
company.
16. Applications to RBI and approval thereof for allotment of shares to non-residents, if any, as also for collaboration
terms and conditions.
17. Minutes of Board and General Body meetings of the company for matters which are in the prospectus.
18. Declaration in Form 32 from Directors (for particulars of Directorship) or the Company Secretary's certificate in this
regard.
19. Revaluation certificate of company's assets given by Government Valuer or any other approved Valuer.
20. Environmental clearance as given by Pollution Control Board of the State Government or the Central Government
as applicable.
21. Certificate from company's solicitors in regard to compliance of legal provisions of the Prospectus as also
applicability of FERA/MRTP provisions to the company.
22. Other documents, reports etc. as are relevant / necessary for true, fair and adequate disclosures in the draft
prospectus / letter of offer (to give details).
23. True copy of the Board resolution passed by the issuer authorising a representative of the Registrar to act on its
behalf in relation to handling of stockinvests.

PLACE: LEAD MERCHANT BANKER (S) TO THE ISSUE WITH HIS / THEIR SEAL (S)

DATE:”
Page 224 of 332
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(b) all the legal requirements connected with the said issue as also the guidelines,
instructions, etc. issued by the Board, the Government and any other competent
authority in this behalf have been duly complied with; and

(c) the disclosures made in the draft prospectus / letter of offer are true, fair and
adequate to enable the investors to make a well informed decision as to the
investment in the proposed issue.

3. We confirm that besides ourselves, all the intermediaries named in the prospectus/letter
of offer are registered with the Board and that till date such registration is valid.

4. We have satisfied ourselves about the worth of the underwriters to fulfil their
underwriting commitments.

5. We certify that written consent from shareholders has been obtained for inclusion of
their securities as part of promoters’ contribution subject to lock-in and the securities
proposed to form part of promoters’ contribution subject to lock-in, will not be disposed /
sold / transferred by the promoters during the period starting from the date of filing the
draft prospectus with the Board till the date of commencement of lock-in period as
stated in the draft prospectus.

PLACE: LEAD MERCHANT BANKER(S) TO THE ISSUE

DATE: WITH HIS/ THEIR SEAL (S)

Page 225 of 332

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ANNEXURE TO THE DUE DILIGENCE CERTIFICATE FOR THE ISSUE OF

_______________________ BY ______________________________LIMITED

1. Memorandum and Articles of Association of the Company.

2. Letter of Intent/SIA Registration/Foreign Collaboration Approval/Approval for m

i port of
plant and machinery, if applicable.

3. Necessary clearance from governmental, statutory, municipal authorities etc. for

implementation of the project, wherever applicable.

4. Documents in support of the track record and experience of the promoters and their
professional competence.

5. Listing agreement of the Company for existing securities on the Stock Exchanges.

6. Consent letters from Company's auditors, Bankers to issue, Bankers to the Company,
Lead Merchant Bankers, Brokers and where applicable, Proposed Trustees.

7. Applications made by the company to the financial institutions/banks for financial

assistance as per object of the Issue and copies of relative sanction letters.

8. Underwriting letters from the proposed underwriters to the issue.

9. Audited Balance Sheets of the Company/Promoter companies for relevant periods.

10. Auditors certificate regarding tax-benefits available to the Company, Shareholders and
Debenture holders.

11. Certificate from Architects or any other competent authority on project implementation
schedule furnished by the company, if applicable.

12. Reports from Government agencies / expert agencies / consultants / company

regarding market demand and supply for the product, industry scenario, standing of the
foreign collaborators, etc.

13. Documents in support of the infrastructural facilities, raw material availability, etc.

14. Auditors' Report indicating summary of audited accounts for the period including that of
subsidiaries of the company.

15. Stock Exchange quotations of the last 3 years duly certified by designated stock
exchange in case of an existing company.

16. Applications to RBI and approval thereof for allotment of shares to non-residents, if any,
as also for collaboration terms and conditions.

17. Minutes of Board and General Body meetings of the company for matters which are in
the prospectus.
Page 226 of 332
 (Updated till May 8, 2006 )

18. Declaration in Form 32 from Directors (for particulars of Directorship) or the Company
Secretary's certificate in this regard.

19. Revaluation certificate of company's assets given by Government Valuer or any other
approved Valuer.

20. Environmental clearance as given by Pollution Control Board of the State Government
or the Central Government as applicable.

21. Certificate from company's solicitors in regard to compliance of legal provisions of the
Prospectus as also applicability of FERA/MRTP provisions to the company.

22. Other documents, reports etc. as are relevant / necessary for true, fair and adequate
disclosures in the draft prospectus / letter of offer (to give details).

320
23. (Deleted)

PLACE: LEAD MERCHANT BANKER (S) TO THE DATE:

ISSUE WITH HIS / THEIR SEAL (S)

320
Omitted the following clause vide SEBI Circular No. SEBI/CFD/DIL/DIP/14/2005/25/1 dated January 25, 2005:
“True copy of the Board resolution passed by the issuer authorising a representative of the Registrar to act on its behalf in
relation to handling of stockinvests”.
Page 227 of 332
 (Updated till May 8, 2006 )
321
(SCHEDULE III-A)

(See clause 5.3.3.1A)

FORMAT OF DUE DILIGENCE CERTIFICATE TO BE GIVEN BY THE DEBENTURE

TRUSTEE BEFORE OPENING OF THE ISSUE

To,

SECURITIES AND EXCHANGE BOARD OF INDIA

Dear Sirs,

SUB.: ISSUE OF ____________________ BY _______________LTD.

We, the under noted Debenture Trustee (s) to the above mentioned forthcoming issue state as
follows:

(1) We have examined various documents pertaining to the security to be created for the
said issue and other such relevant documents.

(2) On the basis of such examination and of the discussions with the company, its directors
and other officers, other agencies and of independent verification of the various relevant
documents, WE CONFIRM that:

(a) The company has made adequate provisions for and/or has taken steps to provide
for adequate security for the debentures to be issued.

(b) The company has obtained all the permissions necessary for creating security on
the said property (ies).

(c) The company has made all the relevant disclosures about the security and also its
continued obligations towards the debenture holders.

(d) All disclosures made in the draft prospectus / letter of offer with respect to the
security are true, fair and adequate to enable the investors to make a well informed
decision as to the investment in the proposed issue.

(3) We have satisfied ourselves about the ability of the company to service the debentures.

PLACE DEBENTURE TRUSTEE TO THE

DATE:” ISSUE WITH HIS SEAL

321
Inserted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003.
Page 228 of 332
 (Updated till May 8, 2006 )

SCHEDULE IV

[Clause 5.3.3.2 (ii)]

FORMAT FOR DUE DILIGENCE CERTIFICATE AT THE TIME OF FILING THE OFFER
DOCUMENT WITH ROC

To,

Securities and Exchange Board of India

Mumbai/Chennai/New Delhi/Calcutta

Dear Sir(s),

Sub: Public issue of ______shares of _______ etc. (Details of the issue)

This is to certify that the offer document filed with Registrar of companies on ______ was
suitably updated under intimation to the Board and that the said offer document contains all
the material disclosures in respect of the issuer company as on the said date.

We confirm that the registrations of all the Intermediaries named in the offer document are
valid as on date and that none of these intermediaries have been debarred from functioning
by any regulatory authority.

We confirm that written consent from shareholders has been obtained for inclusion of their
securities as part of promoters’ contribution subject to lock-in.

We further confirm that the securities proposed to form part of promoters’ contribution and
subject to lock-in, have not been disposed / sold / transferred by the promoters during the
period starting from the date of filing the draft prospectus with SEBI till date.

Yours faithfully,

Page 229 of 332

 (Updated till May 8, 2006 )

SCHEDULE V

[Clause 5.3.3.2(iii)]

FORMAT FOR DUE DILIGENCE CERTIFICATE AT THE TIME OF OPENING OF THE

ISSUE.

To,

Securities and Exchange Board of India

Mumbai/Chennai/New Delhi/Calcutta

Dear Sir(s),

Sub: Public issue of ______shares of _______ etc. (Details of the issue)

This is to certify that all the material disclosures in respect of the issuer company as on the
date of opening of the issue have been made through the offer document filed with ROC on
_____and subsequent amendments/ advertisements (if applicable) dated ______.

We confirm:

a) that the registrations of all the Intermediaries named in the offer document are valid
as on date and that none of these intermediaries have been debarred from
functioning by any regulatory authority as on date.

b) that written consent from shareholders has been obtained for inclusion of their
securities as part of promoters’ contribution subject to lock-in

c) that the securities proposed to form part of promoters’ contribution and subject to lock-
in, have not been disposed / sold / transferred by the promoters during the period
starting from the date of filing the draft prospectus with SEBI till date.

d) that the abridged prospectus contains all the disclosures as specified in the SEBI
guidelines for Disclosure and Investor Protection.

Yours faithfully,

Page 230 of 332

 (Updated till May 8, 2006 )

SCHEDULE VI

[Clause 5.3.3.2(iv)]

FORMAT FOR DUE DILIGENCE CERTIFICATE AFTER THE ISSUE HAS OPENED BUT
BEFORE IT CLOSES FOR SUBSCRIPTION.

To,

Securities and Exchange Board of India

Mumbai/Chennai/New Delhi/Calcutta

Dear Sir(s),

Sub: Public issue of ______shares of _______ etc. (Details of the issue)

This is to certify that all the material disclosures in respect of the issuer company as on date
have been made through the offer document filed with ROC on _____and subsequent
amendments/ advertisements (if applicable) dated ______.

We confirm that the registrations of all the Intermediaries named in the offer document are
valid as on date and that none of these intermediaries have been debarred from functioning
by any regulatory authority as on date.

We also confirm that the securities proposed to form part of promoters’ contribution and subject
to lock-in, have not been disposed / sold / transferred by the promoters during the period
starting from the date of filing the draft prospectus with SEBI till date.

Yours faithfully,

Page 231 of 332

 (Updated till May 8, 2006 )

SCHEDULE VII

[Clause 5.9.1)(c)]

MANDATORY COLLECTION CENTRES

A. NORTHERN REGION
S. No. Exchange City
1. Ludhiana Stock Exchange Ludhiana
2. Delhi Stock Exchange Delhi
3. Jaipur Stock Exchange Jaipur
4. U.P. Stock Exchange Kanpur

B. SOUTHERN REGION
S. No. Exchange City
1. Hyderabad Exchange Hyderabad
2. Bangalore Stock Exchange Bangalore
3. Coimbatore Stock Exchange Coimbatore
4. Cochin Stock Exchange Cochin
5. Madras Stock Exchange Madras
6. Mangalore Stock Exchange Mangalore

C. EASTERN REGION
S. No. Exchange. City
1. Calcutta Stock Exchange Calcutta
2. Gauhati Stock Exchange Gauhati
3. Magadh Stock Exchange Patna
4. Bhubaneswar Stock Exchange Bhubaneswar

D. WESTERN REGION
S. No. Exchange Cit y
1. Bombay Stock Exchange Bombay
2. National Stock Exchange Bombay
3. OTC Exchange of India Bombay
4. Pune Stock Exchange Pune
5. M P Stock Exchange Indore
6. Vadodara Stock Exchange Vadodara
7. Ahmedabad Stock Exchange Ahmedabad
8. Saurashtra Kutch Stock Exchange Rajkot

Page 232 of 332

 (Updated till May 8, 2006 )
322
(SCHEDULE VIIA)

(Clause 6.1.1)

ORDER OF PRESENTATION OF DISCLOSURES IN PROSPECTUS

SR. CONTENTS OF OFFER DOCUMENT

NO
.
I. Cover Pages
1. Front Cover Pages:
(i) Issue Details:
(a) Logo, name, previous name, if any, address, telephone number, fax
number, contact person, website address and e-mail address of the
issuer company.
(b) Nature, number, price and amount of instruments offered and issue
size, as may be applicable.
(c) Risks in relation to first issue.
(d) General risk regarding investments in equity.
(e) Issuer's Absolute Responsibility clause.
(f) Logo, names and addresses of all the Lead Merchant Bankers with
their titles who file the prospectus with the Board, along with their
telephone numbers, fax numbers, website addresses and e-mail
addresses.
(g) Logo, names of the Registrar to the Issue, along with its telephone
number, fax number, website address and e-mail address.
(h) Issue Schedule.
(i) Credit Rating, if applicable.
(j) Names of the Stock Exchanges where listing is proposed along with
details of in-principle approval.
2. Back Cover Pages.
II. Table of Contents
To include all the main heads.
III. Definitions and Abbreviations
1. Conventional/ General terms.
2. Offering-related Terms.
3. Company/ Industry-related Terms.
4. Abbreviations.
IV. Risk Factors
1. Forward-looking Statements and Market Data, if any (to be disclosed on
voluntary basis).
2. Risk Factors:
(i) Risks envisaged by Management.
(ii) Proposals, if any, to address the risks.
(iii) Notes to the risk factors.
V. Introduction
1. Summary:

322
Inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/14/2005/25/1 dated January 25, 2005.
Page 233 of 332
 (Updated till May 8, 2006 )

(i) Summary of the industry and business of the issuer company.

(ii) Offering details in brief.
(iii) Summary Consolidated Financial, Operating and Other Data.
2. General Information:
(i) Name, address of registered office and the registration number of the
issuer company, along with the address of the Registrar of Companies
where the issuer company is registered.
(ii) Board of Directors of the issuer company.
(iii) Brief details of the Chairman, Managing Director, Whole Time Director,
etc.
(iv) Names, addresses, telephone numbers, fax numbers and e-mail
addresses of the Company Secretary, Legal Advisor and Bankers to the
Company.
(v) Name, address, telephone number, fax number and e-mail address of the
Compliance Officer.
(vi) Names, addresses, telephone numbers, fax numbers, contact person,
website addresses and e-mail addresses of the Merchant Bankers, Co-
Managers, Registrars to the Issue, Bankers to the Issue, Brokers to the
Issue, Syndicate members, etc.
(vii) Names, addresses, telephone numbers, fax numbers and e-mail
addresses of the auditors of the issuer company.
(viii) Statement of interse allocation of responsibilities among Lead Managers.
(ix) Credit Rating (in case of debenture issue).
(x) Names, addresses, telephone numbers, fax numbers, website addresses
and e-mail addresses of the trustees under debenture trust deed (in case
of debenture issue).
(xi) Name of the monitoring agency, if applicable.
(xii) Where the project is being appraised, name, address, telephone number
and e-mail address of the appraising entity.
(xiii) Book Building Process in brief.
(xiv) Details of Underwriting, if any.
3. Capital Structure:
(i) Capital structure.
(ii) Classes of shares, if applicable.
(iii) Notes to capital structure.
4. Objects of the Offering:
(i) Funds Requirement.
(ii) Funding Plan (Means of Finance).
(iii) Appraisal.
(iv) Schedule of Implementation.
(v) Funds Deployed.
(vi) Sources of Financing of Funds already deployed.
(vii) Details of Balance Fund Requirement.
(viii) Interim Use of Funds.
(ix) Basic Terms of Issue.
(x) Basis for issue price.
(xi) Tax Benefits.
VI. About the Issuer Company
1. Industry overview.
Page 234 of 332
 (Updated till May 8, 2006 )

2. Business overview.
(i) Details of the business of the issuer company:
(a) Location of the project.
(b) Plant, machinery, technology, process, etc.
(c) Collaborations, any performance guarantee or assistance in
marketing by the collaborators.
(d) Infrastructure facilities for raw materials and utilities like water,
electricity, etc.
(e) Products/ services of the company.
(ii) Business strategy:
(a) Brief statement about business strategy.
(b) Brief statement about future prospects, including capacity & capacity
utilization and projections.
(iii) Competitive strengths (to be disclosed on a voluntary basis).
(iv) Insurance (to be disclosed on a voluntary basis).
(v) Property.
(vi) Purchase of property.
3. Key Industry-Regulation (if applicable).
4. History and Corporate Structure of the issuer company:
(i) History and Major Events.
(ii) Main objects.
(iii) Subsidiaries of the issuer company, if any and their businesses.
(iv) Shareholders agreements.
(v) Other agreements.
(vi) Strategic partners.
(vii) Financial partners.
5. Management:
(i) Board of Directors.
(ii) Compensation of Managing Directors/ Whole time Directors.
(iii) Compliance with Corporate Governance requirements.
(iv) Shareholding of Directors, including details of qualification shares held by
them.
(v) Interest of the Directors.
(vi) Change, if any, in the directors in last three years and reasons thereof,
wherever applicable.
(vii) Management Organisation Structure.
(viii) Details regarding Key Management Personnel.
(ix) Employees .
(x) Disclosures regarding employees stock option scheme/ employees stock
purchase scheme of the issuer company, if any, as required by the
Guidelines or Regulations of the Board relating to Employee Stock Option
Scheme and Employee Stock Purchase Scheme.
(xi) Payment or Benefit to Officers of the Company (non-salary related).
6. Promoters/ Principal Shareholders:
(i) Details about promoters who are individuals.
(ii) Details about promoters which are companies.
(iii) Common pursuits.
(iv) Interest of promoters.
(v) Payment or benefit to promoters of the issuer company.
Page 235 of 332
 (Updated till May 8, 2006 )

(vi) Related party transactions as per the Financial Statements.

7. Exchange rates (to be disclosed on voluntary basis).
8. Currency of presentation.
9. Dividend policy.
VII. Financial Statements
1. Selected Consolidated Financial and Operating data.
2. Financial information of the issuer company.
3. Financial information of group companies.
4. Changes in Accounting Policies in the last three years.
5. Management’s Discussion and Analysis of Financial Condition and
Results of Operations as Reflected in the Financial Statements:
(i) Overview of the business of the issuer company.
(ii) Significant developments subsequent to the last financial year.
(iii) Factors that may affect Results of the Operations.
(iv) Discussion on Results of Operations.
(v) Comparison of recent financial year with the previous financial years (last
three years) on the major heads of the Profit & Los Statement.
(vi) Liquidity and Capital Resources (to be disclosed on voluntary basis).
(vii) Capital Expenditure (to be disclosed on voluntary basis).
(viii) Foreign Exchange Risk (to be disclosed on voluntary basis).
(ix) Interest rate Risk (to be disclosed on voluntary basis).
(x) Recent accounting pronouncements (to be disclosed on voluntary basis).
VIII Legal & Other Information
.
1. Outstanding litigations and Material Developments
(i) Outstanding litigations involving the issuer company.
(ii) Outstanding litigations against the issuer company’s subsidiaries (if
applicable).
(iii) Outstanding litigations involving the promoter and group companies.
(iv) Material developments since the last balance sheet date.
2. Government approvals/ Licensing Arrangements:
(i) Investment approvals (FIPB/ RBI, etc.).
(ii) All government and other approvals.
(iii) Technical approvals.
(iv) Letter of intent/ industrial license and declaration of the Central
Government/ RBI about non-responsibility for financial soundness or
correctness of statements.
IX. Other Regulatory and Statutory Disclosures
1. Authority for the issue and details of the resolution passed for the issue.
2. Prohibition by SEBI.
3. Eligibility of the Issuer Company to enter the Capital market.
4. Disclaimer clause.
5. Caution.
6. Disclaimer in respect of jurisdiction.
7. Disclaimer clause of the stock Exchanges.
8. Disclaimer clause of the Reserve Bank of India (if applicable).
9. Filing of prospectus with the Board and the Registrar of Companies.
10. Listing.
11. Impersonation.
Page 236 of 332
 (Updated till May 8, 2006 )

12.Consents.
13.Expert opinion obtained, if any.
14.Expenses of the issue.
15.Details of fees payable .
16.Underwriting commission, brokerage and selling commission.
17.Previous rights and public issues if any (during the last five years).
18.Previous issues of shares otherwise than for cash.
19.Commission and brokerage on previous issues.
20.Particulars in regard to the issuer company and other listed companies under
the same management within the meaning section 370 (1)(B) of the Companies
Act, 1956 which made any capital issue during the last three years.
21. Promise vis -à-vis performance.
22. Outstanding debentures or bonds and redeemable preference shares and other
instruments issued by the issuer company outstanding as on the date of
prospectus and terms of issue.
23. Stock market data for equity Shares of the issuer company, if listed.
24. Mechanism evolved for redressal of investor grievances.
25. Change, if any, in the auditors during the last three years, and reasons, thereof.
26. Capitalisation of reserves or profits (during last five years).
27. Revaluation of assets, if any (during last five years).
X. Offering Information
1. Terms of the issue:
(i) Ranking of equity shares.
(ii) Mode of payment of dividend.
(iii) Face value and issue price/ floor price/ price band.
(iv) Rights of the equity shareholder.
(v) Market lot.
(vi) Nomination facility to investor.
(vii) Minimum subscription.
(viii) Arrangements for Disposal of Odd Lots.
(ix) Restrictions, if any, on transfer and transmission of shares/ debentures
and on their consolidation/ splitting.
2. Issue procedure:
(i) Fixed price issue or book building procedure as may be applicable,
including details regarding bid form / application form, who can bid/apply,
maximum and minimum bid/application size, bidding process, bidding,
bids at different price levels, etc.
(ii) Option to subscribe in the issue.
(iii) How to apply - availability of forms, prospectus and mode of payment.
(iv) Escrow mechanism:
(a) Escrow A/c. of the company.
(b) Escrow A/c. of the syndicate member.
(v) Terms of payment and payment into the Escrow Collection Account.
(vi) Electronic registration of bids.
(vii) Build up of the book and revision of bids.
(viii) Price discovery and allocation.
(ix) Signing of underwriting agreement.
(x) Filing of prospectus with the Registrar of Companies.
(xi) Announcement of pre-issue Advertisement.
Page 237 of 332
 (Updated till May 8, 2006 )

(xii) Issuance of Confirmation of Allocation note (“CAN”) and Allotment in the

Issue.
(xiii) Designated date.
(xiv) General instructions:
(a) Do’s.
(b) Don’ts.
(c) Instructions for completing the Bid form.
(d) Bidders bank details.
(e) Bids by NRIs or FIIs on a repatriation basis.
(xv) Payment instructions:
(a) Payment into escrow account of the Issuer Company.
(b) Payment into escrow account of the Syndicate member.
(xvi) Submission of bid form.
(xvii) Other instructions:
(a) Joint bids in the case of individuals.
(b) Multiple bids.
(c) Pan or GIR number.
(d) Company’s right to reject bids.
(e) Equity shares in demat form with NSDL or CDSL.
(f) Investor’s attention invited to contact the compliance officer in case of
any pre -issue/ post-issue related problems.
(xviii) Disposal of application and Application moneys.
(xix) Provisions of sub-section (1) of section 68A of the Companies Act, 1956
relating to punishment for fictitious applications.
(xx) Interest on refund of excess bid amount.
(xxi) Basis of allotment or allocation.
(xxii) Procedure and time of schedule for allotment and issue of certificates.
(xxiii) Method of proportionate allotment.
(xxiv) Letters of allotment or refund orders.
(xxv) Despatch of refund orders.
(xxvi) Interest in Case of Delay in Despatch of Allotment Letters/ Refund Orders
in Case of Public Issues.
(xxvii) Undertaking by the company.
(xxviii) Utilisation of Issue Proceeds.
(xxix) Restrictions on foreign ownership of Indian securities, if any.
(a) Investment by NRIs .
(b) Investment by FIIs.
XI. Description of Equity Shares and Terms of the Articles of Association
1. Rights of members regarding voting, dividend, lien on shares and the process
for modification of such rights and forfeiture of shares.
2. Main provisions of the Articles of Association.
XII. Other Information
1. List of material contracts and documents for inspection.
2. Declaration.

Page 238 of 332

 (Updated till May 8, 2006 )

SCHEDULE VIII

[323 (Clause 6.8.3.2 (b))]

PROMOTERS’ CONTRIBUTION AND LOCK-IN

Sr. Date of Date Consideration No. of Face Issue % of Lock-in

No. Allotment when (Cash, bonus, shares Value Price Post- Period
made kind, etc.) Issue
fully paid-up
paid -up capital

323
Substituted vide SEBI Circular No. SEBI/CFD/DIL/DIP/14/2005/25/1 dated January 25, 2005 for “Clause 6.4.2.1(b))”.
Page 239 of 332
 (Updated till May 8, 2006 )

SCHEDULE IX

[324 (Clause 6.8.3.2(c))]

PROMOTERS’ CONTRIBUTION AND LOCK-IN IN RESPECT OF PROMOTERS WHOSE

NAME FIGURE IN THE PROSPECTUS AS PROMOTERS 325 ()

Sr. Name of Date Date Consider- No. of Face Issue % of Lock-

No. the of When ation shares Value Price Post- in
promoter Allot- made (Cash, Issue Period
ment fully bonus, paid-up
paid-up kind, etc.) capital

324
Substituted vide SEBI Circular No. SEBI/CFD/DIL/DIP/14/2005/25/1 dated January 25, 2005 for “Clause 6.4.2.1(c)(ii)”.

325
Omitted the following words vide SEBI Circular No . SEBI/CFD/DIL/DIP/14/2005/25/1 dated January 25, 2005:
“IN THE PARAGRAPH ON “PROMOTERS AND THEIR BACKGROUND””.
Page 240 of 332
 (Updated till May 8, 2006 )

SCHEDULE X

[326 (Clause 6.10.2.7(b)(v))]

STATEMENT OF PROFITS AND LOSSES

Year ended March 31,

1991 1992 1993 1994 1995

(Rupees In Lacs)
Income
Sales :
Of products manufactured by the 1000 1240 1640 1800 1800
Company
Of products traded in by the Company 100 60 60 200 200
Total 1100 1300 1700 2000 2000
Other income 10 30 40 60 100
Increase (Decrease) in Inventories 40 (70) 60 180 310
1150 1260 1800 2240 2410
Expenditure
Raw Materials consumed 400 480 630 1110 1200
Staff Costs 200 220 240 340 400
Other manufacturing expenses 250 260 280 540 650
Administration Expenses 40 42 60 80 85
Selling and Distribution Expenses 110 120 130 190 250
Interest 60 55 90 200 140
1095 1227 1495 2635 2795
Net Profit before tax and 55 33 305 (295) (385)
extraordinary items
Taxation 25 12 144 (185) (235)
Net Profit before Extraordinary Items 30 21 161 (110) (150)
Extra-ordinary items (net of tax) - 49 (64) 800 1000
Net Profit after Extraordinary Items 30 70 97 700 850

326
Substituted vide SEBI Circular No. SEBI/CFD/DIL/DIP/14/2005/25/1 dated January 25, 2005 for “Clause 6.18.7(iv)(b)”
Page 241 of 332
 (Updated till May 8, 2006 )

SCHEDULE XI

[327(Clause 6.1 0.2.7 (b)(vi))]

STATEMENT OF ASSETS AND LIABILITIES

As at March 31 ST

1991 1992 1993 1994 1995

(Rupees in lacs)
A. Fixed Assets :
Gross Block 440 750 900 922 1350
Less Depreciation (55) (107) (170) (250) (320)
Net Block 385 643 730 672 1030
Less : Revaluation Reserve (100) (95) (89) (83) (75)
Net Block after adjustment for
Revaluation Reserve 285 548 641 589 955
Current Assets, Loans and
B. Advances :
Inventories 485 420 720 1030 3200
Sundry Debtors 28 30 30 500 2500
Cash and Bank Balances 13 14 22 200 400
Loans and Advances 78 100 85 1100 2000
Other Current Assets 70 80 55 200 220
674 644 912 3080 8320
Liabilities and Provisions :
C. Secured Loans 376 607 616 620 460
Unsecured Loans 3 3 - - 4000
Current Liabilities and Provisions 250 180 330 460 1100
(629) (790) (946) (1080) (5560)
D. Networth 330 402 607 2589 3715
E. Represented by
1. Share Capital 300 300 400 1600 2000
2. Reserves 130 197 296 1072 1790
Less Revaluation Reserve (100) (95) (89) (83) (75)
Reserves (Net of Revaluation 30 102 207 989 1715
Reserves)
Networth 330 402 607 2589 3715

327
Substituted vide SEBI Ci rcular No. SEBI/CFD/DIL/DIP/14/2005/25/1 dated January 25, 2005 for “Clause 6.18.7.(vi)”.
Page 242 of 332
 (Updated till May 8, 2006 )

SCHEDULE XII

[328 (Clause 6.10.2.7(i)(iv))]

TAX SHELTER STATEMENT

YEAR ENDED MARCH 31 ST

1991 1992 1993 1994 1995

(Rupees in lacs )
Tax at Notional Rate 28 70 89 546 675
Adjustments :
Export Profits (4) (5) (20) (100) (120)
Difference between Tax Depreciation (6) (8) (9) (10) (10)
and Book Depreciation
Other Adjustments 3 3 4 4 5
Net Adjustments (7) (10) (25) (106) (125)

Tax Saving thereon : (3) (5) (13) (49) (58)

Total Taxation 25 65 76 497 617
Taxation on extra-ordinary Items - 53 (68) 682 852
Tax on profits before extra-ordinary 25 12 144 (185) (235)
items

328
Substituted vide SEBI Circular No. SEBI/CFD/DIL/DIP/14/2005/25/1 dated January 25, 2005 for “Clause 6.18.7.(viii)”.
Page 243 of 332
 (Updated till May 8, 2006 )

SCHEDULE XIII

[329 (Clause 6.1 0.2.7(g)(iii))]

CAPITALISATION STATEMENT

Pre -issue as As Adjusted

at 30-6-1995 for issue

(Rupees in lac s)

Short-Term Debt 1870 1870

Long Term Debt 4370 4370

Shareholders Funds

Share Capital 4000 4450

Reserves 14570 37520

Total Shareholders Funds 18570 41940

Long Term Debt/Equity 0.24:1 0.10:1

Note:
Since 31-3-1995 (which is the last date as of which financial information has been given in
para of this document) share capital was increased form Rs.3000 lacs to Rs.4000 lacs by
the issue of bonus shares in the ratio of 1 share for every 3 shares.

329
Substituted vide SEBI Circular No. SEBI/CFD/DIL/DIP/14/2005/25/1 dated January 25, 2005 for “Clause 6.18.7.(iii)”.
Page 244 of 332
 (Updated till May 8, 2006 )
330
(Deleted)

330
O mitted the following Schedule XIV vide SEBI Circular No. SEBI/CFD/DIL/DIP/14/2005/25/1 dated January 25, 2005:

“SCHEDULE XIV

(Clause 6.12.2(iii))

FORM OF AUDITOR’S CERTIFICATE REGARDING PROFIT FORECAST

The Directors
XYZ Company Limited

Dear Sirs,

We have reviewed the accounting policies, standards and calculations adopted in arriving at the forecast of the profit
after taxation but before extraordinary items of XYZ Company Limited for the year ending _________for which the
directors of the company are solely responsible as set out in the section headed “Profit Forecast” in the prospectus of
the Company dated _____ (the “Prospectus”). The forecast has been prepared by the directors of the Company based
on the unaudited accounts of the company for the months ended _______ and a forecast of the results of the
Company for the remaining _____ months of the year ending ________ on the basis of that the company has been in
existence thr oughout the entire year.

In our opinion, the profit forecast, as far as the accounting policies, standards and calculations are concerned, has
been properly complied in accordance with the assumptions made by the directors of the company as set out in the
Prospectus / offer documents and is presented on the basis consistent in all material respects with the accounting
policies normally adopted by the Company as set out in the report on the profits and losses of the Company for the
years ended ___________ made by us and disclosed in the Prospectus.

Yours faithfully,”
Page 245 of 332
 (Updated till May 8, 2006 )

SCHEDULE XV

[331 (Clause 6.8.4.11(a)(vii))]

BASIS FOR ISSUE PRICE

1. Adjusted Earning Per Share (EPS)

(a) 1992-93 Rs. .41

(b) 1993-94 Rs. 8.39
(c) 1994-95 Rs. 13.82
(d) Weighted Average Rs. 10.94

2. Price/ Earning Ration (P/E) in relation to Issue Price

(a) Based on 94/95 EPS 37.63

(b) Industry P/E
(i) Highest 61.2
(ii) Lowest 0.8
(iii) Average 25.3

(*Based on Economic Times of 26/6/95)

3. Return on Net Worth

(a) 1992-93 27.36%

(b) 1993-94 28.77%
(c) 1994-95 33.45%
(d) Weighted Average 30.88%

4. Minimum Return on Total Net Worth after Issue

Needed to maintain EPS at Rs.13.82
14.65%

5. Net Asset Value (NAV)

(a) As at 31-3-1995 Rs. 46.40

(b) After issue Rs. 94.29
(c) Issue price Rs. 520.00

331
Substituted vide SEBI Circular No. SEBI/CFD/DIL/DIP/14/2005/25/1 dated January 25, 2005 for “Clause 6.13.1(g)”.
Page 246 of 332
 (Updated till May 8, 2006 )
332
(SCHEDULE XVI)

332
Substituted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 for the following:

“SCHEDULE XVI

(Clause 7.2.1)

POST ISSUE MONITORING REPORTS

PUBLIC ISSUE

SUBSCRIPTION STATUS : (SUBSCRIBED / UNDERSUBSCRIBED)

3-DAY MONITORING REPORT

(RESPONSIBILITY: POST ISSUE LEAD MERCHANT BANKER)
(To be submitted IN DUPLICATE : Within 3 days from closure of the Public Issue)

1. Name of the Issuer Company :

2. ssue opening date :
3. Earliest closing date :
4. Actual closing date :
5. Date of filing prospectus with RoC :
6. Issue Details (as per the prospectus)
6.1 Nature of instrument : (Equity/FCD/PCD/NCD/Others,
Etc.)
6.2 Offer price per instrument
for different categories :
6.3 Amt. per instrument on application
for different categories :
6.4 Issue Size : (Rs lakhs)

(a) Promoters' contribution :

(a)(i) Date of submission of auditors' certificate to SEBI for receipt of
promoters' contribution :
(b) Amount through offer document :
(including reserved categories
and net public offer)

(b) (i) Reserved Category Amount reserved (Rs lakhs)

Firm basis Competitive basis
-------------------------------------------------------------------------------
Mutual funds
FIS / Banks
FIIs
NRIs / OCBs
Employees
Others (Please specify)
-------------------------------------------------------------------------------
(b)(ii) Net public offer :

7(a). Provisional Subscription Details of Net Public offer (including unsubscribed portion of reserved categories
i) Total amount to be collected on application : Rs lakhs
ii) Amount collected on application : Rs lakhs
iii) % subscribed i.e. % of (ii) to (i) : (%)

7(b). Amount subscribed by the reserved categories on competitive basis : Rs. lakhs

8) Please tick mark whether 90% minimum subscription of the amount through offer document is collected.
(i) YES (ii) NO

Signed by ... Signed by .....

Registrars to the Issue Company

Signed by.....
Lead Merchant Banker(s)

Place: Date :
Page 247 of 332
 (Updated till May 8, 2006 )

Note: This is the responsibility of Lead Merchant banker(s) to give correct information after verifying it from the company
and the Registrar to the issue.

PUBLIC ISSUE

SUBSCRIPTION STATUS : (SUBSCRIBED / UNDERSUBSCRIBED)

78-DAY MONITORING REPORT

(RESPONSIBILITY: POST ISSUE LEAD MERCHANT BANKER)
(To be submitted IN DUPLICATE: Within 78 days from closure of the public issue)

1. Name of the Company :

2. Issue opening date :
3. Actual closing date :
4. 3-Day Report
Due on :
Submitted on :
5. No. of Collecting Banks :
(Allso specify no. of Bank Branches)
6. Bank- wise names of branches which did
not submit final consolidated certificates
within 21 days from closure of issue and
mention the dates when they actually
submitted :
7. Subscription Details

a) Public Offer (Net) (Including unsubscribed portion of reserved category

added back to net public offer)

1) No. of applications recd. :

2) No. of instruments applied for :
3) Amount of subscription received : Rs.
4) No. of times issue subscribed :
5) No. of applications
accompanied by stock invests :
6) No. of instruments applied
through stock invest :
7) Amount of subscription received
through stock invest : Rs.
8) Percentage of subscription
through stock invest in total
subscription :

(b) Information relating to reserved categories

Reservations No.of applications No. of instruments Amount

applied for subscribed
------------------------------------------------------------------------------------------------
NRIs
FIs
FIIs
MFs
Employees
Others
(Specify)
-------------------------------------------------------------------------------------------------
The firm allottees who did not meet their commitments though mentioned in the prospectus (Please give their names
and amount and whether the promoters have subscribed to that amount before opening of the issue).

9. Actual Date of finalisation of Basis of Allotment (enclose copy) :

10. Allotment Details

10.1 No. of successful allottees per 1 lac shares :
10.2 No. of successful allottees from
stock-invest applicants :
10.3 No. of instruments allotted to
stockinvest applicants :

Page 248 of 332

 (Updated till May 8, 2006 )

10.4 Percentage of stockinvest

allottees in total allottees :
10.5 No. of unsuccessful allottees :

11. Actual Date(s) of completion of

despatch of -
(a) Refund Orders :
(b) Cancelled stock invests :
(c) Certificates/Allotment Letters :
(d) Certificate/allotment letter against
application by stock Invest :
(e) Reasons for delay in
despatch, if any :
(f) Whether interest paid for delayed
period, if so, for which period :
12. If there is a reservation for NRIs, date(s)
of completion of despatch of -
(a) Refund Orders :
(b) Cancelled Stockinvests :
(c) Certificate/Allotment Letters :
(d) Reasons for delay in despatch, if any :
(e) Whether interest paid for delayed period :
(f) Date of submission of application to the
RBI for approval for despatch of share
certificates :
(g) Date of approval received from RBI :

13. Amount of refund due : Rs.

14. Refund Banker(s) (Name and Address):
15. Date of transfer of refund
amount to Refund Banker, if any :
16. Date of completion of despatch of refund orders/
cancelled stock invests :
17 Name of Regional Stock Exchange :
18 Names of other stock exchanges
where listing is sought :
19. Date on which application
was filed with each stock exchange
for listing of instruments :
20. Date when listing and trading permission
given by each stock exchange (Enclose copies
of permission letters of stock exchanges) :
21. Reasons for delay in listing for trading, if any :

TO BE FILLED UP IN CASE OF UNDERSUBSCRIBED ISSUES ONLY:

1. If the issue underwritten, menti on the

amount of issue underwritten :
2. Extent of under subscription
on the date of closure of the issue
a) Percentage :
b) Amount
3. Total no. of Underwriters :
3. If devolvement notices had not been issued,
mention how the shortfall was met :
5. No. of Underwriters to whom
devolvement notices had been issued :
6. Date of Issue of devolvement notices :
7. No. of Underwriters who
did not pay devolvement (Please give names,
amount underwritten and reasons for not paying) :
8. In case of default from underwriters,
mention how the shortfall was met :
9. In case where FIs/MFs had subscribed to make
up shortfall not as underwriter :

a) Name of FI/MF :
b) No. of Instruments applied for :

Page 249 of 332

 (Updated till May 8, 2006 )

c) Amount Received :

CERTIFIED that the information given above and also in the enclosures are true to the best of our knowledge and no
refund orders / allotment letters / certificates are pending for despatch in respect of the issue.

CERTIFIED that shares to be locked in are duly inscribed with the words "Share cannot be hypothecated / transferred / sold
till .........)

Signed by ... Signed by .....

Registrars to the Issue Company

Signed by.....
Lead Merchant Banker(s)

Place: Date :

Note:

(i) It is the responsibility of Lead Merchant banker(s) to give correct information after verifying the facts from the company
and the Registrar to the issue.

(ii) The lead merchant banker shall enclose a certificate from the refund banker that the amount of refund due from the
company to investors is deposited in a separate account giving details of the total amount deposited in the account
and date of deposit.

**********

RIGHTS ISSUE

SUBSCRIPTION STATUS : (SUBSCRIBED / UNDERSUBSCRIBED)

3-DAY MONITORING REPORT

(RESPONSIBILITY: POST ISSUE LEAD MERCHANT BANKER)
(To be submitted IN DUPLICATE: Within 3 days from closure of the Rights Issue)

1. Name of the Company :

2. Issue Opening date :
3. Actual closing date :
4. Date of filing letter of
offer with the stock Exchange :
5. Issue Details (as per the letter of offer) :

5.1 Basis of offer (Ratio) :

5.2 Nature of instrument :(Equity/FCD/PCD/NCD/Others, etc)
5.3 Offer price per instrument :
5.4 Amt. per instrument on application :
5.5 Issue Size : Amt in Rs lakhs
6. Record date :
7. Provisional Subscription Details of the issue:
i) Total Amount to be collected on application : Rs lakhs
ii) Amount collected on application : Rs lakhs
iii) % subscribed i.e. % of (ii) to (i): (%)
iv) Please tick mark whether 90% minimum subscription collected :

(i) YES (ii) NO

Signed by ... Signed by .....

Registrars to the Issue Company

Signed by.....
Lead Merchant Banker(s)
Place: Date :
Note:

It is the responsibility of Lead Merchant banker(s) to give correct information after verifying it from the company and the
Registrar to the issue.

Page 250 of 332

 (Updated till May 8, 2006 )

RIGHTS ISSUE

SUBSCRIPTION STATUS : (SUBSCRIBED / UNDERSUBSCRIBED)

50-DAY MONITORING REPORT

(RESPONSIBILITY: POST ISSUE LEAD MERCHANT BANKER)
(To be submitted IN DUPLICATE : Within 50 days from closure of the Rights Issue)

1. Name of the Company :

2. Issue Opening date :
3. Actual closing date :
4. Issue Details ( as per the letter of offer)
4.1 Basis of offer :
4.2 Nature of instrument : (Equity/FCD/PCD/NCD, etc.)
4.3 Offer price per instrument :
4.4 Amt. per instrument on application :
4.5 Issue Size : Rs in lakhs
5. 3 Day Report Due on :
Submitted on
6. No. of Collecting Banks :
(Also specify No. of Bank Branches)
7. Bank- wise names of branches which did
not submit final consolidated certificate within
21 days from closure of issue and mention
the dates when they actually submitted :
8. Details of Subscription
(i) percentage of rights taken up by-
a) Promoters :
b) Other Shareholders :
(ii) percentage of rights renounced by -
a) Promoters :
b) Others :
(iii) percentage of rights taken by
shareholders/ renounces :
(iv) percentage at the disposal of the
Board :
(v) Out of the unsubscribed portion as in
(vi) above, taken by:
(a) Promoters :
(b) Others :
9. Promoters shareholdings : No .of Shares Percentage
(a) Prior to the Issue :
(b) On Expanded Capital after the rights issue :
10. Date of finalisation of allotment (enclose
copy of the basis of allotment) :
11. (a) Name and Address of
Refund Banker :
(b) Amount of refund due :
( c ) Date of transfer of refund amount
to Refund Banker, if any :
12. Actual Date(s) of completion of
despatch of -
(a) Refund Orders :
(b) Certificate/Allotment Letters :
(c) Reasons for delay in despatch, if any
(c) Whether interest paid for delayed
period, if so, for which period :
13. Name of Regional Stock Exchange :
14. Names of other stock exchanges
where listing is sought :
15. 42nd day from the date of closure
of the issue :
16. Date on which application was filed with each
stock exchange for listing of instruments :
17. Date when listing and trading permission given
by each stock exchange (Enclose copies of
permission letters of stock exchanges) :

Page 251 of 332

 (Updated till May 8, 2006 )

(Clause 7.2.1)

POST ISSUE MONITORING REPORTS

PUBLIC ISSUE

SUBSCRIPT ION STATUS: (SUBSCRIBED/ UNDERSUBSCRIBED)

3-DAY MONITORING REPORT

(RESPONSIBILITY: POST ISSUE LEAD MERCHANT BANKER)

1. Name of the Issuer Company :

2. Issue opening date :
3. Earliest closing date :
4. Actual closing date :
5. Date of filing prospectus with RoC :
6. Issue Details (as per the prospectus)

18. Reason for delay in listing for trading, if any:

TO BE FILLED UP IN CASE OF UNDERSUBSCRIBED ISSUES ONLY:

1. Extent of under subscription on the date of

closure of the issue
a) Percentage :
b) Amount :
2. Details of Standby assistance, if any
a. No. of Underwriters :
b. No. of Underwriters who did not pay
devolvement (Please give names, amount
underwritten and reasons for not paying) :
3. In case where FIs/MFs had subscribed to make
up shortfall not as underwriter
a) Name of FI/MF :
b) No. of Instruments applied for :
c) Amount Received :

CERTIFIED that the information given above and also in the enclosures are true to the best of our knowledge and no
refund orders / allotment letters / certificates are pending for despatch in respect of the issue.

CERTIFIED that shares to be locked in are duly inscribed with the words "Share can not be hypothecated / transferred /
sold till .........)

Signed by ... Signed by .....

Registrars to the Issue Company

Signed by.....
Lead Merchant Banker(s)

Place: Date :

Note:

(i) It is the responsibility of Lead Merchant banker(s) to give correct information after verifying it from the company and
the Registrar to the issue.

(ii) The lead Merchant Banker shall enclose a certificate from the refund banker that the amount of refund due from the
company to investors is deposited in a separate account giving details of the total amount deposited in the account
and date of deposit.”
Page 252 of 332
 (Updated till May 8, 2006 )

6.1 Nature of instrument :(Equity/FCD/PCD/NCD/Others, etc.)

6.2 Offer price per instrument for different categories :
6.3 Amt. per instrument on application for different
categories :
6.4 Issue Size : (Rs lakhs)
(a) Promoters' contribution :
(a)(i) Date of submission of auditors' certificate
to SEBI for receipt of promoters'
contribution :
(b) Amount through offer document
(including reserved categories and net
public offer) :

(b)(i) Reserved Category Amount reserved (Rs lakhs)

Firm basis Competitive basis
Mutual funds
FIS / Banks
FIIs
NRIs / OCBs
Employees
Others (Please specify)

(b)(ii) Net public offer :

7(a) Provisional Subscription Details of Net Public offer (including unsubscribed portion of
reserved categories
i) Total amount to be collected on
application : Rs lakhs
ii) Amount collected on application : Rs lakhs
iii) % subscribed i.e. % of (ii) to (i) : (%)
7(b) Amount subscribed by the reserved
categories on competitive basis : Rs. lakhs
8. Please tick mark whether 90% minimum subscription of the amount through offer
document is collected.
(i) YES (ii) NO

Signed by.... Signed by.....

Registrars to the Issue Company

Signed by.....
Lead Merchant Banker(s)

Place: Date:

Note:
This is the responsibility of Lead Merchant banker(s) to give correct information after verifying it
from the company and the Registrar to the issue.

Page 253 of 332

 (Updated till May 8, 2006 )

PUBLIC ISSUE

SUBSCRIPTION STATUS: (SUBSCRIBED / UNDERSUBSCRIBED)

FINAL POST ISSUE MONITORING REPORT

(RESPONSIBILITY: POST ISSUE LEAD MERCHANT BANKER)

1. Name of the Company :

2. Issue opening date :
3. Actual closing date :
4. 3-Day Report
Due on :
Submitted on :
5. No. of Collecting Banks :
(Also specify no. of Bank Branches)
6. Bank-wise names of branches which did not
submit final consolidated certificates within
21days from closure of issue and mention the
dates when they actually submitted :
7. Subscription Details
a) Public Offer (Net) (Including unsubscribed
portion of reserved category added back
to net public offer)
1) No. of applications recd. :
2) No. of instruments applied for :
3) Amount of subscription received : Rs.
4) No. of times issue subscribed :
333
5) (Deleted)
334
6) (Deleted)
335
7) (Deleted)
336
8) (Deleted)
:
b) Information relating to reserved categories

Reservations No. of applications No. of instruments Amount

applied for subscribed
NRIs
FIs

333
Omitted the following vide SEBI Circular No. SEBI/CFD/DIL/DIP/14/2005/25/1 dated January 25, 2005:
“5)No. of applications accompaniedby stock invests :”

334
Omitted the following vide SEBI Circular No. SEBI/CFD/DIL/DIP/14/2005/25/1 dated January 25, 2005:
“6)No. of instruments applied throughstock invest :”

335
Omitted the following vide SEBI Circular No. SEBI/CFD/DIL/DIP/14/2005/25/1 dated January 25, 2005:
“7)Amount of subscription received through stock invest : Rs.”
336
Omitted the following vide SEBI Circular No. SEBI/CFD/DIL/DIP/14/2005/25/1 dated January 25, 2005:
“8)Percentage of subscription through stock invest in total subscription : “
Page 254 of 332
 (Updated till May 8, 2006 )

FIIs
MFs
Employees
Others
(Specify)
8. The firm allottees who did not meet their commitments though mentioned in the
prospectus (Please give their names and amount and whether the promoters have
subscribed to that amount before opening of the issue).
9. Actual Date of finalisation of Basis of Allotment
(enclose copy) :
10. Allotment Details
10.1 No. of successful allottees per 1 lac shares :
10.2 337(Deleted) :
10.3 338(Deleted) :
339
10.4 (Deleted)
10.5 No. of unsuccessful allottees :
11. Actual Date(s) of completion of despatch of:
(a) Refund Orders :
(b) Cancelled stock invests :
(c) Certificates/Allotment Letters :
(d) Certificate/allotment letter against
application by stock Invest :
(e) Reasons for delay in despatch, if any :
(f) Whether interest paid for delayed period,
if so, for which period :
12. If there is a reservation for NRIs, date(s) of
completion of despatch of:
(a) Refund Orders :
340
(b) (Deleted) :
(c) Certificate/Allotment Letters :
(d) Reasons for delay in despatch, if any :
(e) Whether interest paid for delayed period :
(f) Date o f submission of application to the
RBI for approval for despatch of share
Certificates :
(g) Date of approval received from RBI :
13. Amount of refund due : Rs.
14. Refund Banker(s) (Name and Address) :
15. Date of transfer of refund amount to Refund

337
Omitted the following vide SEBI Circular No. SEBI/CFD/DIL/DIP/14/2005/25/1 dated January 25, 2005:
“No. of suc cessful allottees from stock-invest applicants :”

338
Omitted the following vide SEBI Circular No. SEBI/CFD/DIL/DIP/14/2005/25/1 dated January 25, 2005:
“No. of instruments allotted to stockinvest applicants :”

339
Omitted the following vide SEBI Circular No. SEBI/CFD/DIL/DIP/14/2005/25/1 dated January 25, 2005:
“Percentage of stockinvest allottees in total allottees :”
340
Omitted the following vide SEBI Circular No. SEBI/CFD/DIL/DIP/14/2005/25/1 dated January 25, 2005:
“Cancelled Stockinvests”.
Page 255 of 332
 (Updated till May 8, 2006 )

Banker, if any :
16. Date of completion of despatch of refund
orders/ 341(Deleted) :
17. Name of Designated Stock Exchange :
18. Names of other stock exchanges where listing
is sought :
19. Date on which application was filed with each
stock exchange for listing of instruments :
20. Date when lis ting and trading permission given
by each stock exchange (Enclose copies of
permission letters of stock exchanges) :
21. Reasons for delay in listing for trading, if any :

341
Omitted the following vide SEBI Circular No. SEBI/CFD/DIL/DIP/14/2005/25/1 dated January 25, 2005:
“Cancelled Stockinvests”.
Page 256 of 332
 (Updated till May 8, 2006 )

TO BE FILLED UP IN CASE OF UNDERSUBSCRIBED ISSUES ONLY:

1. If the issue underwritten, mention the amount of

issue underwritten :
2. Extent of under subscription on the date of
closure of the issue
a) Percentage :
b) Amount :
3. Total no. of Underwriters :
4. If devolvement notices had not been issued,
mention how the shortfall was met :
5. No. of Underwriters to whom
devolvement notices had been issued :
6. Date of Issue of devolvement notices :
7. No. of Underwriters who did not pay devolvement
(Please give names, amount underwritten and
reasons for not paying) :
8. In case of default from underwriters, mention
how the shortfall was met :
9. In case where FIs/ MFs had subscribed to make
up shortfall not as underwriter :
a) Name of FI/MF :
b) No. of Instruments applied for :
c) Amount Received :

CERTIFIED that the information given above and also in the enclosures are true to the best of
our knowledge and no refund orders / allotment letters / certificates are pending for despatch in
respect of the issue.

CERTIFIED that shares to be locked in are duly inscribed with the words "Share cannot be
hypothecated / transferred / sold till .........)

Signed by ... Signed by .....

Registrars to the Issue Company

Signed by.....
Lead Merchant Banker(s)

Place: Date:

Note:
(i) It is the responsibility of Lead Merchant banker(s) to give correct information after
verifying the facts from the company and the Registrar to the issue.

(ii) The lead merchant banker shall enclose a certificate from the refund banker that the
amount of refund due from the company to investors is deposited in a separate account
giving details of the total amount deposited in the account and date of deposit.

Page 257 of 332

 (Updated till May 8, 2006 )

RIGHTS ISSUE

SUBSCRIPTION STATUS: (SUBSCRIBED / UNDERSUBSCRIBED)

3-DAY MONITORING REPORT

(RESPONSIBILITY: POST ISSUE LEAD MERCHANT BANKER)

1. Name of the Company :

2. Issue Opening date :
3. Actual closing date :
4. Date of filing letter of offer with the
Stock Exchange :
5. Issue Details (as per the letter of offer) :
5.1 Basis of offer (Ratio) :
5.2 Nature of instrument : (Equity/FCD/PCD/NCD/ Others, etc .)
5.3 Offer price per instrument :
5.4 Amt. per instrument on applic ation :
5.5 Issue Size : Amt. in Rs. lakhs
6. Record date :
7. Provisional Subscription Details of the issue :
i) Total Amount to be collected on
application : Rs. lakhs
ii) Amount collected on application : Rs. lakhs
iii) % subscribed i.e. % of (ii) to (i) : (%)
ii) Please tick mark whether 90% minimum subscription collected :
(i) YES (ii) NO

Signed by… Signed by…

Registrars to the Issue Company

Signed by.....
Lead Merchant Banker(s)

Place: Date:

Note:
It is the responsibility of Lead Merchant banker(s) to give correct information after verifying it
from the company and the Registrar to the issue.

Page 258 of 332

 (Updated till May 8, 2006 )

RIGHTS ISSUE

SUBSCRIPTION STATUS: (SUBSCRIBED / UNDERSUBSCRIBED)

50-DAY MONITORING REPORT

(RESPONSIBILITY: POST ISSUE LEAD MERCHANT BANKER)

1. Name of the Company :

2. Issue Opening date :
3. Actual closing date :
4. Issue Details ( as per the letter of offer)
4.1 Basis of offer :
4.2 Nature of instrument : (Equity/FCD/PCD/NCD, etc.)
4.3 Offer price per instrument :
4.4 Amt. per instrument on application :
4.5 Issue Size : Rs. in lakhs
5. 3 Day Report
Due on :
Submitted on :
6. No. of Collecting Banks :
(Also specify No. of Bank Branches)
7. Bank-wise names of branches which did not
submit final consolidated certificate within
21 days from closure of issue and mention
the dates when they actually submitted :
8. Details of Subscription
(i) percentage of rights taken up by:
a) Promoters :
b) Other Shareholders :
(ii) percentage of rights renounced by:
a) Promoters :
b) Others :
(iii) percentage of rights taken by
shareholders/ renounces :
(iv) percentage at the disposal of the Board :
(v) Out of the unsubscribed portion
as in above, taken by:
(a) Promoters :
(b) Others :
9. Promoters shareholdings : No. of Shares Percentage
(a) Prior to the Issue :
(b) On Expanded Capital after the
rights issue :
10. Date of finalisation of allotment (enclose copy of
the basis of allotment) :
11. (a) Name and Address of Refund Banker :
(b) Amount of refund due :
(c) Date of transfer of refund amount to
Refund Banker, if any :
Page 259 of 332
 (Updated till May 8, 2006 )

12. Actual Date(s) of completion of despatch of:

(a) Refund Orders :
(b) Certificate/Allotment Letters :
(c) Reasons for delay in despatch, if any :
(d) Whether interest paid for delayed period,
if so, for which period :
13. Name of Designated Stock Exchange :
14. Names of other stock exchanges where listing
is sought :
15. 42nd day from the date of closure of the issue :
16. Date on which application was filed with each
stock exchange for listing of instruments :
17. Date when listing and trading permission given
by each stock exchange (Enclose copies of
permission letters of stock exchanges) :
18. Reason for delay in listing for trading, if any:

TO BE FILLED UP IN CASE OF UNDERSUBSCRIBED ISSUES ONLY:

1. Extent of under subscription on the date of

closure of the issue
a) Percentage :
b) Amount :
2. Details of Standby assistance, if any
a. No. of Underwriters :
b. No. of Underwriters who did not pay
devolvement (Please give names, amount
underwritten and reasons for not paying) :
3. In case where FIs/ MFs had subscribed to make
up shortfall not as underwriter
a) Name of FI/MF :
b) No. of Instruments applied for :
c) Amount Received :

CERTIFIED that the information given above and also in the enclosures are true to the best of
our knowledge and no refund orders / allotment letters / certificates are pending for despatch in
respect of the issue.

CERTIFIED that shares to be locked in are duly inscribed with the words "Share can not be
hypothecated / transferred / sold till .........)

Signed by ... Signed by.....

Registrars to the Issue Company

Signed by.....
Lead Merchant Banker(s)

Place: Date :

Page 260 of 332

 (Updated till May 8, 2006 )

Note:
(i) It is the responsibility of Lead Merchant banker(s) to give correct information after
verifying it from the company and the Registrar to the issue.

(ii) The lead Merchant Banker shall enclose a certificate from the refund banker that the
amount of refund due from the company to investors is deposited in a separate account
giving details of the total amount deposited in the account and date of deposit.

Page 261 of 332

 (Updated till May 8, 2006 )

SCHEDULE XVII

[Clause 7.4.1.2(c)]

UNDERWRITING DEVOLVEMENT STATEMENT

NAME OF THE MERCHANT BANKER :

NAME OF THE ISSUER COMPANY :

ISSUE SIZE :

ISSUE-WISE STATEMENT OF NON -ACCEPTANCE OF UNDERWRITING

DEVOLVEMENT

Sr. Name of the Amount Amount Date of issue of Reasons for not
No. Underwriter underwritten devolved notice of accepting
devolvement, if any devolvement

Page 262 of 332

 (Updated till May 8, 2006 )
342
(SCHEDULE XVIII)

[Clause 7.6.1.1 and Clause 11.3.5(iii)]

ILLUSTRATION EXPLAINING THE PROCEDURE OF ALLOTMENT

1. Total shares on offer@ Rs. 600 per share: 10 crore shares

2. Shares on offer for retail category: 2.5 crore shares

342
Substituted vide SEBI Circular No. SEBI/CFD/DIL/DIP/13/2004/28/5 dated May 28, 2004 for the following:

“(Clause 7.6.1.1.(c))

BASIS OF ALLOTMENT PROCEDURE

Size of public offer - 2,00,000 equity shares of Rs.10/- each .

No. of times oversubscribed - 3 times.

Total Number of shares applied for - 6,00,000 equity shares.

Sr. No. of No. of Total No. Of Proportiona No. of No. of Total No.
No. Shares applied applican shares te Shares successf of
For ts applied by allocation Allotted ul shares
category each to each Per applican allotted
(Category-wise) applicant Category application by ts (6x7)
(2x3) (One-third) rounding off
(1) (2) (3) (4) (5) (6) (7) (8)

1. 100 1,500 1,50,000 50,000 100 500 50,000

+9,900* + 99* + 9,900
2. 200 400 80,000 26,700 100 267 26,700

3. 300 300 90,000 30,000 100 300 30,000

4. 400 300 1,20,000 40,000 100 300 30,000

5. 500 200 1,00,000 33,300 200 167# 33,400

+ 100 #
6. 600 100 60,000 20,000 200 100 20,000

6,00,000 2,00,000 2,00,000

Notes:

A) In the above exampl e the number of shares allocable to each category of the applicants have been arrived at in
column no. 5 in proportion to the number of times the issue has been oversubscribed.

B) In the case of category number 4, the number of shares actually allotted is less than the number of shares
available for allotment in that category on proportionate basis. This surplus has been included in the category 1
i.e. The applicants who had applied for minimum number of shares (after making adjustments for exceptional
situations as in (c) below.

C) The adjustment is on account of rounding off the number of successful applicants in category 5 from 166.5
to167.

D) In the case of applicants in categories 1 and 2 who have applied for 100 and 200 shares respectively, the
applicants in each of the above categories shall be entitled to 33 and 66 equity shares respectively which have
been rounded off to marketable lots of 100 each. As a result the successful applicants shall be getting 100
shares.

In the case of applicants in category 3,4, 5 and 6 they should be respectively entitled to allotment of 100, 133, 166 and
200 equity shares respectively. However, the actual entitlement would be rounded off to 100 shares each for
categories 3 and 4 and 200 shares for categories 5 and 6 respec tively.”
Page 263 of 332
 (Updated till May 8, 2006 )

3. The total issue is over subscribed 4 times whereas the retail category is over subscribed
8.25 times
4. Issuer decides to fix the minimum application / bid size as 9 shares (falling within the
range of Rs. 5000 - 7000). Application can be made for a minimum of 9 shares and in
multiples thereof.

Assume three retail investors A, B & C. A has applied for 81 shares. B has applied for 72
shares and C has applied for 45 shares. As per allotment procedure, the allotment to retail
individual investors would be on proportionate basis i.e., at 1/8.25th of the total number of
shares applie d for. The actual entitlement shall be as follows:

Sr. Name of Total Number of Total number of shares eligible to be allotted

No. Investor shares applied for (No. of shares applied for / 8.25)
1 A 81 81/8.25 = 9.82 shares rounded off to 10 shares
2 B 72 72/8.25 = 8.73 shares rounded off to 9 shares (i.e.
minimum application size).
3 C 45 shares 45/8.25=5.45 shares.
Application liable to be rejected. (as the entitlement
is less than the minimum application size).

However, the successful applicants out of the total

applicants shall be determined by drawal of lots.

Page 264 of 332

 (Updated till May 8, 2006 )
343
(SCHEDULE XVIIIA)

[Clause 8.6.1(iii)]

ILLUSTRATION EXPLAINING THE MINIMUM APPLICATION SIZE

An issue is being made at a price of Rs.390 per share. In this case, the issuer in
consultation with the merchant banker can determine the minimum application lot within the
range of 13 – 17 shares (in value terms between Rs.5000- Rs.7000), as detailed hereunder:

Options I II III IV V
Lot Size @ Rs.390/- per 13 shares 14 shares 15 shares 16 17 shares
share shares
Application / Bid amount for 5070 5469 5850 6240 6630
1 lots
Application / Bid amount for 10140 10920 11700 12480 13260
2 lots
Application / Bid amount for 20280 21840 23400 24960 26520
4 lots
Application / Bid amount for 40560 43680 46800 49920 ---
8 lots
Application / Bid amount for 45630 49140 --- --- --
9 lots

The options given above are only illustrative and not exhaustive.

Where the issuer company in consultation with merchant banker decides to fix the minimum
application / bid size as 14 (Option II), necessary disclosures to the effect that the applicant
can make an application for 14 shares and in multiples thereof shall be made in the offer
document.

343
Inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/13/2004/28/5 dated May 28, 2004.
Page 265 of 332
 (Updated till May 8, 2006 )

SCHEDULE XIX

(Clause 8.17.2)

FORMAT OF THE REPORT TO BE SUBMITTED BY THE MONITORING AGENCY

NAME OF THE MONITORING AGENCY :

MONITORING REPORT FOR THE HALF YEAR ENDED _________

1. Name of the Company :

2. About the issue whose proceeds to be monitored

a. Issue date, type of issue(public/rights), type of instrument(Equity/ FCDs, NCDs,
PCDs, etc.)
b. Issue size (Rs . crores)
c. Amount collected (Rs. crores)

3. Give details of the arrangement made by you to ensure the monitoring of issue
proceeds.

4. Project details (to be monitored) :

a. Name of the project (particulars and location):

b. Cost of the project details : (Rs. crores)

(As mentioned in the offer document)

Item Head Original Cost Revised Remarks

If, any cost overrun, how it is proposed to be financed.

c. Progress in the project:

i) Expenditure incurred during the six months period (Rs. crores)

Item Head During Six months Cumulative

ii) Means of finance raised during six months period (Rs. Crores)

d. If total cumulative amount raised is more than the expenditure incurred on the
project, explain how the surplus funds are utilised/ proposed to be utilised. Give
details on investment like instruments, maturity, earnings and other conditions.
Indicate name of the party/ company in which amounts have been invested. The
following data shall be given separately for inve stment in group companies and
others:

Page 266 of 332

 (Updated till May 8, 2006 )

Type of instrument/ Amount invested Maturity Earnngs

Instrument Rs. in lakhs date

e. Comments of Monitoring Agency on utilisation of funds.

f. If there is any delay in implementation of the project, the same may be specified
the reason thereof and the proposed course of action. (Please give the
comparative statement of schedule of various activities as mentioned in the offer
document and their actual implementation).

g. Status of Government/ statutory approvals related to the project as disclosed in

offer document.

h. Technical assistance/ collaboration (Please mention arrangements contemplated

at the time of issue and the progress thereafter)

i. Major deviations from the earlier progress reports.

j. Any favourable/ unfavourable events affecting / improving project viability.

k. Any other relevant information.

Signature
Name:
Designation:

(Name of the Monitoring Agency)

Page 267 of 332

 (Updated till May 8, 2006 )

SCHEDULE XIX-A

[344(Clause 11.3.5 (ii-a))]

ILLUSTRATION REGARDING ALLOTMENT TO QIBs

A. ISSUE DETAILS

Sr. No. Particulars Issue details

1 Issue size 200 crores equity shares
2 Allocation to QIB ( 50%) 100 crores equity shares
Of which
a. Reservation to MF (5%) 5 crores equity shares
b. Balance for all QIBs including MFs 95 crores equity shares
3 No. of QIB applicants 10
4 No. of shares applied for 500 crores equity shares

B. DETAILS OF QIB BIDS

S. No. Type of QIB bidders No. of shares bid for (in crores)
1 A1 50
2 A2 20
3 A3 130
4 A4 50
5 A5 50
6 MF1 40
7 MF2 40
8 MF3 80
9 MF4 20
10 MF5 20
TOTAL 500

A1-A5 (QIB bidders other than MFs)

MF1-MF5 (QIB bidders which are MFs)

344
Inserted schedule, vide SEBI Circular No. SEBI/CFD/DIL/DIP/16/2005/19/9 dated September 19, 2005.
Page 268 of 332
 (Updated till May 8, 2006 )

C. DETAILS OF ALLOTMENT TO QIB BIDDERS/APPLICANTS

(No. of equity shares in crores)

Type of Shares Allocation of 5 crore s Allocation of balance 95 Aggregate

QIB bid for shares to MFs crore s shares to QIBs allocation
bidders proportionately proportionately to MFs
(See Note 2) (See Note 4)
(I) (II) (III) (IV) (V)
A1 50 0 9.60 0
A2 20 0 3.84 0
A3 130 0 24.95 0
A4 50 0 9.60 0
A5 50 0 9.60 0
MF1 40 1 7.48 8.48
MF2 40 1 7.48 8.48
MF3 80 2 14.97 16.97
MF4 20 0.5 3.74 4.24
MF5 20 0.5 3.74 4.24
500 5 95 42.42

Notes:

1. The illustration presumes compliance with the provisions of clause .7.6.1.1 of the
guidelines pertaining to minimum allotment.

2. Out of 100 crore equity shares allocated to QIBs, 5 crores (i.e. 5%) will be allocated
on proportionate basis among 5 mutual fund applicants who applied for 200 shares in
QIB category.

3. The balance 95 crore equity shares [i.e. 100 - 5 (available for MFs)] will be allocated
on proportionate basis among 10 QIB applicants who applied for 500 shares
(including 5 MF applicants who applied for 200 shares).

4. The figures at Col. No. IV are arrived as under :

a. For QIBs other than mutual funds (A1 to A5) = No. of shares bid for (i.e Col II)
X 95 / 495

b. For mutual funds (MF1 to MF5) = { (No. of shares bid for (i.e Col II) less
shares allotted ( i.e., col. III )} X 95/495

c. The numerator and denominator for arriving at allocation of 95 crore shares to

the 10 QIBs are reduced by 5 crore shares, which has already been allotted to
mutual funds at Col. No. (III).

Page 269 of 332

 (Updated till May 8, 2006 )

SCHEDULE XX

[345(Clause 11.3.5 (vii))]

CLARIFICATORY EXAMPLES

i. In case of an issuer making an initial public offer:

Suppose the post issue capital is Rs. 100 crores. As per the extant guidelines the
promoters’ contribution shall not be less than 20% of the post issue capital subject to
the condition that at least 25% of the post issue capital shall be offered to the public.
In case, the promoters bring in only the minimum specified contribution, then Rs. 20
crores shall be allocated to the promoters. In such a scenario, Book Building facility
may be for Rs. 80 crores, which is the issue size offered to the public through the
prospectus.

Allocation in such a scenario shall be as follows;

Allocation for individual investors applying for upto 10 tradeable lots through the
syndicate members shall be atleast 15% of the post-issue capital (Rs. 100 crores)
i.e., atleast Rs. 15 crores.

Allocation to Institutional investors as well as other investors applying through the

syndicate members shall be Rs.65 crores (Rs. 80 crores - Rs. 15 crores).

Allocation to individual investors applying not through the syndicate members but
during the time when the issue is open would be 10% of the issue size offered to the
public through the prospectus (Rs. 80 crores) i.e., Rs. 8 crores.

Due to allocation to individual investors applying not through the syndicate

members the post issue capital would increase to Rs. 108 crores and therefore the
promoters need to bring in extra capital of Rs. 2.4 crores to ensure that their post
issue holding (Rs.20 crores + Rs. 2.4 crores = Rs. 22.4 crores) does not fall below
the minimum specified percentage (20% of Rs.110.4 crores i.e. Rs. 108 cro res + Rs.
2.4 crores).

Allocation to individual investors would therefore total at least Rs. 23 crores (Rs.15
crores + Rs. 8 crores).

Similarly, the computation can be worked out for varying levels of promoters’
contribution.

The point that needs to be understood is that in case of a company going in for an
initial public offer and availing the facility of Book Building, the allocation to
individual investors applying through the syndicate members shall be with
reference to the post issue capital, while the allocation to individual investors

345
Inserted reference clause to the schedule, vide SEBI Circular No. SEBI/CFD/DIL/DIP/14/2005/25/1 dated January 25,
2005.
Page 270 of 332
 (Updated till May 8, 2006 )

applying not through the syndicate members shall be with reference to the
issue size offered to the public through the prospectus.

ii. The allocation process shall be as follows for a listed company:

Suppose a listed company with a capital of Rs. 50 crores makes a further issue of
capital to the public of Rs. 50 crores. As per the guidelines, the promoters have to
participate to the extent of 20% of the proposed issue or ensure that his post-issue
holding does not fall below 20% of the expanded capital.

In case the promoters participate to the extent of 20% of the proposed issue, then the
promoters’ contribution shall be Rs. 10 crores. The amount available for Book
Building, in such a case, shall be Rs. 40 crores, which is the issue size offered to the
public through the prospectus.

Allocation for individual investors applying for upto 10 tradeable lots through the
syndicate members shall be atleast 15% of the proposed issue size(Rs. 50 crores)
i.e. atleast Rs.7.5 crores.

Allocation to Institutional investors as well as other investors applying through the

syndicate members shall be Rs.32.5 crores (Rs. 40 crores - Rs. 7.5 crores).
346
(Deleted).

Allocation to individual investors applying not through the syndicate members but
during the time when the issue is open would be 10% of the issue size offered to the
public through the prospectus (Rs. 40 crores) i.e., Rs. 4 crores.

Due to allocation to individual investors applying not through the syndicate

members the capital issued through the present issue would increase to Rs. 54
crores and therefore the promoters need to bring in extra capital of Rs. 1.2 crores to
ensure that their post issue holding (Rs.10 crores + Rs. 1.2 crores = Rs. 11.2 crores)
does not fall below the minimum specified percentage (20% of Rs. 55.2 crores i.e.,
Rs. 54 crores + Rs. 1.2 crores).

Allocation to individual investors would therefore total at least Rs. 11.5 crores (Rs.
7.5 crores + Rs. 4 crores).

In case of a listed company going in for a further issue of capital and availing the
facility of Book Building, the allocation to individual investors applying through
the syndicate members shall be with reference to the proposed issue, while the
allocation to individual investors applying not through the syndicate members
shall be with reference to the issue size offered to the public through the
prospectus.

iii. The allocation process shall be as follows for an unlisted company going in for
an offer for sale:
346
Omitted the following words, vide SEBI Circular No. SEBI/CFD/DIL/DIP/16/2005/19/9 dated September 19, 2005:
“Allocation
would be determined by the Book Runner(s) in consultation with the Issuer as well as the syndicate
members on the basis of prior commitment, quality of investor, earliness of bid, price aggression etc.”
Page 271 of 332
 (Updated till May 8, 2006 )

Suppose an unlisted company with a capital of Rs.100 crores makes an offer for sale.
As per the guidelines, the promoters shall ensure that their shareholding after
disinvestment shall not be less than 20% of the total issued capital of the company
subject to the condition that at least 25% of the total issued capital of the company
shall be offered to the public.

In case the promoters’ shareholding after disinvestment remains at 20% of the total
issued capital, then the promoters’ contribution shall be Rs. 20 crores. The amount
available for Book Building, in such a case, shall be Rs. 80 crores, which is the issue
size offered to the public through the prospectus.

Allocation for individual investors applying for upto 10 marketable lots through the
syndicate members shall be atleast 15% of the post issue capital(Rs. 100 crores) i.e.
atleast Rs. 15 crores.

Allocation to individual investors applying not through the syndicate members but
during the time when the issue is open would be 10% of the issue size offered to the
public through the prospectus (Rs. 80 crores) i.e. Rs. 8 crores.

Allocation to Institutional investors as well as other investors applying through the

syndicate members shall be Rs.57 crores (Rs. 80 crores - Rs. 15 crores - Rs. 8
crores). 347 (Deleted).

Allocation to individ ual investors would therefore total at least Rs. 23 crores (Rs. 8
crores + Rs. 15 crores).

In case of an unlisted company going in for an offer for sale and availing the facility of
Book Building, the allocations to the individual investors applying through the
syndicate members shall be with reference to the post-issue capital, while the
allocations to the individual investors not applying through the syndicate
members shall be with reference to the issue size offered to the public
through the prospectus.

347
Omitted the following words, vide SEBI Circular No. SEBI/CFD/DIL/DIP/16/2005/19/9 dated September 19, 2005:
“Allocation would be determined by the Book Runner(s) in consultation with the Issuer as well as the syndicate
members on the basis of quality of investor, earliness of bid, price aggression etc.”
Page 272 of 332
 (Updated till May 8, 2006 )
348
(SCHEDULE XX-A)

[Clauses 5.6A, 9.1.12 (c) and 9.5]

FORMATS OF ISSUE ADVERTISEMENTS

PART A

SAMPLE FORMAT FOR PRE-ISSUE ADVERTISEMENT FOR PUBLIC ISSUE

(FIXED PRICE / BOOKBUILT)

This is only an advertisement for information purposes and not a prospectus announcement.

ABC LTD.
(Incorporated on ____________________ under the Companies Act as
__________________________ and subsequently renamed _______________________
on ________________)
Registered Office: __________________________________ Tel: _______________ Fax
______________
Corporate Office:
_________________________________________________________________
Tel: _________ Fax: _______ e-mail: ______ Website: _____________________________

THE ISSUE
Public issue of ___________ equity shares / debentures (if applicable) of Rs. ____ each at a
price of Rs._____ ( Floor price or price band or as the case may be for Book built issue) for
cash aggregating Rs._________ (appropriate disclosure for Book Built issue)
Disclosure as per Clause 3.7.1(ii)
The Issue is being made through the 100% Book Building Process wherein at least ___% of
the Issue shall be allocated on a 349 (proportionate) basis to Qualified Institutional Buyers.
Further, not less than ___% of the Issue shall be available for allocation on a proportionate
basis to Non-Institutional Bidders and the remaining ____% of the Issue shall be available
for allocation on a proportionate basis to Retail Bidders, subject to valid bids being received
at or above the Issue Price. (The disclosure about details of allocation shall be given in
case of Book built issues in these lines)

PROMOTERS
XXXX

PROPOSED LISTING
Names of Stock Exchanges

350
(Disclaimer Clause of SEBI

348
Inserted schedule vide SEBI Circular No. SEBI/CFD/DIL/DIP/14/2005/25/1 dated January 25, 2005.

349
Substituted vide SEBI Circular No. SEBI/CFD/DIL/DIP/16/2005/19/9 dated September 19, 2005 for the word
“discretionary”.

350
Inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/17/2005/11/11 dated November 11, 2005.
Page 273 of 332
 (Updated till May 8, 2006 )

SEBI only gives its observations on the offer documents and this does not constitute
approval of either the issue or the offer document.)

LEAD MANAGERS / BOOK RUNNING LEAD MANAGERS / CO-BOOK RUNNING LEAD

MANAGERS
(as the case may be)
Name, address, telephone and fax numbers, email ID, website address and contact person

COMPLIANCE OFFICER OF ISSUER COMPANY

Name, address, telephone and fax numbers, email ID, website address

CREDIT RATING (only if applicable)

DEBENTURE TRUSTEES (only if applicable)

AVAILABILITY OF APPLICATION FORMS

Names of Issuer, Lead Managers, Book runners, Syndicate Members, Brokers and Bankers
to the issue (as the case may be) (Addresses optional)

AVAILABILITY OF PROSPECTUS
Investors are advised to refer to the prospectus, and the risk factors contained therein,
before applying in the issue. Full copy of the prospectus is available at www.sebi.gov.in and
websites of issuer / lead manager/s / Stock Exchange/s at www……

ISSUE / BID OPENS ON :

ISSUE / BID CLOSES ON :
Issued by
Directors of Issuer

Page 274 of 332

 (Updated till May 8, 2006 )

PART B

SAMPLE FORMAT FOR ISSUE OPENING ADVERTISEMENT FOR PUBLIC ISSUES

(FIXED PRICE / BOOKBUILT)

This is only an advertisement for information purposes and not a prospectus announcement.

ABC LTD.
(Incorporated on ____________________ under the Companies Act as
__________________________ and subsequently renamed _______________________
on ________________)
Registered Office: __________________________________ Tel: _______________ Fax
______________
Corporate Office:
_________________________________________________________________
Tel: _________ Fax: _______ e-mail: ______ Website: _____________________________

THE ISSUE
Public issue of ___________ equity shares / debentures (if applicable) of Rs. ____ each at a
price of Rs._____ (Floor price or price band or as the case may be for Book built issue)
for cash aggregating Rs._________ (appropriate disclosure for Book Built issue)

Disclosure as per Clause 3.7.1(ii)

The Issue is being made through the 100% Book Building Process wherein at least ___% of
the Issue shall be allocated on a 351 (proportionate) basis to Qualified Institutional Buyers.
Further, not less than ___% of the Issue shall be available for allocation on a proportionate
basis to Non-Institutional Bidders and the remaining ____% of the Issue shall be available
for allocation on a proportionate basis to Retail Bidders, subject to valid bids being received
at or above the Issue Price. (The disclosure about details of allocation shall be made in
case of Book built issues in these lines)

PROMOTERS
XXXX

PROPOSED LISTING
Names of Stock Exchanges

352
(Disclaimer Clause of SEBI
SEBI only gives its observations on the offer documents and this does not constitute
approval of either the issue or the offer document.)

LEAD MANAGERS / BOOK RUNNING LEAD MANAGERS / CO-BOOK RUNNING LEAD

MANAGERS (as the case may be)
Name, address, telephone and fax numbers, email ID, website address and contact person

351
Substituted vide SEBI Circular No. SEBI/CFD/DIL/DIP/16/2005/19/9 dated September 19, 2005 for the word
“discretionary”.

352
Inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/17/2005/11/11 dated November 11, 2005.
Page 275 of 332
 (Updated till May 8, 2006 )

COMPLIANCE OFFICER OF ISSUER COMPANY

Name, address, telephone and fax numbers, email ID, website address

CREDIT RATING (only if applicable)

DEBENTURE TRUSTEES (only if applicable)

AVAILABILITY OF APPLICATION FORMS

Names of Issuer, Lead Managers, Book runners, Syndicate Members, Brokers and Bankers
to the issue (as the case may be ) (Addresses optional)

AVAILABILITY OF PROSPECTUS
Investors are advised to refer to the prospectus, and the risk factors contained therein,
before applying in the issue. Full copy of the prospectus is available at www.sebi.gov.in and
websites of issuer / lead manager/s / Stock Exchange/s at www……

ISSUE / BID OPENS TODAY

Issued by
Directors of Issuer

Page 276 of 332

 (Updated till May 8, 2006 )

PART C

SAMPLE FORMAT FOR ISSUE CLOSING ADVERTISEMENT FOR PUBLIC ISSUES

(FIXED PRICE / BOOKBUILT)

This is only an advertisement for information purposes and not a prospectus announcement.

ABC LTD.
(Incorporated on ____________________ under the Companies Act as
__________________________ and subsequently renamed _______________________
on ________________)
Registered Office: __________________________________ Tel: _______________ Fax
______________
Corporate Office:
_________________________________________________________________
Tel: _________ Fax: _______ e-mail: ______ Website: _____________________________

THE ISSUE
Public issue of ___________ equity shares (if applicable) of Rs. ____ each at a price of
Rs._____ (Floor price or price band or as the case may be for Book built issue) for
cash aggregating Rs._________ (appropriate disclosure for Book Built issue)
Disclosure as per Clause 3.7.1(ii)
The Issue is being made through the 100% Book Building Process wherein at least ___% of
the Issue shall be allocated on a 353 (proportionate) basis to Qualified Institutional Buyers.
Further, not less than ___% of the Issue shall be available for allocation on a proportionate
basis to Non-Institutional Bidders and the remaining ____% of the Issue shall be available
for allocation on a proportionate basis to Retail Bidders, subject to valid bids being received
at or above the Issue Price. (The disclosure about details of allocation shall be made in
case of Book built issues in these lines)

PROMOTERS
XXXX

PROPOSED LISTING
Names of Stock Exchanges

354
(Disclaimer Clause of SEBI
SEBI only gives its observations on the offer documents and this does not constitute
approval of either the issue or the offer document.)

LEAD MANAGERS / BOOK RUNNING LEAD MANAGERS / CO-BOOK RUNNING LEAD

MANAGERS (as the case may be)
Name, address, telephone and fax numbers, email ID, website address and contact person

COMPLIANCE OFFICER OF ISSUER COMPANY

353
Substituted vide SEBI Circular No. SEBI/CFD/DIL/DIP/16/2005/19/9 dated September 19, 2005 for the word
“discretionary”.

354
Inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/17/2005/11/11 dated November 11, 2005.
Page 277 of 332
 (Updated till May 8, 2006 )

Name, address, telephone and fax numbers, email ID, website address

CREDIT RATING (only if applicable)

DEBENTURE TRUSTEES (only if applicable)

AVAILABILITY OF APPLICATION FORMS

Names of Issuer, Lead Managers, Book runners, Syndicate Members, Brokers and Bankers
to the issue (as the case may be ) (Addresses optional)

AVAILABILITY OF PROSPECTUS
Investors are advised to refer to the prospectus, and the risk factors contained therein,
before applying in the issue. Full copy of the prospectus is available at www.sebi.gov.in and
websites of issuer / lead manager/s / Stock Exchange/s at www……

ISSUE / BID CLOSES TODAY

Issued by
Directors of Issuer
****”

Page 278 of 332

 (Updated till May 8, 2006 )
355
(SCHEDULE XXI)

[356([Clause 11.3.5 (viii))]

BOOK BUILDING – MODEL TIME FRAME

After, the final observation from SEBI has been received on the offer document, the
minimum number of application forms accompanied with Form 2A and offer document
containing the final observations received from SEBI, without mentioning the final price, shall
be despatched to the members of the Stock Exchanges. However, the issue opening and
closing date shall be mentioned in the application form. A minimum of 200 application forms
per active member of the Stock Exchange where the securities of the issuer company are
proposed to be listed and 10,000 forms each to other Stock Exchanges shall be despatched.
Further, minimum 1000 offer document, containing the final observations received from
SEBI , to each Stock exchange where the securities of the issuer company are proposed to
be listed and minimum 200 offer document, containing the final observations received from
SEBI, each to other Stock Exchanges would also have to be despatched. These shall be
despatched subject to the condition that a minimum gap of 14 days is maintained between
the receipt of these applications and the issue opening date.

After, the price has been determined on the basis of bidding the statutory public
advertisement containing, inter alia, the price as well as a table showing the number of
securities and the amount payable by an investor, based on the price determined, shall be
issued. The statutory advertisement may be issued before the ROC filing. There shall be a
minimum time gap of five (5) days between the statutory public advertisement and the issue
opening date. The statutory public advertisement shall be issued for a continuos period of
three days in an English National daily with wide circulation, one Hindi National paper and a
Regional language newspaper with daily circulation at the place where the registered office
of the issuer company is situated.”

355
The following schedule, which was inserted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 to
substitute the then existing schedule, has been deferred vide press release no. PR No.246/2003 dated October 13,
2003:

T T+1 T+2 T+3 T+4 T+5 T+6

Book • Price •Registrar draws • Stock Exchanges • Pay–in (Only • Brokers • Trading
Closed Determination the allocation approve the basis high- value) account to comme
• Determination list of allocation • Bankers to be credited nces
of offer size •All entered bids • Final prospectus confirm clearance with shares
assumed as printed and of fund • Broker to
valid dispatched • Board Meeting credit
• CANs sent to • Stock Exchanges shares to
QIBs to issue the listing the demat
• Allocation details and trading account of
electronically permission investors
communicated by • Company to
Registrar/Compa instruct
ny to brokers NSDL/CDSL to
credit shares to
the demat account
of brokers

356
Inserted reference clause to the schedule, vide SEBI Circular No. SEBI/CFD/DIL/DIP/14/2005/25/1 dated January 25,
2005.
Page 279 of 332
 (Updated till May 8, 2006 )

357 SCHEDULE XXIA

[Clause 13A.7.2 ]

DISCLOSURES IN PLACEMENT DOCUMENT

1. Disclaimer to the effect that the Memorandum relates to an issue made to Qualified
Institutional Buyers under Chapter XIIIA and that no offer is being made to the public
or any other class of investors.
2. Glossary of Terms/Abbreviations
3. [Financial Statements Contained Herein]
4. Merchant Bankers/Managers to the placement and other advisors
5. Summary of the Offering and Instrument
6. Risk Factors
7. Market Price Information
Disclose particulars of:-

a. high, low and average market prices of shares of the company during the
preceding three years
b. monthly high and low prices for the six months preceding the date of filing of
theprospectus
c. number of shares traded on the days when high and low prices were recorded
in the relevant stock exchange during period of (i) and (ii) above, and total
volume traded on those dates
d. the stock market data referred to above shall be shown separately for periods
marked by a change in capital structure, with such period commencing from
the date the concerned stock exchange recognizes the change in the capital
structure (e.g., when the shares have become ex-rights or ex-bonus)
e. the market price immediately after the date on which the resolution of the
Board of Directors approving the issue was approved
f. the volume of securities traded in each month during the six months preceding
the date on which the offer document is filed with ROC
g. Along with high, low and average prices of shares of the company, details
relating to volume of business transacted should also be stated for respective
periods.

8. Use of proceeds
a. purpose of the issue;
b. break-up of the cost of project for which the money is raised through issue;
c. the means of financing such project; and
d. proposed deployment status of the proceeds at each stage of the project.

9. Capitalization Statement
10. Dividends
11. Selected Financial and Other Information

357
Inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/22/006/8/5 dated May 8, 2006.
Page 280 of 332
 (Updated till May 8, 2006 )

The audited consolidated or unconsolidated financial statements prepared in accordance

with Indian GAAP shall contain the following:

a. Report of Independent Auditors on the Financial Statements

b. Balance Sheets
c. Statements of Income
d. Schedules to Accounts
e. Statements of Changes in Stockholders’ Equity
f. Statements of Cash Flows
g. Statement of Accounting Policies
h. Notes to Financial Statements
i. Statement Relating to Subsidiary Companies (in case of unconsolidated financial
statements)

12. Management’s Discussion and Analysis of Financial Condition and Results

of Operations
13. Industry Description
14. Business Des cription
15. Organizational Structure and Major Shareholders
16. Board of Directors and Senior Management
17. Taxation Aspects relating to the Instrument
18. Legal Proceedings
19. Accountants
20. General Information
21. Such Other information as is appropriate to enable the inves tor to make an informed
decision.

Page 281 of 332

 (Updated till May 8, 2006 )

SCHEDULE XXII

[Clause 16.1.1(b), 16.2.3.1, 16.2.4.3]

JURISDICTION OF REGIONAL OFFICES/ HEAD OFFICE OF THE BOARD

REGIONAL OFFICE TERRITORIAL JURISDICTION ADDRESS OF

HEAD OFFICE SEBI OFFICE

NORTHERN REGION Haryana, Himachal Pradesh, Built-up Space

Jammu and Kashmir, Punjab, Block No.1,
Rajasthan, Uttar Pradesh, Rajendra Bhavan
Chandigarh and Delhi. Rajendra Place,
Dist. Centre,
NEW DELHI - 8.

EASTERN REGION Assam, Bihar, Manipur, FMC, Fortuna,

Meghalaya, Nagaland, Orissa, 5th Floor,
West Bengal, Arunachal 234/3A, AJC,
Pradesh, Mizoram & Tripura. Bose Road ,
CALCUTTA - 47.

SOUTHERN REGION Andhra Pradesh, Karnataka, 3rd Floor,

Kerala, Tamilnadu and D’monte
Pondicherry. Building,No. 32,
D’monte Colony,
TTK Road,
Alwarpet,
CHENNAI - 18.

HEAD OFFICE Gujarat, Maharashtra, 1) Mittal Court,

Madhya Pradesh, Dadra and ‘B’ Wing,
Nagar Haveli and Goa. 1 st Floor, 224
Nariman Point
MUMBAI - 21.

2) Earnest House,
14th Floor,
Nariman Point,
MUMBAI - 21.

Page 282 of 332

 (Updated till May 8, 2006 )

SCHEDULE XXIII

[Clause 16.1.3 & 16.1.4(c)]

FORMAT FOR SUBMITTING DRAFT AND FINAL OFFER DOCUMENT ON A COMPUTER

FLOPPY

358
1. (The soft copes of draft offer documents shall be submitted in both HTML and PDF
formats in a floppy placed in a sealed envelope. The Floppy (1.44 MB, write protect
mode) should be submitted in a sealed envelope.

2. One floppy shall contain prospectus / letter of offer of a single issue only and in one
single file.

3. They must go through the offer documents after conversion into HTML and PDF formats
thoroughly to ensure that their internal notings, additions / deletions or corrections do
not appear in the final format which is submitted to SEBI. It is to be ensured that the
data given in the tables is in systematic order. It is to be understood that merchant
bankers are fully responsible for the contents of soft copies of the offer documents.

4. The Merchant Bankers are required to submit an undertaking to SEBI while filing the
offer document certifying that the information contained in the floppy is in HTML format
and matches exactly with the contents of the hard copy.

5. The floppies containing the soft copy of the offer document should have a sticker duly
posted giving the following information:

The name of merchant banker

Name of the issuer company
Issue type (public/rights/offer for sale)
Signature of the by the person who has signed the due diligence certificate.

6. If the requirements of this circular regarding submission of soft copy of the offer
document are not fulfilled, the offer document would not be processed.

7. Merchant Bankers are further advised to confirm to SEBI in writing, within one day of the
posting of draft offer document on the website (if the next day is a holiday, on the first
working day), that the contents of the draft offer document appearing on the website are
in order.

8. The merchant bankers are advised to follow the above procedure explained above in
respect of the draft offer document, for the final offer document as well. The sticker
mentions at clause (5) above shall contain following additional information:
(a) Date of filing with Registrar of Companies / Stock Exchange

(b) Issue opening date.)

358
Substituted vide SEBI Circular No. RMB (Compendium) Series Circular No. 2 (1999-2000) dated February 16, 2000.
Page 283 of 332
 (Updated till May 8, 2006 )
359
(SCHEDULE XXIII A)

[360 (Clause 16.1.5 (c))]

INFORMATION TO BE SUBMITTED WITH SOFT COPY OF DRAFT AND FINAL OFFER

DOCUMENTS

1. Soft copy submitted by:

2. Content Title:
3. Whether the Documents are in HTML Format? YES/NO
4. Whether the tabular data in the HTML format are in order? YES/NO/N.A.
5. Whether the Sr. Numbers of paragraph/points are in order and YES/NO/N.A.
matches with the printed copy?
6. Whether the alignments of all paragraphs are in order? YES/NO
7. Whether all relevant image files, if any are available in the floppy. YES/NO/N.A.
8. Whether the contents of the HTML format and Hard copy of the YES/NO
document have been compared and found to be in order?
9. Whether the letter of confirmation for the point no.8 has been YES/NO
enclosed?
10. Whether the spacing between lines and paragraphs is uniform? YES/NO
11. Remarks, if any

Prepared by: Verified by:

Date:

(For office use only)

FOR THE USE OF DIVISION/DEPARTMENT CONCERNED

Date of receipt of floppy: RNI

No:________

Whether the contents of floppy are prima facie in Order: Yes/No.

Secretary Officer Division Chief

Date:

FOR THE USE OF INFORMATION SYSTEMS DIVISION

Date of receipt of floppy:

Whether the contents of floppy are prima facie in order: YES/NO

359
Inserted vide SEBI Circular No. DIP (Compendium) Circular No. 3 dated August 4, 2000.

360
Substituted vide SEBI Circular No. SEBI/CFD/DIL/DIP/14/2005/25/1 dated January 25, 2005 for “Clause 16.1.3 and 16
1.4 (c)”.
Page 284 of 332
 (Updated till May 8, 2006 )

Date on which the document is displayed on the SEBI web site:

Secretary Officer Division chief

FOR THE USE OF DEPARTMENT/DIVISION CONCERNED AND ISD

The contents on the net were verified and found to be prima facie in order.

Page 285 of 332

 (Updated till May 8, 2006 )
361
(SCHEDULE XXIV)

361
Substituted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 for the following:

“SCHEDULE XXIV

[clause 16.2.4.1 (b)]

APPLICATION FORM FOR ISSUE OF NO OBJECTION CERTIFICATE FOR RELEASE OF 1% DEPOSIT PLACED
WITH THE REGIONAL STOCK EXCHANGE
(to be submitted to the Board on Issuer Company's Letter Head)

1. Issue details indicating :

a) Name of the Company

b) Details of Registrars
c) Nature and size
d) Date of closure
e) No. of applications received and amount subscribed
f) No. of times the issue was subscribed
g) First and last date of despatch of original refund orders/cancelled stock-invests
h) First and last date of despatch of allotment letters/certificate
361
i) (First and last date of sending security certificates to NRIs (Enclose RBI acknowledgement letter. If
acknowledgement is not received, date of filing the documents with RBI along with a copy of a letter
forwarded to RBI)
j) Mode of despatch of Refund orders/Allotment letters/ Certificates.
k) Total amount transferred to the Refund Acount and balance outstanding as of latest date (Enclosed bank
certificate)
l) Name of the Regional Stock Exchange and the amount deposited as 1% deposit.
2. A note on the existing complaint redressal system followed by the Company/Registrar to the Issue highlighting
a) Name & address of Compliance officer;
a) infrastructure
b) manpower
c) computer back-up
d) level of attention and
e) average time taken in solving the complaints
3. Performance in redressal of investor complaints
a) Status of investor complaints as on a recent date against the company in the following format :
____________________________________________________________
Sr.No. Source No. of Complaints
Received Resolved Pending
____________________________________________________________
(i) Directly
(ii) SEBI
(iii) Stock Exchange
(iv) Investor Associations
__________________________________________________________
b) State briefly the nature of complaints indicating the approximate percentage break-up of various types
c) Give reasons for pendency of complaints
4. A copy of the letter from the concerned Regional stock exchange directing the company to obtain NOC from the
Board.
5. A copy of the letter from the respective stock exchanges giving permission for trading in the shares of the issue for
which NOC is sought (Give reasons for delay, if any, in listing of securities)
6. A Certificate from the concerned Regional stock exchange to the effect that underwriting/brokerage commission as
well as Registrars/Lead Managers fees have been duly paid by the company.
361
7. (Certificate from the Registrars countersigned by the post issue lead manager that the certificates to the NRIs
have been dispatched)
8. Any other information.

CERTIFIED that the information given above and also in the enclosures are true to the best of our knowledge and no
refund orders/allotment letters/certificates are pending for despatch in respect of the issue.

FOR COMPANY Place :

(Name & Signature of Date :
Authorised Signatory)”
Page 286 of 332
 (Updated till May 8, 2006 )

[Clause 16.2.4.1 (b)]

APPLICATION FORM FOR ISSUE OF NO OBJECTION CERTIFICATE FOR RELEASE OF

1% DEPOSIT PLACED WITH THE DESIGNATED STOCK EXCHANGE (to be submitted to
the Board on Issuer Company's Letter Head)

1. Issue details indicating:

a) Name of the Company

b) Details of Registrars
c) Nature and size
d) Date of closure
e) No. of applications received and amount subscribed
f) No. of times the issue was subscribed
g) First and last date of despatch of original refund orders/cancelled stock-invests
h) First and last date of despatch of allotment letters/certificate
i) First and last date of sending security certificates to NRIs (Enclose RBI
acknowledgement letter. If acknowledgement is not received, date of filing the
documents with RBI along with a copy of a letter forwarded to RBI
j) Mode of despatch of Refund orders/Allotment letters/ Certificates .
k) Total amount transferred to the Refund Acount and balance outstanding as of
latest date (Enclosed bank certificate)
l) Name of the Designated Stock Exchange and the amount deposited as 1%
deposit.

2. A note on the existing complaint redressal system followed by the Company/Registrar to

the Issue highlighting

a) Name & address of Compliance officer;

b) infrastructure
c) manpower
d) computer back-up
e) level of attention and
f) average time taken in solving the complaints

3. Performance in redressal of investor complaints

a) Status of investor complaints as on a recent date against the company in the

following format:

Sr. Source No. of Complaints

No. Received Resolved Pending
(i) Directly
(ii) SEBI
(iii) Stock Exchange

Prior to the above, sub-clause (i) of clause (1) and clause (7) were substituted vide SEBI Circ ular No. RMB
(Compendium) Series Circular No. 1 (2001-2002) dated July 17, 2001.
Page 287 of 332
 (Updated till May 8, 2006 )

(iv) Investor Associations

____________________________________________________________

b) State briefly the nature of complaints indicating the approximate percentage

break-up of various types
c) Give reasons for pendency of complaints .

4. A copy of the letter from the concerned Designated stock exchange directing the
company to obtain NOC from the Board.

5. A copy of the letter from the respective stock exchanges giving permission for trading in
the shares of the issue for which NOC is sought (Give reasons for delay, if any, in listing
of securities)

6. A Certificate from the concerned Designated stock exchange to the effect that
underwriting/brokerage commission as well as Registrars/Lead Managers fees have
been duly paid by the company.

7. Certificate from the Registrars countersigned by the post issue lead manager that the
certificates to the NRIs have been dispatched

8. Any other information.

CERTIFIED that the information given above and also in the enclosures are true to the best of
our knowledge and no refund orders/allotment letters/certificates are pending for despatch in
respect of the issue.

FOR COMPANY Place :

(Name & Signature of Date :
Authorised Signatory)

Page 288 of 332

 (Updated till May 8, 2006 )

SCHEDULE XXV

[Clause 16.2.4.5(b)]

PROFORMA FOR SENDING RESPONSES TO SEBI

(i) The proforma in which companies shall send their responses to investor complaints is
as specified below.

(ii) The proforma shall be strictly adhered to, failing which the replies will not be
updated.

Sr. Company Type/ Name of Action taken Date of Despatch

No. Ref. No. Category complainant in brief action details Reg.
No.

Note:
(a) Action taken in brief should indicate the action take n by the company to resolve the
complaint.

(b) Where the company has asked the investor to execute an indemnity bond, the
company has to invariably furnish the proof of original despatch of refund orders /
certificates / dividends / interest warrants / maturity amounts by giving date of
despatch and Registration no.

(c) In cases where further details are sought from the investor like Application No., Folio
No., Bank Serial No., etc. and no response is forthcoming from the investor, the
company is required to send at least two reminders by UCP over an interval of two
months each from the despatch of first letter and intimate SEBI giving proof of postal
despatch of such reminder letters along with one specimen copy of the reminders
sent.

Sample Example:

Sr. Company Type/ Name of Action taken in Date of Despatch

No. Ref. No. category complainant brief action details Reg.
No.
1. 95/1/35808/ IA XYZ Refund Order No. 31/12/94 3329
01 2345678
2. 95/1/24678/ IA ABC Indemnity format 5/5/95 2684
02 sent Original R/O 12/12/94
sent o l st in postal
transit

Page 289 of 332

 (Updated till May 8, 2006 )

3. 94/1/98356/ IA LMN Bank Sr. Number 10/01/95

09 asked on -------- . 15/03/95
Reminder I sent 25/05/95
on --------.
Reminder II sent
on --------.
(Specimen
enclosed with
postal proof)
4. 94/1/12346/ IIIB PQR Shares transferred 06/03/95 34566
09

Page 290 of 332

 (Updated till May 8, 2006 )

SCHEDULE XXVI

[CLAUSE 16.3.1.1(c)]

ADDITIONAL INFORMATION FOR RENEWAL OF REGISTRATION AS MERCHANT

BANKER

1.0 Key personnel

1.1 Detailed bio-data clearly giving following information for the key personnel who joined
merchant banking division after the previous registration.

(a) Name
(b) Qualification
(c) Designation in the applicant company.
(d) Experience Details giving information about: name of the organisation, duration,
area of work [including of applicant company, if any].

1.2 A copy of experience certificate from previous employers, copy of Appointment letter,
acceptance letter, copy of experience certificates and copy of salary slip in the
applicant company.

2.0 Details of directors

2.1 If any of the Directors are wholetime directors the same to be indicated.

3.0 Details of membership of stock exchange

3.1 If the applicant company / associate company /group company / subsidiary company of
these are member of any recogn ised stock exchange, the following be submitted:

i) A conduct certificate from the concerned stock exchange regarding its functioning as
member.

ii) Details regarding payment of fees and also whether the member is facing any
charges/disciplinary action or if n
i past any such action has been taken by the
concerned stock exchange/ Board.

iii) NOC from the stock exchange for functioning as a merchant banker (in case
applicant company holds a corporate membership)/ Director/ full time employee.

4.0 Final accounts

4.1 A Copy of Audited annual accounts (including Auditors report and schedules) as on ......
......... (latest F.Y.)/ as on date of meeting the networth criteria.

5.0 State whether issuer company is registered as Non Banking Finance Company with
RBI. If yes , state the place where it is registered and give the registration number and
details about any comment of RBI for their inspection for latest three financial years.
Page 291 of 332
 (Updated till May 8, 2006 )

6.0 Declarations to be furnished: (to be signed by two Directors)

"We hereby declare and un dertake as under:

i) That the applicant company, its promoter, director, partner or employee has not at any
time been convicted for any offence involving moral turpitude or has been found guilty of
any economic offence.

ii) That the applicant company/associate company, its promoters, directors, partners or
employees are not involved in any litigation connected with the securities market and
there are no charges against them as on date.

iii) That none of the associate, subsidiary, inter-connected or group company of the
applicant company has applied or has been granted registration by the board to
undertake merchant banking activities.

iv) That the applicant company/associate company, its directors, partners are not facing
any charges/ disciplinary action from any stock exchange.

v) That the applicant company, its associates, its director, partner or principal officer is not
involved in the securities scam and are not named in the Janakiraman Committee
Report/ J P C Report. (If involved, detailed comments may be forwarded).

vi) That all investments indicated in the certified annual accounts are held in the name of
the company only." (If not, details of such holdings may be forwarded).

Page 292 of 332

 (Updated till May 8, 2006 )

SCHEDULE XXVII

[CL.16.3.2.1 (a)]

FORMAT FOR HALF YEARLY REPORT TO BE SUBMITTED BY MERCHANT BANKERS

(For the period ending September / March 199 )

1. Name/Category of registration.

2. SEBI Registration No.

3. Name of the Compliance Officer.

4. Addition / deletion / change in address etc. of branch offices from last submitted
report.

5. Change, if any, in constitution of the organisation (private limited, public limited,

partnership, merges, acquisition etc.)

6. Change, if any, in directorship details since the last report.

Name Induction/ Reasons Effective Brief Experience Share in the

retirement/ Qualification Date (in case of company
resignation induction)

7. Change in the key management personnel since last report (since grant of
registration in case of first report)

Name Date of App./ Qualification Experience

Resignation/Termination

8. Change including addition to/in associate concerns

Name of Co./ firm Nature of change Activities Handled Nature of interest with
Merchant Banker

Page 293 of 332

 (Updated till May 8, 2006 )

9. New activities undertaken/discontinuation of any existing activities

Activity When commenced/ Object of the new activities/
discontinued reasons for discontinuation.

10. Details of all pending litigations involving the merchant banker.

11. Issue management activit ies (Attach separate sheet if required):

Name of issuer Type of issue Instrument

Companies (public/rights/
composite)

Offer Amount Issue Price/ Issue opening

(Rs. In Lakhs) Conversion Price date

Issue Closing No. of times Functional date

oversubscribed Responsibility

Stock Exchanges Reasons for delay First date of

where instruments in listing trading in
were to be listed respective SEs

Opening trading Current market Remarks

price at respective price
SEs

12. Penalty/warnings given by SEBI, if any.

13. Underwriting activities

13.1 Total number of issues underwritten during the period.

13.2 Total amount underwritten during the period (Rs. In lakhs).
13.3 Outstanding underwriting commitment at the close of the period (Rs. in lakhs).
13.4 Details of disputed/devolved cases

Sr. Name Instru- Amount Amount Devolve - If not met, the Penalty/
No. of the ment underwritte devolve ment reasons thereof warning if
issuer n (Rs. in d (Rs. met & how dispute any issued
lakhs) in lakhs) yes/no was settled by SEBI

14. Redressal of Investor Grievances

14.1 System of redressal of investor grievances (a brief write up).

(i) Number of investor grievances received during the period.
(ii) Nature of grievances.
(iii) Number of grievances resolved.
(iv) Number of grievances pending.
Page 294 of 332
 (Updated till May 8, 2006 )

(v) The date of oldest grievance.

15. Financial information

Capital Structure Year ended Previous

(Rs in lakhs) Year ended
(Rs. In lakhs)

i) Paid-up capital
ii) Free reserves
iii) Secured loan
iv) Unsecured loan
v) Others

TOTAL

i) Fixed Assets (net block)

ii) Quoted investment at cost/market price whichever is lower
iii) Unquoted investment
iv) Current assets
v) Misc. exp. not written off
vi) Others

TOTAL

(Please enclose the copy of latest audited financial results alongwith schedules)

16. Changes, if any in major share holding (more than 5%)

Name of the Investment/ Percentage of

shareholder disinvestment total paid-up
capital

17. Name of the major shareholders holding more than 5%.

18. Any capital issue (rights or public) during the period. If yes, details thereof inclusive of
status of complaints from investors and their redressal.

19. Indictment or involvement in any economic offence by the merchant banker or their
directors or principle officer, if any, during the period.

PLACE:
DATE: AUTHORISED SIGNATORY

Page 295 of 332

 (Updated till May 8, 2006 )
362
(SCHEDULE XXVIII)

(Clause 8.3.5)

CONTENTS OF THE ADVERTISEMENT TO BE ISSUED IN TERMS OF CLAUSE 8.3.5.4

1. Name and address of registered office of the company.

2. Details of change of name and/or object clause.

3. Capital structure - Pre and post scheme of amalgamation. This shall provide details
of the authorized, issued, subscribed and paid up capital (Number of instruments,
description, aggregate nominal value)

4. Shareholding pattern giving details of promoter group shareholding, group

companies.

5. Names of ten largest shareholders of the company - number and percentage of

shares held by each of them, their interest, if any, in the company.

6. Details of promoters of the company - educational qualifications, experience,

address.

7. Business of company and management.

8. Reason for the amalgamation.

9. Financial statement for the previous 3 years prior to the date of listing.

10. Latest audited financial statements along with notes to accounts and any audit
qualifications. Change in accounting policies in the last 3 years and their effect on
profits and re serves of the company {Financial statements should not be later than 6
months prior to the date of listing}.

11. Details of other group companies including their capital structure and financial
statements.

12. Outstanding litigations and defaults of the company, promoters, directors or any of
the group companies.

13. Particulars of high, low and average prices of the shares of the listed company during
the preceding 3 years.

14. Any material development after the date of the balance sheet.

15. Such other information as may be prescribed by SEBI from time to time.

362
Inserted Schedule, vide SEBI Circular No. RMB (Compendium) Series Circular No. 1 (2001- 2002) dated July 17, 2001.
Page 296 of 332
 (Updated till May 8, 2006 )
363
(SCHEDULE XXIX )

(Clause 8A)

FINAL REPORT FOR GREEN SHOE OPTION

a. Name of the company :

b. Name of the SA (Registration No.) :
c. Issue size (No. of shares) :
d. Issue opened on :
e. Issue closed on :
f. Over-allotment in issue (%) :
g. Date of commencement of trading :
h. Amount in the GSO Bank Account ( Rs..) :
i. Details of promoter(s) from whom shares :
borrowed (Name & Number of shares borrowed)
j. Date on which the stabilisation period ended :
k. Number of shares bought during the stabilization :
period
l. Date on which company allotted further shares to :
the extent of shortfall
m. Date when the shares in the GSO Demat Account :
were returned to the promoter(s)
n. Date when the money in the GSO Bank Account :
was remitted to the company
o. Details of the Depository account (Special account :
for GSO securities) where shares purchased from
the market were kept inter-alia the following:
364
(i) Depository Participant
365
(ii) Account No.
366
(iii) Number of shares purchased, date wise.
367
(iv) Number of shares taken out, date wise.

363
Inserted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003.

364
Renumbered sub-point “(p)” as sub-point “(i)”, vide SEBI Circular No. SEBI/CFD/DIL/DIP/14/2005/25/1 dated
January 25, 2005.

365
Renumbered sub -point “(q)” as sub-point “(ii)”, vide SEBI Circular No. SEBI/CFD/DIL/DIP/14/2005/25/1 dated
January 25, 2005.

366
Renumbered sub -point “(r)” as sub-point “(iii)”, vide SEBI Circular No. SEBI/CFD/DIL/DIP/14/2005/25/1 dated
January 25, 2005.
367
Renumbered sub-point “(s)” as sub-point “(iv)”, vide SEBI Circular No. SEBI/CFD/DIL/DIP/15/2005/29/3 dated
Mar ch 29, 2005.
Page 297 of 332
 (Updated till May 8, 2006 )
368
(SCHEDULE XXX)

[Clause 11.3.4.1(xii)]

<NAME OF THE ISSUE>- BID DETAILS

Sr. Category No. of No of No of times /

No. shares shares %age of total
offered / bid for meant for the
reserved category
1 QIBs
1 (a) FIIs
Domestic Financial Institutions (Banks /
FIs / Insurance Companies etc.)
1(b) Mutual Funds
1(c) Others
2 Non Institutional Investors
2(a) Corporates
2(b) Individuals (other than RIIs)
2(c) Others
3 Retail Individual Investors (RIIs)
3 (a) Cut off
3 (b) Price bids
4 Reservation categories, if any
4(a) Cut off
4(b) Price bids

Notes:

1. The graph should have the title “Graphical display of bids received”.

2. A statement to the effect that the position indicated above is only bids position and
does not necessarily convey the subscription to the issue.

3. Statement as to how the multiple bids are accounted for in the data and graph.

4. Time of updation.

5. Additional comments, if any.

368
Inserted Schedule, vide SEBI Circular No. SEBI/CFD/DIL/DIP/15/2005/29/3 dated March 29, 2005.
Page 298 of 332
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The text of Sections I and II of Chapter VI of these Guidelines, prior to substitution

made vide SEBI Circular No. SEBI/CFD/DIL/DIP/14/2005/25/1 dated January 25, 2005,
is as under:

“SECTION I - CONTENTS OF THE PROSPECTUS

6.1 The offer document shall contain all material information which shall be true and
adequate so as to enable the investors to make informed decision on the investments
in the issue.

6.1.1 The offer document shall also contain the information and statements specified in this
chapter.

369
(6.1.2 The draft offer document and final offer document shall be approved by the Board
of Directors of the issuer company and signed by all the Directors (including the
Managing Director), Chief Executive Officer and Chief Financial Officer of the issuer
company. They shall also certify that all the disclosures made in the offer document
are true and correct.)

6.2 Cover Pages

6.2.1 Front Outer Cover Page

6.2.1.1
a) The front cover page of the prospectus shall be white and no patterns or pictures
shall be printed on this page.
b) The cover page paper shall be of adequate thickness (preferably minimum 100 gcm.
quality).
6.2.1.2 The front outer cover page of the prospectus shall contain the following details only:
i. The word "Prospectus"
ii. The name of the issuer company and address of the registered office of the company
along with telephone fax number and E.mail address.
iii. The nature, number, price and amount of the instruments offered.
Iv
(a)370 (The ‘Risks in relation to the first issue’ (wherever applicable) shall be incorporated
in a box format in case of a initial public issue:

"This being the first issue of the company, there has been no formal market for
the securities of the company. The face value of the shares is (-----) and
the issue price is ‘X-times’ of the face value. The issue price (has been
determined and justified by the Lead Merchant Banker and the issuer company

369
Inserted vide SEBI Circular No. RMB (Compendium) series 2003-04 circular no.9 dated May 2, 2003.

370
Substituted vide SEBI Circular No. SEBI/CFD/DIL/DIP/13/2004/28/5 dated May 28, 2004 for the following:
“The ‘Risks in relation to the first issue’ (wherever applicable) shall be incorporated in a box format in case of a initial
public issue:
"This being the first issue of the company, there has been no formal market for the securities of the company. The
issue price (has been determined and justified by the Lead Merchant Banker and the issuer company as stated under
Justification of Premium paragraph - in case of premium issue) should not be taken to be indicative of the market price
of the equity shares after the shares are listed. No assurance can be given regarding an active or sustained trading in
the shares of the company nor regarding the price at which the equity shares will be traded after listing."
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as stated under Justification of Premium paragraph - in case of premium issue)

should not be taken to be indicative of the market price of the equity shares
after the shares are listed. No assurance can be given regarding an active or
sustained trading in the shares of the company nor regarding the price at
which the equity shares will be traded after listing.")

b) In case of issue proposed to be listed on the Over the Counter Exchange of India and
/ or where market maker has been appointed, the concluding sentence of the above
risk factor shall read as under:
"No assurance can be given regarding the price at which the equity shares of the
company will be traded after listing."
v The following general risk shall be incorporated:
"Investment in equity and equity related securities involve a degree of risk and
investors should not invest any funds in this offer unless they can afford to take the
risk of losing their investment. Investors are advised to read the risk factors carefully
before taking an investment decision in this offering. For taking an investment
decision, investors must rely on their own examination of the issuer and the offer
including the risks involved. The securities have not been recommended or approved
by Securities and Exchange Board of India (SEBI) nor does SEBI guarantee the
accuracy or adequacy of this document."
Specific attention of investors shall be invited to the summarised and detailed
statement of Risk Factors by indicating their page number(s) in the ‘General Risks’.
vi ‘Issuer’s Absolute Responsibility’ clause shall be incorporated as under :
"The issuer, having made all reasonable inquiries, accepts responsibility for and
confirms that this offer document contains all information with regard to the issuer and
the issue, which is material in the context of the issue, that the information contained
in the offer document is true and correct in all material aspects and is not misleading
in any material respect, that the opinions and intentions expressed herein are
honestly held and that there are no other facts, the omission of which make this
document as a whole or any of suc h information or the expression of any such
opinions or intentions misleading in any material respect."
vii.
a) The name and address of only of the Lead Merchant Banker who files the offer
document with Board along with its telephone, fax number and E.mail address shall
appear on the front outer cover page.
b) The names of the other Lead Merchant Bankers, Co-Managers, etc. may be
mentioned on the back cover page.
c)371 (If more than one merchant banker are associated with the issue, the inter-se
allocation of responsibility of each Merchant Banker as demarcated and submitted to
the Board in terms of clause 5.3.2, shall be disclosed in the offer document)
viii. The name and address of the Registrar to the issue along with the telephone number
and fax number.
ix. Issue Opening Date
x. Credit Rating, if applicable
xi. Name/s of stock exchanges where listing of the securities is proposed 372(and the
details of in-principle approval for listing obtained from these stock exchanges.)
371
Inserted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003.

372
Inserted vide SEBI Circular No. DIP (Compendium) Circular No. 3 dated August 04, 2000.
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6.2.2 Front Inside Cover Page

6.2.2.1 Index shall appear on the Front Inside Cover Page.

6.2.3 Inner Cover Pages

6.2.3.1 The other risk factors shall be printed in clear readable font (preferably of
minimum point 10 size) starting on the first inner cover page to be numbered page i
(and, if need be, shall continue on subsequent pages ii, iii, etc. as distinct from the
page number of the offer document proper which would run as 1, 2, 3, etc.) in
addition to appearing in the Part I of the Prospectus.

6.2.3.2
373
(i. The Risk factors shall be classified as those which are specific to the project and
internal to the issuer company and those which are external and beyond the control
of the issuer company.
ii. The Risk factor shall be determined on the basis of their materiality.
iii Materiality shall be decided taking the following factors into account
a. Some events may not be material individually but may be found material
collectively.
b. Some events may have material impact qualitatively instead of quantitatively.
c . Some events may not be material at present but may be having material
impacts in future.
iv. The Risk factors shall appear in the Offer Document in the following manner:
a. Risks envisaged by Management
b. Proposals, if any, to address the risks.)

6.2.4 Back Cover Pages

6.2.4.1 Back Inside Cover Page and Back Outside Cover Page shall be in white.

6.2.4.2 Any ‘notes’ required to be given prominence shall appear immediately after
the Risk Factors wherever they appear.

PART I

6.3 General Information

6.3.1 Name and address of registered office of the issuer company.

6.3.2 Letter of intent / industrial license and declaration of the Central Govt./RBI about non-
responsibility for financial soundness or correctness of statements.

373
Substituted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 for the fol lowing:
“The risk factors shall be classified as those which are specific to the project and internal to the issuer company and
those which are external and beyond the control of the issuer company. Management perception of the internal and
external risk factors shall be given immediately after each of the risk factors and not as a separate heading under
management perception.”
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6.3.3 Disclaimer Clause

6.3.3.1 A prospectus shall contain the following disclaimer clause in bold capital letters:
i) "It is to be distinctly understood that submission of offer document to SEBI should not
in any way be deemed or construed that the same has been cleared or approved by
SEBI. SEBI does not take any responsibility either for the financial soundness of any
scheme or the project for which the issue is proposed to be made or for the
correctness of the statements made or opinions expressed in the offer document.
Lead Merchant Banker, ______________ has certified that the disclosures made in
the offer document are generally adequate and are in conformity with SEBI
(Disclosures and Investor Protection) Guidelines in force for the time being. This
requirement is to facilitate investors to take an informed decision for making
investment in the proposed issue.
It should also be clearly understood that while the Issuer Company is primarily
responsible for the correctness, adequacy and disclosure of all relevant information in
the offer document, the Lead Merchant Banker is expected to exercise Due Diligence
to ensure that the Company discharges its responsibility adequately in this behalf and
towards this purpose, the Lead Merchant Banker _______________________ has
furnished to SEBI a Due Diligence Certificate dated ________________ in
accordance with SEBI (Merchant Bankers) Regulations 1992 which reads as follows :
i.) We have examined various documents including those relating to litigation like
commercial disputes, patent disputes, disputes with collaborators etc. and other
materials in connection with the finalisation of the offer document pertaining to the
said issue;
ii.) On the basis of such examination and the discussions with the Company, its
Directors and other officers, other agencies, independent verification of the
statements concerning the objects of the issue, projected profitability, price
justification and the contents of the documents mentioned in the Annexure and other
papers furnished by the company.
WE CONFIRM that :
(a) the offer document forwarded to SEBI is in conformity with the documents, materials
and paper relevant to the issue;
(b) all the legal requirements connected with the said issue, as also the guidelines,
instructions, etc. issued by SEBI, the Government and any other competent authority
in this behalf have been duly complied with; and
(c) the disclosures made in the offer document are true, fair and adequate to enable the
investors to make a well informed decision as to the investment in the proposed
issue.
(d) We confirm that beside ourselves , all the intermediaries named in the prospectus are
registered with SEBI and till date such registration is valid.
(e) We have satisfied ourselves about the worth of the underwriters to fulfill their
underwriting commitments.
The filing of offer document does not, however, absolve the company from any
liabilities under section 63 or 68 of the Companies Act, 1956 or from the requirement
of obtaining such statutory or other clearances as may be required for the purpose of
the proposed issue. SEBI, further reserves the right to take up, at any point of time,
with the lead merchant banker(s) any irregularities or lapses in offer document."

6.3.4 Disclaimer Statement from the Issuer

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6.3.4.1 A statement to the effect that the issuer accepts no responsibility for statements
made otherwise than in the prospectus or in the advertisement or any other material
issued by or at the instance of the issuer and that anyone placing reliance on any
other source of information would be doing so at his own risk should be incorporated .

6.3.5 Filing of offer document with the Board and RoC

a) Under this head, the office of the Board where the offer document has been filed shall
be mentioned.
b) The RoC where copy of the offer document, having attached thereto the Material
Contracts and Documents referred to elsewhere in the offer document, has been filed
shall also be mentioned.

374
6.3.6 (Names of the Designated stock exchange and other exchanges where application
has been made for listing of the present issue shall be mentioned.)

6.3.7 Provisions of sub-section (1) of section 68A of the Companies Act, relating to
punishment for fictitious applications, shall be mentioned.

6.3.8 Minimum Subscription Clause

Following statements shall appear:

6.3.8.1 For Non-underwritten Public Issues

" If the company does not receive the minimum subscription of 90% of the issued
amount on the date of closure of the issue, or if the subscription level falls below 90%
after the closure of issue on account of cheques having being returned unpaid or
withdrawal of applications, the company shall forthwith refund the entire subscription
amount received. If there is a delay beyond 8 days after the company becomes liable
to pay the amount, the company shall pay interest as per Section 73 of the
Companies Act 1956."

6.3.8.2 For Underwritten Public Issues

"If the company does not receive the minimum subscription of 90% of the net offer to
public including devolvement of Underwriters within 60 days from the date of closure
of the issue, the company shall forthwith refund the entire subscription amount
received. If there is a delay beyond 8 days after the company becomes liable to pay
the amount, the company shall pay interest prescribed under Section 73 of the
Companies Act 1956."

6.3.8.3 For Composite Issues

i. The Lead Merchant Banker shall ensure that the requirement of "minimum
subscription" is satisfied both jointly and severally, i.e., independently for both rights
and public issues.
ii. If the company does not receive the minimum subscription in either of the
issues the company shall refund the entire subscription received.

374
Substituted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 for the following:
“Names of regional stock exchange and other stock exchanges where application made for listing of present issue,
shall be mentioned.”
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6.3.8.4 Offer for sale

6.3.8.4.1The requirement of minimum subscription shall not be applicable to offer for sale.

6.3.8.5 Public issues by infrastructure companies

The requirement of minimum subscription shall not be applicable to an eligible
infrastructure company, provided disclosures regarding the alternate source of
funding is made in the offer documents.

6.3.9 Declaration about the issue of allotment letters or refunds within a period of 10 weeks
and interest in case of any delay in refund at the prescribed rate under section 73(2) /
73(2A) of the Companies Act, shall be mentioned.

6.3.10 Issue Schedule

(a) Date of opening of the issue
(b) Date of closing of the issue
(c) Date of earliest closing of the issue

6.3.11 Intermediaries and auditors

a. Name and address of auditors and lead managers.
b. Name and address of registrars to the issue.
c . Name and address of trustee under debenture trust deed (in case of debenture issue)

6.3.12 Credit Rating

a. The credit rating obtained from a credit rating agency for the proposed issue of debt
security including convertible instruments.
b. If the rating has been obtained from more than one credit rating agencies, disclosures
shall b e made of all ratings including unaccepted rating.
c. All the credit ratings obtained during the previous three years before filing of the offer
document for any of its listed debt-securities at the time of accessing the market
through a rated debt-security shall be disclosed.

6.3.13 Underwriting of the issue

a. Names and addresses of the underwriters and the amount underwritten by them
b. Declaration by board of directors of the issuer company that the underwriters have
sufficient resources to discharge their respective obligations.

6.3.14 Compliance Officer

a. The name, address telephone number, fax and E.mail number and address of
Compliance Officer.
b. The investor’s attention shall also be invited to contact the compliance officer in case
of any pre -issue / post-issue related problems such as non-receipt of letters of
allotment / share certificates / refund orders / cancelled stockinvests, etc.

6.4 Capital Structure of the company

6.4.1 The lead merchant banker shall present the capital structure in the following manner:

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a. Authorised issued subscribed and paid up capital (Number of instruments,

description, aggregate nominal value)
b. Size of present issue giving separately promoters contribution, firm allotment /
reservation for specified categories and net offer to public. (Number of instruments,
description, aggregate nominal value and issue amount shall be given in that order,
Name(s) of group companies to be given, in case, reservation has been made for
shareholders of the group companies)
c. Paid-up Capital
i. after the issue
ii. after conversion of securities (if-applicable)
d. Share Premium Account (before and after the issue)

6.4.2 Notes to Capital Structure

After the details of capital structure, the following notes shall be incorporated:-
a. Note relating to promoters' contribution and lock-in period stating date of allotment,
date when made fully paid up, Nature of allotment (rights, bonus, etc.), number of
securities, face value of securities, issue price of securities, percentage of promoters
contribution to total issued capital and the date up to which the securities are locked-
in.
b. An illustrative format of promoters contribution and lock-in is specified in Schedule
VIII.
(i) percentage of contribution by the promoters whose name figured in the prospectus as
promoters in the paragraph on "Promoters and their background" and the date up to
which the securities are locked-in.
(ii) An illustrative format of promoters contribution whose name figures in prospectus is
specified in Schedule IX .
c. statement that promoters contribution has been brought in not less than the specified
minimum lot and from persons defined as promoters under the Guidelines.
d. Statement that the promoters undertake to accept full conversion, if the promoters
contribution is in terms of the same optionally convertible security as is being offered
to the public.
e. Details of all "buy-back" and `stand by’ and similar arrangements for purchase of
securities by promoters, directors and lead merchant bankers shall be disclosed.
f. An over-subscription to the extent of 10% of the net offer to public can be retained for
the purpose of rounding off to the nearer multiple of 100 while finalising the allotment
g. A disclosure to the effect that the securities offered through this public/ rig hts issue
shall be made fully paid up or may be forfeited within 12 months from the date of
allotment of securities in the manner specified in clause 8.6.2.
h. A note stating that;-
(i) unsubscribed portion in any reserved category may be added to any other reserved
category.
(ii) The unsubscribed portion, if any, after such inter se adjustments amongst the
reserved categories shall be added back to the net offer to the public.
i. In case of under-subscription in the net offer to the public portion spillover to the
extent of undersubscription shall be permitted from the reserved category to the net
public offer portion.
j. Following details regarding major shareholders:-
(i) names of the ten largest shareholders as on the date of filing of the prospectus with
the registrar of Companies;
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(ii) number of shares held by shareholders at (i) above including number of shares which
they would be entitled to upon exercise of warrant, option, rights to convert a
debenture, loan or other instrument;
(iii) particulars as in (i) and (ii) above as on a date two years prior to the date of filing the
prospectus with the Registrar of Company, -
(iv) Particulars as in (i) and (ii) above as on a date 10 days prior to the date of filing of the
prospectus with the Registrar of the Company;
(v) if the issuer company has made an initial public offering within the immediately
preceding two years, the above information shall be given separately indicating the
names of persons who acquired shares by subscriptions to the public issue and those
who acquired the shares by allotment on a firm basis or by private placement.
k. The details of:-
(i) the aggregate shareholding of the Promoters group and of the directors of the
Promoters, where the promoter is a company;
(ii) aggregate number of securities purchased or sold by the Promoters Group and the
directors of the promoter during a period of six months preceding the date on which
the draft prospectus is filed with Board and to be updated by incorporating the
information in this regard till the time of filing the prospectus with the Registrar of the
Company;
(iii) the maximum and minimum price at which purchases and sales referred to in (ii)
above were made along with the relevant dates.
l. In the event of it not being possible to obtain information regarding sales and
purchase of securities by any relative of the promoters, a statement to that effect shall
be made in the prospectus on the basis of the transfers recorded in the books of the
company.
Explanation I
For the purpose of sub-clauses (i) to (iii) of clause k above, th e term 'promoter' shall
include -
a) the person or persons who are in over-all control of the company.
b) the person or persons who are instrumental in the formulation of a plan or programme
pursuant to which the securities are offered to the public;
c) the persons or persons named in the prospectus as promoters(s) :
Provided that a director / officer of the issuer company or person, if they
are acting as such merely in their professional capacity shall not be included in
the Explanation.

Explanation II
'Promoter Group' shall include-
a) the promoter,
b) an immediate relative of the promoter (i.e. any spouse of that person, or any parent,
brother, sister or child of the person or of the spouse);and
c) in case promoter is a company-
(i) a subsidiary or holding company of that company;
(ii) any company in which the promoter holds 10% or more of the equity capital or which
holds 10% or more of the equity capital of the Promoter;
(iii) any company in which a group of individuals or companies or combin ations thereof
who holds 20% or more of the equity capital in that company also holds 20% or more
of the equity capital of the issuer company; and
d) in case the promoter is an individual,-
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i) any company in which 10% or more of the share capital is held by the promoter or an
immediate relative of the promoter' or a firm or HUF in which the 'Promoter' or any
one or more of his immediate relative is a member;
ii) any company in which a company specified in (i) above, holds 10% or more, of the
share capital;
iii) any HUF or firm in which the aggregate share of the promoter and his immediate
relatives is equal to or more than 10% of the total, and
e) all persons whose shareholding is aggregated for the purpose of disclosing in the
prospectus "shareholding of the promoter group".

Explanation III - The Financial Institution, Scheduled Banks, Foreign Institutional

Investors (FIIs) and Mutual Funds shall not be deemed to be a promoter or promoter
group merely by virtue of the fact that 10% or more of the equity of the issuer
company is held by such institution.
Provided that the Financial Institutions, Scheduled banks, Foreign Institutional
Investors, shall be treated as promoters or promoter group for the subsidiaries or
companies promoted by them or for the mutual fund sponsored by them.

6.5 Terms of the present issue

6.5.1 Terms of payments

6.5.1.1 The caption "Interest in Case of Delay in Despatch of Allotment Letters/ Refund
Orders in Case of Public Issues" shall appear and shall contain the following
statement:
"The company agrees that as far as possible allotment of securities offered to the
public shall be made within 30 days of the closure of public issue. The company
further agrees that it shall pay interest @15% per annum if the allotment letters /
refund orders have not been despatched to the applicants within 30 days from the
date of the closure of the issue. However applications received after the closure of
issue in fulfillment of underwriting obligations to meet the minimum subscription
requirement, shall not be entitled for the said interest."

6.5.2 Arrangements for Disposal of Odd Lots

6.5.2.1
a) Any arrangements made by the issuer company for providing liquidity for and
consolidation of the shares held in odd lots, particularly when such odd lots arise on
account of issues by way of rights, bonus, conversion of debentures/warrants etc.,
shall be intimated to the shareholders/investors.
b) The company is free to make arrangements for providing liquidity in respect of odd lot
shares through any investment or finance company, broking firms or through any
other agency and the particulars of such arrangement, if any, may be disclosed in the
offer documents related to the concerned issue of capital.

6.5.2.2 Lead Merchant Banker shall ascertain whether the companies coming for fresh issue
of capital propose to set up trusts in order to provide service to the investors in the
matter of disposal of odd lot shares of the company held by them and if so,
disclosures relating to setting up and operation of the trust shall be contained in the
offer document.
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6.5.2.3Whenever any issue results in issue of shares in odd lots, the issuer company, shall
as far as possible issue certificates in the denomination of 1-2-5-10-20-50 shares.

6.5.3 Rights of the instrument holders

6.5.4 How to apply - availability of forms, prospectus and mode of payment

6.5.4.1Applications by mutual funds

a. Lead Merchant Bankers shall clearly incorporate necessary disclosures under the
heads "Procedure for applications by mutual funds" and "Multiple Applications"to
indicate that a separate application can be made in respect of each scheme of an
Indian mutual fund registered with the Board and that such applications shall not be
treated as multiple applications.
b. The applications made by the AMCs or custodians of a Mutual Fund shall clearly
indicate the name of the concerned scheme for which application is being made.

6.5.4.2 Applications by NRIs

6.5.4.2.1 The Lead merchant banker shall ensure the following disclosures:

a. the name and address of at least one place in India from where individual NRI
applicants can obtain the application forms.
b. "NRI applicants may please note that only such applications as are accompanied by
payment in free foreign exchange shall be considered for allotment under the
reserved category. The NRIs who intend to make payment through Non-Resident
Ordinary (NRO) accounts shall use the form meant for Resident Indians and shall not
use the forms meant for reserved category."

6.5.4.3 Disclosures about Stock invests

a. The disclosures regarding manner of obtaining and mode of drawing stockinvests,

non-utilisation of stockinvests by third party, time period for utilisation of stockinvests
by the purchasers and disposal of applications accompanied by stock invest as
specified by RBI shall be incorporated at the appropriate places in the offer
document.
b. Name of the bank through which the stockinvests shall be realised, shall be given in
the prospectus.
c. The following paragraph shall be incorporated at the appropriate places in the
prospectus.
"Registrars to the Issue have been authorised by the company ( through resolution of
the Board passed on ______) to sign on behalf of the company to realise the
proceeds of the Stockinvest from the issuing bank or to affix non allotment advice on
the instrument or cancel the Stockinvest of the non allottees or partially successful
allotees who have enclosed more than one stockinvest. Such cancelled stockinvest
shall be sent back by the Registrars directly to the investors."

6.5.5 Despatch of Refund Orders

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6.5.5.1 The following clause shall be incorporated in the prospectus:

"The company shall ensure despatch of refund orders of value over Rs.1500/- and
share/debenture certificates by Registered Post only and adequate funds for the
purpose shall be made available to the Registrars by the issuer company ".

6.5.6 Undertaking by the Issuer Company.

6.5.6.1 The following undertaking by the issuer company shall be incorporated in the offer
document :
a. that the complaints received in respect of the Issue shall be attended to by the issuer
company expeditiously and satisfactorily;
375
b. (that all steps for completion of the necessary formalities for listing and
commencement of trading at all stock exchanges where the securities are to be listed
are taken within 7 working days of finalisation of basis of allotment.)
c. that the issuer company shall apply in advance for the listing of equities on the
conversion of Debentures / Bonds;
d. that the funds required for despatch of refund orders/allotment letters/ certificates by
registered post shall be made available to the Registrar to the Issue by the issuer
company;
e. that the promoters’ contribution in full, wherever required, shall be brought in advance
before the Issue opens for public subscription and the balance, if any, shall be
brought in pro rata basis before the calls are made on public;
f. that the certificates of the securities/refund orders to the non-resident Indians shall be
despatched within specified time.
g. that no further issue of securities shall be made till the securities offered through this
offer document are listed or till the application moneys are refunded on account of
non-listing, undersubscription, etc.
h. that necessary cooperation with the credit rating agency(ies) shall be extended in
providing true and adequate information till the debt obligations in respect of the
instrument are outstanding.

6.5.6.2 376(In case of a debenture issue, the company shall also give undertakings to the
following effect in the offer document:
i. That the company shall forward the details of utilization of the funds raised
through the debentures duly certified by the statutory auditors of the company,
to the debenture trustees at the end of each half-year.
ii. That the company shall disclose the complete name and address of the
debenture trustee in the annual report.
iii. That the company shall provide a compliance certificate to the debenture
holders (on yearly basis) in respect of compliance with the terms and
conditions of issue of debentures as conta ined in the offer document, duly
certified by the debenture trustee.
iv That the company shall furnish a confirmation certificate that the security
created by the company in favour of the debenture holders is properly

375
Substituted vide SEBI Circular No. DIP (Compendium) Circular No. 3 dated August 04, 2000 for the following:
"that the issuer company shall take necessary steps for the purpose of getting the securities listed in the concerned
stock exchange within the specified time;"

376
Inserted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003.
Page 309 of 332
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maintained and is adequate enough to meet the payment obligations towards

the debenture holders in the event of default.)

6.5.7 Utilisation of Issue Proceeds

6.5.7.1 A statement by the Board of Directors of issuer company to the effect that–
a. all monies received out of issue of shares or debentures to public shall be transferred
to separate bank account other than the bank account referred to in sub -section (3) of
section 73;
b. details of all monies utilised out of the issue referred to in sub-item(i) shall be
disclosed under an appropriate separate head in the balance-sheet of the company
indicating the purpose for which such monies had been utilised; and
c. details of all unutilised monies out of the issue of shares or debentures, if any,
referred to in sub-item(i) shall be disclosed under an appropriate separate head in the
balance-sheet of the company indicating the form in which such unutilised monies
have been invested.

377
(6.5.7.2 - The offer document shall contain a statement of the Board of Directors of the
issuer company to the effect that –
i. the utilisation of monies received under promoters’ contribution and from firm
allotments and reservations shall be disclosed under an appropriate head in the
balance sheet of the company indicating the purpose for which such monies have
been utilised.
ii. the details of all unutilised monies out of the funds received under promoters’
contribution and from firm allotments and reservations shall be disclosed under a
separate head in the balance sheet of the company indicating the form in which such
unutilis ed monies have been invested).

6.5.8 Any special tax benefits for company and its shareholders.

6.6 Particulars of the issue

6.6.1

378
(6.6.1.1Objects

6.6.1.2 Whether the company proposes to raise funds for a purpose like fixed asset creation
and/or for rotation such as working capital etc shall be disclosed clearly in the offer
document

6.6.1.3. Where the company proposes to raise funds for a purpose like fixed asset creation,
the requirement of funds shall also be disclosed clearly.)
Objects

6.6.2 Project Cost

377
Inserted vide SEBI Circular No. DIP (Compendium) Circular No. 3 dated August 04, 2000.

378
Substituted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 for “Objects” .

Page 310 of 332

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a. Where the company proposes to undertake more than one activity i.e diversification,
modernisation, expansion etc. the total project cost shall be given activity- wise.
b. Where the company is implementing the project in a phased manner, the cost of each
phase including the phase, if any, which has already been implemented shall be
separately given.
c. The total project cost shall reflect the cost involved in each of the projects mentioned
under the section on “Objects of the issue".

379
6.6.3 (Means of financing.

a. An undertaking shall be given in the offer document by the issuer company

confirming 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.”

b.. The balance portion of the ‘Means of Finance’ for which no firm arrangement has
been made shall be mentioned without specification.)

6.6.4 Appraisal

6.6.4.1
(a) The scope and purpose of the appraisal along with the date of appraisal shall be
disclosed in the offer document.

(b) The offer document shall contain the cost of the project and means of finance as per
the appraisal report.

(c) The weaknesses and threats, if any, given in the appraisal report, shall be disclosed
in the offer document by way of risk factors.

6.6.5 Deployment of funds in the project

a. Actual expenditure incurred on the project (in cases of companies raising capital for a
project) upto a date not earlier than 2 months from the date of filing the prospectus
with Registrar of Companies.
b. Means and source of financing including details of "bridge loan" or other financial
arrangement, which may be repaid from the proceeds of the issue.
c. Year wise break up of the expenditure proposed to be incurred on the said project.
d. Investment avenues in which the management proposes to deploy issue proceeds
pending its utilisation in the proposed project.

6.6.6 Name of monitoring agency, if applicable, to be disclosed.

6.7 Company, Management and Project

6.7.1 History and main objects and present business of the company

379
Substituted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 for “Means of financing.”
Page 311 of 332
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6.7.2 Subsidiary(ies) of the company, if any

6.7.3 Promoters and their Background

380
a ((i)A complete profile of the promoters including their age, educational
qualifications, experience in the business or employment and in the line of business
proposed in the offer document , their business and financial activities, photograph,
Voter ID Number, Driving License Number shall be disclosed.
(ii) A disclosure, confirming that the Permanent Account Number, Bank Account
Number and Passport Number of the promoters have been submitted to the Stock
Exchanges on which securities are proposed to be listed, at the time of filing the draft
offer document to them)

b In case, the promoters are companies, history of the companies and the promoters
of the companies shall be furnished.
c Details in change of management of the companies if any, including details of the
persons who are holding the controlling interest together with the applicability and
compliance of Securities and Exchange Board of India (Substantial Acquisition of
Shares and Takeovers) Regulations, 1997.)

6.7.4 Key Managerial Personnel

a. A paragraph on the key managerial personnel shall be incorporated giving full details
of the personnel recruited as on the date of filing of the offer document with the Board
indicating name, date of joining, qualification, details of previous employment etc.
b. The Lead Merchant Banker shall verify and ensure that the persons whose name
appear in this para are in the employment of the company as permanent employees."
c. Any change otherwise than by way of retirement in the normal course in the key
senior managerial personnel particularly in charge of production, planning, finance
and marketing within one year prior to the date of filing the offer document with the
Board shall be disclosed.

6.7.5 Names, address and occupation of manager, managing director, and other directors
(including nominee- directors, whole-time directors (giving their directorships in other
companies)

6.7.6 Location of the Project

6.7.7 Plant and machinery , technology, process, etc.

a. Details in a tabular form to be given shall include the machines required to be
bought by the company, cost of the machines, name of the suppliers, the date
of placement of order and the date / expected date of supply.
b. In case of machines yet to be delivered, the date of quotations relied upon for
the cost estimates given, shall also be mentioned.
c. Percentage and value terms the plant and machinery for which orders are yet
to be placed shall be stated and also be given by way of a risk factor.

380
Substituted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 for the following:
“A complete profile of the promoters including their age, educational qualifications, experience in the business or
employment and in the proposed line of business, their business and financial activities shall be furnished.”
Page 312 of 332
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d. Details of second hand machinery bought / proposed to be bought, if any,

including the age of the machines, balance estimated life, etc. shall als o be
given.

6.7.8 Collaboration, any performance guarantee or assistance in marketing by the

collaborators

6.7.8.1 Following information regarding persons/entities with whom technical and financial
agreements have been entered into to be given:
a. place of registration and year of incorporation;
b. paid up share capital;
c. turnover of the last financial year of operation;
d. general information regarding such persons relevant to the issuer.

6.7.9 Infrastructure facilities for raw materials and utilities like wate r, electricity, etc.

6.7.10 Schedule of implementation of the project and progress made so far, giving details of
land acquisition, civil works, installation of plant and machinery, trial production, date
of commercial production, etc.

6.7.11 The products

6.7.11.1 Nature of the product/ s – consumer / industrial and end users

6.7.11.2
(a) Market including details of the competition, past production figures for the industry,
existing installed capacity, past trends and future prospects regarding exports (if,
applicable), demand and supply forecasts (if given, should be essentially with
assumptions unless sourced from a market research agency of repute), etc. to be
given.
(b) Source of data used shall be mentioned.

6.7.11.3 Approach to marketing and proposed marketing set up.

6.7.11.4 Export possibilities and export obligations, if any (in case of a company providing
any "service" particulars, as applicable, be furnished)

6.7.12 Future prospects

6.7.12.1 Capacity & Capacity Utilisation

a. A table shall be incorporated giving the existing installed capacities for each product,
capacity utilisation for these products in the previous 3 years, proposed capacities for
existing as well as proposed products and the assumptions for future capacity
utilisation for the next three years (from the date of commencement of commercial
production) in respect of existing as well as proposed products.
b. If the projected capacity utilisation is higher than the actual average capacity
utilisation by more than 25% during the previous 3 years, how the company proposes
to achieve the projected levels of capacity utilisation in view of its failure to achieve
levels of similar capacity utilisation in the past, shall be stated.

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6.7.13 Stock Market Data

6.7.13.1 Particulars of:-

a. high, low and average market prices of the share of the company during the
preceding three years;
b. monthly high and low prices for the six months preceding the date of filing the draft
prospectus with Board which shall be updated till the time of filing the prospectus with
the Registrar of Company / Stock Exchange concerned;
c. number of shares traded on the days when the high and low prices were recorded in
the relevant stock exchange during said period of (i) and (ii) above;
d. the stock market data referred to above shall be shown separately for periods marked
by a change in capital structure, with such period commencing from the date the
concerned stock exchange recognises the change in the capital structure (e.g. when
the shares have become ex-rights or ex-bonus);
e. the market price immediately after the date on which the resolution of the Board of
Directors approving the issue was approved;
f. the volume of securities traded in each month during the six months preceding the
date on which the prospectus is filed with ROC; and
g. to volume of business transacted along with high, low and average prices of shares of
the company shall also be stated for respective periods.

6.8 Management Discussion and Analysis of the Financial Condition and Results of
the Operatio ns as Reflected in the Financial Statements.
6.8.1 A summary of past financial results after adjustments as given in the auditors report
for the past three years containing significant items of income and expenditure shall
be given.
6.8.2 An analysis of reasons for the changes in significant items of income and expenditure
shall also be given, inter alia, containing the following:
a. unusual or infrequent events or transaction;
b. significant economic changes that materially affected or (are likely to effect inc ome
from continuing operations;
c. known trends or uncertainties that have had or are expected to have a material
adverse impact on sales, revenue or income from continuing operations;
d. future changes in relationship between costs and revenues, in case of events such as
future increase in labour or material costs or prices that will cause a material change
are known;
e. the extent to which material increases in net sales or revenue are due to increased
sales volume, introduction of new products or services or increased sales prices;
f. total turnover of each major industry segment in which the company operated
g. status of any publicly announced new products or business segment;
h. the extent to which business is seasonal;
i. any significant dependence on a single or few suppliers or customers;
j. competitive conditions.

6.8.3 A statement by the directors whether in their opinion there have arisen any
circumstances since the date of the last financial statements as disclosed in the
prospectus any which materially and adversely affect or is likely to affect the trading
or profitability of the company, or the value of its assets, or its ability to pay its
liabilities within the next twelve months.
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381
(6.8.4 One standard financial unit shall be used in the offer document.)

6.9 Financial of Group Companies

6.9.1 The following information for the last 3 years based on the audited statements in
respect of all the companies, firms, ventures, etc. promoted by the promoters
irrespective of whether these are covered under section 370 (1)(B) of the Companies
Act, 1956 shall be given, wherever applicable:
a. Date of Incorporation;
b. Nature of activities;
c . Equity Capital;
d. Reserves (excluding revaluation reserve);
e. Sales;
f. Profit after tax (PAT);
g. Earnings per share (EPS); and
h. Net Asset Value (NAV);
i. The highest and lowest market price of shares during the preceding six months with
suitable disclosures for changes in capital structure during the period and the market
value on the date of filing the prospectus with the Registrar of Companies;
j. If any of the companies has made public or rights issue in the preceding three years,
the issue price of the security, the current market price and particulars of changes in
the capital structure, if any, since the date of issue and a statement regarding the cost
and progress of implementation of the project in comparison with the cost and
implementation schedule given in the offer document;
k . Information regarding adverse factors related to the company and in particular
regarding;
i. whether the company has become a sick company within the meaning of the Sick
Industrial Companies (Special Provisions) Act, 1995 or is under winding up;
ii. whether the company has made a loss in the immediately preceding year and if so,
the profit or loss figures for the immediately preceding three years.
6.9.2
(a) In case, the issuer company has more than five listed group companies, the
financial information may be restricted to the five largest listed companies to be
determined on the basis of market capitalisation one month before the date of filing
draft prospectus with the Board.
(b) The information regarding company(ies) which has become BIFR company or
is under winding up or has a negative net worth shall be provided.
6.9.3 If the promoters have disassociated themselves from any of the companies/firms
during preceding three years, the reasons therefore and the circumstances leading to
the disassociation shall be furnished together with the terms of such disassociation.
6.9.4
(a) In case there are common pursuits among these companies , the reasons and
justification for the same shall be spelt out and the conflict of interest situations shall
be stated.
(b) The related business transactions within the group shall also be mentioned.

381
Inserted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003.
Page 315 of 332
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(c) The significance of these transactions on the financial performance of the

company/companies shall be stated.

6.9.5 Sales or purchase between companies in the promoter group when such sales or
purchases exceed in value in the aggregate 10% of the total sales or purchases of
the issuer and also disclose material items of income or expenditure arising out of
transactions in the promoter group.

6.10 Following particulars in regard to the company and other listed companies
under the same management within the meaning section 370 (1)(B) of the
Companies Act, 1956 which made any capital issue during the last three years
shall be given
a. Name of the company
b. Year of Issue
c. Type of Issue (Public/ Rights/Composite)
d. Amount of issue
e. Date of closure of issue
f. Date of completion of delivery of share/debenture certificates
g. Date of completion of the project, where object of the issue was financing the project
h. Rate of dividend paid

6.11 Promise vis-à-vis Performance

6.11.1 Issuer Company

a. A separate para entitled "Promise Vs Performance - Last three issues" shall be given
indicating whether all the objects mentioned in the respective offer Documents
relating to the earlier issues by the company were met and whether all projections
made in the said offer documents were achieved.
b. If not, non-achievement of objects/projections shall be brought out distinctly shortfall
and delays shall be quantified.

6.11.2 Listed Ventures of Promoters

a. A separate para on issues of group/associate companies entitled "Promise Vs
Performance - Last one Issue of group/associate companies" shall be given indicating
whether all the objects mentioned in the respective offer Documents relating to group/
associate companies were met and whether all projections made in the offer
documents were achieved.
b. If not, non-achievement of objects/ projections shall be brought out distinctly. Shortfall
and delays shall be quantified.

6.12 Projections
382
(No forecast of projections relating to financial performance of the issuer company
shall be given in the offer document.)

382
Substituted vide SEBI Circular No. DIP (Compendium) Circular No. 3 dated August 04, 2000 for the following clauses:
6.12.1 No projections of profits shall be made except
a. by a company which has not completed twelve months of commercial operations and its audited operative results
are not available; or
b. by a company which is undertaking a new project or is proposing to substantially expand its activities beyond
100% of the existing capacity.
Provided that the projections by (a) and (b) above may be made only if:-
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6.13 Basis for Issue Price

383
(6.13.1 Following information shall be disclosed for all issues irrespective of the
issue price.
a. Earnings per share i.e. EPS pre-issue for the last three years (as adjusted for
changes in capital);
b. P/E pre-issue
c. average return on net worth in the last three years
d. minimum return on increased net worth required to maintain pre-issue EPS;
e. Net Asset Value per share based on last balance sheet;

i) the projections are based solely on an appraisal by a public financial institution or a scheduled commercial bank;
ii) such appraising agency has financed the project or part thereof or is committed to finance the project or part thereof;
iii) the projections are not for a period exceeding two years from the date of expected commencement of commercial
production or three years from the date of closure of the issue, whichever is later;
iv) the major assumptions on which projections are base are specified.
Explanation
For the purpose of eligibility of banks or FIs to appraise the projects and give projections in the offer documents, it is
clarified that:
a) The subsidiaries of banks/FIs are not eligible for the purpose of giving projections in the offer documents.
If a project is appraised by a subsidiary of a bank or FI and the project is financed/committed to be financed by the
parent bank/FI, the proj ections made by the subsidiaries cannot be given in the offer documents.
b. If a bank/FI has appraised a project and has extended assistance by way of lease finance/hire purchase which is
part of means of finance of the project as given in the offer document, the projections made by such banks/FIs can
be given in the offer document.
c. If the appraisal is done by a bank/FI which is holding the equity of the company before the issue or is participating
in the firm allotment category, the projection made by such bank/FI can be given in the offer document and a
disclosure of the extent of their participating in the equity of the company should be given.
d. Provided that participation of banks/FI in the reserved category on competitive basis shall not eligible for giving
projections as allotment to them is not certain.
e. In case of rights issues, if the banks/FIs are the shareholders and give an undertaking that they would subscribe to
their entitlement fully or partially, and if projects are appraised by them, projections can be given and a disclosure
of the extent of their taking up the rights shares should be made in the offer document.
f. Underwriting by the banks/FIs shall not be considered as financing the project and projections given by them shall
not be given in the offer documents.
6.12.2 Forecast of Estimated Profits
i. The forecast of the estimated profits for the financial year ending immediately before the date of the prospectus (if
such information has not already been given in the offer document) and for the financial year ending immediately
after the date of the prospectus, duly supported by an auditors' certificate, shall be given in the prospectus.
ii. The major assumptions on which the forecast is based shall be specified and the auditor should give assurance
on the arithmetical calculations derived from such assumptions.
iii. A specimen of Auditor’s Certificate is given in Schedule XIV.
Provided that such forecast shall not be given if;
a. the forecast period has already been covered in projections.
b. the company has not commenced commercial production".

383
Substituted vide SEBI Circular No. RMB (Compendium) series 2003- 04 circular no.9 dated May 2, 2003 for the
following clause:
“Following information shall be disclosed for all issues irrespective of the issue price.
a. Earnings per share i.e. EPS pre-issue for the last three years (as adjusted for changes in capital);
b. P/E pre-issue and comparison thereof with industry P/E where available (giving the source from which industry
P/E has been taken) ;
c. average return on net worth in the last three years;
d. minimum return on increased net worth required to maintain pre-issue EPS;
e. Net Asset Value per share based on last balance sheet;
f. Net Asset Value per share after issue and comparison thereof with the issue price.
g. An illustrative format of disclosure in respect of basis for issue price is given in Schedule XV.
Provided that the projected earnings shall not be used as a justification for the issue price in the offer document.
Provided further that the accounting ratios disclosed in the prospectus in support of basis of the issue price shall
be calculated after giving effect to the consequent increase in capital on account of compulsory conversions
outstanding, as well as on the assumption that the options outstanding, if any, to subscribe for additional capital
will be exercised.

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f. Net Asset Value per share after issue and comparison thereof with the issue
price.
g. An illustrative format of disclosure in respect of basis for issue price is given in
Schedule XV.
h. Comparison of all the accounting ratios of the issuer company as mentioned
above with the industry average and with the accounting ratios of the peer
group ( i.e companies of comparable size in the same industry.( Indicate the
source from which industry average and accounting ratios of the peer group
has been taken)
384
(i the face value of shares (including the statement about the issue price being
“X” times of the face value)

Provided that the projected earnings shall not be used as a justification for the issue
price in the offer document.

Provided further that the accounting ratios disclosed in the offer documents in
support of basis of the issue price shall be calculated after giving effect to the
consequent increase in capital on account of compulsory conversions outstanding, as
well as on the assumption that the options outstanding, if any, to subscribe for
additional capital will be exercised.)

385
(6.13.2

(i) The issuer company and the lead merchant banker shall provide the accounting
ratios as mentioned in clause 6.13.1 above to justify the basis of issue price.
Provided that, the lead merchant banker shall not proceed with the issue in case the
accounting ratios mentioned above, do not justify the issue price.
(ii) In case of book built issues, the offer document shall state that the final price has
been determined on the basis of the demand from the investors.)

6.14 Outstanding litigations or Defaults

a. All pending litigations in which the promoters are involved, defaults to the financial
institutions/banks, non-payment of statutory dues and dues towards instrument
holders like debenture holders, fixed deposits, and arrears on cumulative preference
shares by the promoters and the companies/firms promoted by the promoters, shall
be listed in the prospectus together with the amounts involved and the present status
of such litigations/defaults. The likely adverse effect of these litigations/defaults, etc.
on the financial performance of the company shall also be mentioned.
b. Further, the cases of pending litigations, defaults, etc. in respect of
companies/firms/ventures with which the promoters were associated in the past but
are no longer associated shall also be disclosed in case their name(s) continues to be
associated with particular litigation(s).
c.
i) The above information is required to be furnished in addition to the litigations against
the company or against any other company whose outcome could have a materially
adverse effect of the position of the company.
384
Inserted vide circular no SEBI/CFD/DIL/DIP/13/2004/28/5 dated May 28, 2004.

385
Inserted vide SEBI Circular No. DIP (Compendium) Circular No. 3 dated August 04, 2000.
Page 318 of 332
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ii) Further, all the litigations against the promoter or directors involving violation of
statutory regulations or criminal offence shall be furnished in the offer document.
d.
i) The pending proceedings initiated for economic offences against the directors, the
promoters, companies and firms promoted by the promoters shall be disclosed
separately indicating their present status.
ii) The details of the past cases in which penalties were imposed by the concerned
authorities.
e. Outstanding litigations, defaults, etc., pertaining to matters likely to affect operations
and finances of the company including disputed tax liabilities, prosecution under any
enactment in respect of Schedule XIII to the Companies Act, 1956 (1 of 1956) shall
be furnished in the prospectus in the prescribed format.
f. The lead merchant banker shall ensure to appropriately incorporate in the prospectus
and as risk factor(s), information regarding pending litigations, defaults, non payment
of statutory dues, proceedings initiated for economic offences/Civil offences
(including the past cases, if found guilty), any disciplinary action taken by the Board/
stock exchanges against the company/Promoters and their other business ventures
(irrespective of the fact whether they fall under the purview of Sec 370 (1B) of the
Company's Act, 1956) / Directors.
g. The name(s) of small scale undertaking(s) or any other creditors to whom the
company owes a sum exceeding Rs. 1 lakh which is outstanding more than 30 days;
and
h.
i. If any of the above mentioned litigations, etc., arise after the filing of the offer
document, the facts shall be incorporated appropriately in the prospectus (and as risk
factors).
ii. In case there are no such cases a distinct negative statement is required to be made
in this regard in the prospectus.

6.15 Risk factors and management perception on the same, if any

6.16 Disclosure on Investor Grievances and Redressal System

The offer documents shall disclose the arrangements or any mechanism evolved by
the company for redressal of investor grievances.
1. The company shall disclose the time normally taken by it for disposal of various types
of investor grievances.
2. Similar disclosure shall be made in regard to the listed companies under the same
management within the meaning of Section 370 (1B) of the Companies Act for the
period of 3 years prior to the date of filing of the offer documents with ROC / Stock
Exchange.

PART II

6.17 General Information

6.17.1 Consent of directors, auditors, solicitors/ advoc ates, managers to the issue, Registrar
of Issue, Bankers to the company, bankers to the issue and experts.

6.17.2 Expert opinion obtained, if any

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6.17.3 Change, if any, in directors and auditors during the last three years, and reasons,
thereof

6.17.4 Authority for the issue and derails of resolution passed for the issue

6.17.4 Procedure and time of schedule for allotment and issue of certificates

6.17.5 Names and address of the company secretary, legal adviser, lead managers, co-
managers, auditors, bankers to the company, bankers to the issue and brokers to the
issue.

6.18 Financial Information

6.18.1 A report by the auditors of the company with respect to -

a. profits and losses and assets and liabilities, in accordance with clause 6.18.2 or
6.18.3 of this clause, as the case may require; and
b. the rates of dividends, if any, paid by the company in respect of each class of shares
in the company for each of the five financial years immediately preceding the issue of
the prospectus, giving particulars of each class of shares on which such dividends
have been paid and particulars of the cases in which no dividends have been paid in
respect of any class of shares for any of those years; and, if no accounts have been
made up in respect of any part of the period of five years ending on a date three
months before the issue of the prospectus, containing a statement of that fact (and
accompanied by a statement of the accounts of the company in respect of that part of
the said period up to a date not earlier than six months of the date of issue of the
prospectus indicating the profit or loss for that period and the assets and liabilities
position as at the end of that period together with a certificate from the auditors that
such accounts have been examined and found correct by them. The said statement
may indicate the nature of provision or adjustments made or are yet to be made).

6.18.2 If the company has no subsidiaries, the report shall -

a. so far as regards profits and losses, deal with the profits or losses of the company
(distinguishing items of a non- recurring nature) for each of the five financial years
immediately preceding the issue of the prospectus; and
b. so far as regards assets and liabilities, deal with the assets and liabilities of the
company and the last date to which the accounts of the company were made up.

6.18.3 If the company has subsidiaries, the report shall -

a. so far as regards profits and losses, deal separately with the company’s profits or
losses as provided by 6.18.2 and in addition deal either -
i. as a whole with the combined profits or losses of its subsidiaries, so far as they
concern members of the company or
ii. individually with the profits or losses of each subsidiary so far as they concern
members of the company or, in stead of dealing separately with the company’s profits
or losses, deal as a whole with the profits or losses of the company, and, so far as
they concern members of the company, with the combined profits or losses of its
subsidiaries and
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b. so far as regards assets and liabilities, deal separately with the company’s assets and
liabilities as provided by 6.18.2 and in addition, deal either –
i) as a whole with the combined assets and liabilities of its subsidiaries, with or without
the company’s assets and liabilities or
ii) individually with the assets and liabilities of each subsidiaries and shall indicate as
respects the assets and liabilities of the subsidiaries, the allowance to be made for
persons other than members of the company.

6.18.4 If the proceeds, or any part of the proceeds, of the issue of the shares or debentures
are or is to be applied directly or indirectly -
i. in the purchase of any business; or
ii. in the purchase of an interest in any business and by reason of that purchase, or
anything to be done in consequence thereof, or in connection therewith; the company
will become entitled to an interest as respects either the capital or profits and losses
or both, in such business exceeding fifty percent thereof;
iii. a report made by accountants (who shall be named in the prospectus) upon-
a. the profits or losses of the business of each of the five financial years immediately
preceding the issue of the prospectus and
b. the assets and liabilities of the business at the last date to which the accounts of the
business were made up, being a date not more than one hundred and twenty days
before the date of the issue of the prospectus.

6.18.5 If-
a. the proceeds, or any part of the proceeds, of the issue of the shares or debentures
are or is to be applied directly or indirectly in any manner resulting in the acquisition
by the company of shares in any other body corporate; and
b. by reason of that acquisition or anything to be done in consequence thereof or in
connection therewith, that body corporate will become a subsidiary of the company;
and
c . a report made by accountants (who shall be named in the prospectus) upon–
i. the profits or losses of the other body corporate for each of the five financial years
immediately preceding the issue of the prospectus; and
ii. the assets and liabilities of the other body corporate at the last date to which its
accounts were made up.
iii. The said report shall -
a. indicate how the profits or losses of the other body corporate dealt with by the report
would, in respect of the shares to acquired, have concerned members of the
company and what allowance would have fallen to me made, in relation to assets and
liabilities so dealt with for holders of other shares, if the company had at all material
times held the shares to be acquired; and
b. where the other body corporate has subsidiaries deal with the profits or losses and
the assets and liabilities of the body corporate and its subsidiaries in the manner
provided by sub-clause (2) above in relation to the company and its subsidiaries.

6.18.6 Principal terms of loan and assets charged as security.

6.18.7 Other provisions relating to accounts of the issuer company

a. All significant accounting policies and standards followed in the preparation of the
financial statements shall be disclosed.
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b. Statements of Assets and Liabilities and Profit and Loss or any other financial
information shall be incorporated after making the following adjustments, wherever
quantification is possible:
(i) Adjustments / rectification for all incorrect accounting practices or failures to make
provisions or other adjustments which resulted in audit qualifications;
(ii) Material amounts relating to adjustments for previous years shall be identified and
adjusted in arriving at the profits of the years to which they relate irrespective of the
year in which the event triggering the profit or loss occurred;
(iii) a) Where there has been a change in accounting policy, the profits or losses of the
earlier years (required to be shown in the offer documents) and of the year in which
the change in the accounting policy has taken place shall be re -computed to reflect
what the profits or losses of those years would have been if a uniform accounting
policy was followed in each of these years.
b) If an incorrect accounting policy is followed, the re -computation of the financial
statements shall be in accordance with correct accounting policies;
(iv)
a) Statement of profit or loss shall disclose both the profit or loss arrived at before
considering extraordinary items and after considering the profit or loss from
extraordinary items.
b) An illustrative format of the disclosure of profits and losses on this basis is specified
at Schedule X.

(v) The statement of assets and liabilities shall be prepared after deducting the balance
outstanding on revaluation reserve account from both fixed assets and reserves and
the networth arrived at after such deductions.

(vi) A suggested format of assets and liabilities is specified at Schedule XI.

c. The turnover disclosed in the Profit and Loss Statement shall be bifurcated into:-
(i) turnover of products manufactured by the company;
(ii) turnover of products traded in by the company; and
(iii) turnover in respect of products not normally dealt in by the company but included in
(ii) above, shall be mentioned separately.
d. The offer document shall disclose details of `Other Income' in all cases where such
income (net of related expenses) exceeds 20% of the net profit before tax, including:
i. the sources and other particulars of such income; and
ii. an indication as to whether such income is recurring or non-recurring, or has arisen
out of business activities/other than the normal business activities.
e)
i) Changes (with quantification wherever possible) in the activities of the issuer which
may have had a material effect on the statement of profit/loss for the five years.
ii) Disclosure of these changes in the activities of the company shall include
discontinuance of lines of business, loss of agencies or markets and similar factors.

f) The following accounting ratios shall be given for eac h of the accounting periods for
which financial information is given.
i. Earnings per Share: This ratio shall be calculated after excluding extra ordinary items.
ii. Return on net worth: This ratio shall be calculated excluding revaluation reserves.
iii. Net Asset Value per share. This ratio shall be calculated excluding revaluation
reserves.
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g)
i. A Capitalisation Statement showing total debt net worth, and the debt/equity ratios
before and after the issue is made shall be incorporated.
ii. In case of any change in the share capital since the date as of which the financial
information has been disclosed in the offer document, a note explaining the nature of
the change shall be given.
iii. An illustrative format of the Capitalisation Statement is specified at Schedule XIII.
h.
i. Break-up of total outstanding unsecured loans taken by the company,
promoters/group companies/associate companies and others shall be given in the
offer documents.
ii. In respect of each such unsecured loan of the former category, the terms and
conditions including interest rates and the repayment schedule.
iii. If the loan can be recalled by the lenders at any time, the fact to be given as a risk
factor.
iv. Profits after tax are often affected by the tax shelters which are available.
v. Some of these are of a relatively permanent nature (for example, arising out of export
profits) while others may be limited in point of time (for example, tax holidays for new
undertakings).
vi. Tax provisions are also affected by timing differences which can be reversed in the
future (for example, the difference between book depreciation and tax depreciation).
vii. For a proper understanding of the future tax incidence, these factors shall be
identified and explained through proper disclosures.
An illustrative format of statement in respect of tax shelter is specified in Schedule
XII.

386
(6.18.8
a. The Issuer Company, if it so desires , may include in the offer document, the financial
statements prepared on the basis of more than one accounting standards subject to
disclosure of the material differences arising because of differences in the accounting
policies of two different accounting standards.

b ‘Management Discussion and Analysis (MDA)’ and ‘Accounting and other Ratios’
computed as per Clause No. 6.8 and 6.13 of the Guidelines shall be based on the
Financial Statements prepared on the basis of Indian Accounting Standards. In
addition, the issuer company may present MDA based on other Accounting
Standards.)

6.19 Statutory and other information

6.19.1 Minimum Subscription

6.19.2 Expenses of the issue giving separately fee payable to :-

a. Advisers
b. Registrars to the Issue
c . Managers to the Issue
d. Trustees for the debenture-holders

386
Inserted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003.
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6.19.3 Underwriting commission and brokerage

6.19.4 Previous issue for cash

6.19.5 Previous public or rights issue, if any:

(during last five years)
a. Date of allotment: Closing Date:
Date of refunds
Date of listing on the stock exchange:
b. If the issue (s) at premium or discount and the amount thereof
c . The amount paid or payable by way of premium, if any, on each share which had
been issued within the two years preceding the date of the prospectus or is to be
issued, stating the dates or proposed dates of issue and, where some shares have
been or are to be issued at a premium and other shares of the same class at a lower
premium, or at par or at a discount, the reasons for the differentiation and how any
premiums received have been or are to be disposed off.

6.19.6 Commission or brokerage on previous issue

6.19.7 Issue of shares otherwise than for cash

6.19.8 Debentures and redeemable preference shares and other instruments issued by the
company outstanding as on the date of prospectus and terms of issue.

6.19.9 Option to subscribe

a. The details of option to subscribe for securities to be dealt with in a depository.
b. The lead merchant banker shall incorporate a statement in the offer document and in
the application form to the effect that the investor shall have an option either to
receive the security certificates or to hold the securities in dematerialised form with a
depository.

6.19.10 Purchase of property

a. As respects any property to which this clause applies-
i. the names, address, descriptions and occupations of the vendors;
ii. the amount paid or payable in cash, shares or debentures to the vendor and, where
there is more than one separate vendor, or the company is a sub-purchaser, the
amount so paid or payable to each vendor, specifying separately the amount, if any,
paid or payable for goodwill;
iii. the nature of the title or interest in such property acquired or to be acquired by the
company;
iv. short particulars of every transaction relating to the property completed within the two
preceding years, in which any vendor of the property to the
v . company or any person who is, or was at the time of the transaction, a promoter, or a
director or proposed director of the company had any interest, direct or indirect,
specifying the date of the transaction and the name of such promoter, director or
proposed director and stating the amount payable by or to such vendor, promoter,
director or proposed director in respect of the transaction.

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b. The property to which sub-clause (a) applies is a property purchased or acquired by

the company or proposed to be purchased or acquired, which is to be paid for wholly
or partly out of the proceeds of the issue offered for subscription by the prospectus or
the purchase or acquisition of which has not been completed at the date of issue of
the prospectus, other than property -
i. the contract for the purchase or acquisition whereof was entered into in the ordinary
course of the company’s business, the contract not being made in contemplation of
the issue nor the issue in consequence of the contract; or
ii. as respects which the amount of the purchase money is not material.
c . for the purpose of this clause, where a vendor is a firm,, the members of the firm shall
not be treated as separate vendors
d. if the company proposes to acquire a business which has been carried on for less
than three years, the length of time during which the business has been carried

6.19.11 Following details may be given in the offer document:

a.
i. Details of directors, proposed directors, whole-time directors, their remuneration,
appointment and remuneration of managing directors, interests of directors, their
borrowing powers and qualification shares.
ii. Any amount or benefit paid or given within the two preceding years or intended to be
paid or given to any promoter or officer and consideration for payment of giving of the
benefit.
b. The dates, parties to, and general nature of -
i. every contract appointing or fixing the remuneration of a managing director or
manager whenever entered into, that is to say, whether within or more than, two
years before the date of the prospectus;
ii. every other material contract, not being a contract entered into in the ordinary course
of the business carried on or intended to be carried on by the company or a contract
entered into more than two years before the date of the prospectus.
iii. A reasonable time and place at which any such contract or a copy thereof may be
inspected.
c. Full particulars of the nature and extent of the interest, if any, of every director or
promoter-
i. in the promotion of the company; or
ii. in any property acquired by the company within two years of the date of the
prospectus or proposed to be acquired by it.
iii. Where the interest of such a director or promoter consists in being a member of a firm
or company, the nature and extent of the interest of the firm or company, with a
statement of all sums paid or agreed to be paid to him or to the firm or company in
cash or shares or otherwise by any person either to induce him to become, or to
qualify him as, a director, or otherwise for services rendered by him or by the firm or
company, in connection with the promotion or formation of the company.

6.19.12 Rights of members regarding voting, dividend, lien on shares and the process for
modification of such rights and forfeiture of shares.

6.19.13 Restrictions, if any, on transfer and transmission of shares / debentures and on their
consolidation / splitting.

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6.19.14 Revaluation of assets, if any (during last five years)

6.19.15 Material contracts and inspection of documents, eg

a. Material contracts
b. Documents
c . Time and place at which the contracts together with documents will be available for
inspection from the date of prospectus until the date of closing of the subscription list.

SECTION II: CONTENTS OF ABRIDGED PROSPECTUS

6.20 The abridged prospectus shall contain the disclosures as specified under Section I of
Chapter VI.

6.20.1 The disclosure requirement as specified shall also be applicable in case of abridged
prospectus.

6.21 General Information

6.21.1 Name and address of registered office of the company

6.21.2 Name/s of stock exchanges where listing of the sec urities is proposed.

6.21.3 Date of opening, closing and earliest closing of the issue

6.21.4 Disclaimer Clause

6.21.5 Name and address of lead managers.

6.21.6 Name and address of registrars to the issue.

6.21.7 Name and address of trustee under debenture trust deed (in case of debenture issue)

6.21.8 Rating for the proposed debenture/ preference shares issue, if any, obtained from
any other Credit Rating Agency

6.21.9
(a) The name, address telephone number, fax number and address of Compliance
Officer.
(b) The investor’s attention shall also be invited to contact the compliance officer in case
of any pre -issue / post-issue related problems such as non-receipt of letters of
allotment / share certificates / refund orders / cancelled stockinvests, etc.

6.21.10 Provisions of sub section (1) of section 68A of the Companies Act, relating to
punishment for fictitious applications.

6.21.11 Declaration about the issue of allotment letters/refunds within a period of 30 days
and interest in case of delay in dispatching refund/ allotment letters @ 15% p.a. as at
the rate as may be specified.

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6.21.12 Risk Factors and Issue Highlights:

6.21.13 The Risk Factors and management perception on the same shall be printed along
with Issue Highlights with equal treatment in printing in all respects.

6.22 Capital Structure of the company

6.22.1 Following details shall appear

a. Authorised, issued, subscribed and paid up capital (Number of instruments,
description, aggregate nominal value)
b. Size of present issue giving separately promoters contribution, firm allotment/
reservation for specified categories and net offer to public.
c . (Number of instruments, description, aggregate nominal value and issue amount shall
be given in that order, Name(s) of group companies to be given, in case, reservation
has been made for shareholders of the group companies )
d. Paid-up Capital
i. after the issue
ii. after conversion of securities (if-applicable)
e. Share Premium Account (before and after the issue)

6.22.2 A disclosure to the effect that the securities offered through this public/ rights issue
shall be made fully paid up or forfeited within 12 months from the date of allotment of
securities in a manner as specified in clause 8.5.2.

6.23 Terms of the present issue

6.23.1
i. Authority for the issue, terms of payment and procedure and time schedule for
allotment and issue of certificates.

ii. The caption "Interest in Case of Delay in Despatch of Allotment Letters/ Refund
Orders in Case of Public Issues" shall appear.

6.23.2 How to apply - availability of forms, prospectus and mode of payment

6.23.2.1 Applications by NRIs

a) In the application form meant for Indian Public, the declaration relating to Nationality
and Residentship shall be shown prominently as under:
"Nationality and Residentship (Tick whichever is applicable)
i. I am / We are Indian National(s) resident in India and I am/we are not applying for the
said equity shares as nominee(s) of any person resident outside India or Foreign
National(s).
ii. I am / We are Indian National(s) resident in India and I am / We are applying for the
said equity shares as Power of Attorney holder(s) of Non-Resident Indian(s)
mentioned below on non-repatriation basis.
iii. I am / We are Indian National(s) resident outside India and I am/we are applying for
the said equity shares on my / our own behalf on non-repatriation basis."
b) The application form meant for NRIs shall not contain provision for payment through
NR(O) accounts.
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i On the face of the form, the following legend shall be printed in a box:
"Attention NRI Applicants: Payment must be made through their Non Resident
External (NRE) / Foreign Currency Non Resident (FCNR) accounts or through
cheques / drafts sent from abroad and drawn on convertible rupee accounts in India.
Forms accompanied by cheques drawn on NR(O) accounts are liable to be rejected".
c) Attention of NRIs shall be invited to the following:
i. the name and address of at least one place in India from where individual NRI
applicants can obtain the application forms .
ii. Such applications as are accompanied by payment in free foreign exchange shall be
considered for allotment under the reserved category.
iii. Such NRIs who wish to make payment through Non-Resident Ordinary (NRO)
accounts shall use the form meant for Resident Indians and shall not use the form
meant for reserved category.
d) The application form should contain necessary instructions/provision for the following:
i. Instructions to applicants to mention the number of application form on the reverse of
the instruments to avoid misuse of instruments submitted along with the applications
for shares/debentures in public issues.
ii. Provision in the application form for inserting particulars relating to savings bank /
current account number and the name of the bank with whom such account is held, to
enable the Registrars to print the said details in the refund orders after the names of
the payees.
iii. Disclosure of PAN/GIR number in respect of applications for monetary value of the
investment of Rs.50,000 and above.
iv. Giving an option to investors to either receive securities in the form of physical
certificates or hold them in dematerialised form.

6.23.3 Any special tax benefits for company and its shareholders

6.24 Particulars of the issue

6.24.1 Objects

6.24.2 Project Cost

6.24.3 Means of financing

6.25 Company, Management and Project

6.25.1 History and main objects and present business of the company

6.25.2 Promoters and their Background

6.25.3 Names, address and occupation of manager, managing director, and other directors
(including nominee-directors, whole -time directors (giving their directorships in other
companies)

6.25.4 Location of the Project

6.25.5 Plant and machinery , technology, process, etc

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6.25.6 Collaboration, any performance guarantee or assistance in marketing by the

collaborators

6.25.7.Infrastructure facilities for raw materials and utilities like water, electricity, etc.

6.25.8 Schedule of implementation of the project and progress made so far, giving details of
land acquisition, civil works, installation of plant and machinery, trial production, date
of commercial production etc

6.25.9 The products

6.25.9.1 Nature of the product/s - consumer / industrial and end users

6.25.9.2 Market including details of the competition, past production figures for the industry,
existing installed capacity, past trends and future prospects regarding exports (if,
applicable), demand and supply forecasts (if given, should be essentially with
assumptions unless sourced from a market research agency of repute), etc. to be
given.

6.25.9.3Source of data used shall be mentioned.

6.25.9.4 Approach to marketing and proposed marketing set up

6.25.9.5 Export possibilities and export obligations, if any (in case of a company providing
any "service" particulars, as applicable, be furnished)

6.25.10 Future prospects

6.25.11 Stock Market Data

i) Particulars of:-
a. high, low and average market prices of the share of the company during the
preceding three years;
b. monthly high and low prices for the six months preceding the date of filing the draft
prospectus with Board which shall be updated till the time of filing the prospectus with
the Registrar of Company / Stock Exchange concerned.
c. number of shares traded on the days when the high and low prices were recorded in
the relevant stock exchange during said period of (i) and (ii) above;
d. the stock market data referred to above shall be shown separately for periods marked
by a change in capital structure, with such period commencing from the date the
concerned stock exchange recognises the change in the capital structure (e.g. when
the shares have become ex-rights or ex-bonus);
e. the market price immediately after the date on which the resolution of the Board of
Directors approving the issue was approved;
f. the volume of securities traded in each month during the six months preceding the
date on which the offer document is filed with ROC.
g. Along with high, low and average prices of shares of the company, details relating to
volume of business transacted should also be stated for respective periods.

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6.26 Following particulars in regard to the listed companies under the same
management with the meaning of Section 370(1B) which made any capital issue
in the last three years.
a. Name of the company
b. Year of issue
c. Type of issue (public/ rights/ composite)
d. Amount of issue
e. Date of closure of issue
f. Date of despatch of share/ debenture certificate completed
g. Date of completion of the project, where object of the issue was financing of a project
h. Rate of dividend paid

6.27 Basis for Issue Price

387
(Following information shall be disclosed for all issues irrespective of the issue
price.
a. Earnings per share i.e. EPS pre-issue for the last three years (as adjusted for
changes in capital);
b. P/E pre-issue
c . average return on net worth in the last three years
d. minimum return on increased net worth required to maintain pre-issue EPS;
e. Net Asset Value per share based on last balance sheet;
f. Net Asset Value per share after issue and comparison thereof with the issue
price.
g. Comparison of all the accounting ratios of the issuer company as mentioned
above with the industry average and with the accounting ratios of the peer
group ( i.e companies of comparable size in the same industry.( Indicate the
source from which industry average and accounting ratios of the peer group
has been taken)

Provided that the projected earnings shall not be used as a justification for the issue
price in the offer document.

387
Substituted for the following clause vide RMB (Compendium) series 2003- 04 Circular no. 9 dated May 2, 2003:
(i) Following information shall be disclosed:-
a. Earnings per share i.e. EPS pre-issue for the last three years (as adjusted for changes in capital);
b. P/E pre-issue and comparison thereof with industry P/E where available (giving the source from which industry
P/E has been taken) ;
c. average return on net worth in the last three years;
d. minimum return on increased net worth required to maintain pre-issue EPS;
e. Net Asset Value per share based on last balance sheet;
f. Net Asset Value per share after issue and comparison thereof with the issue price.
Provided that projected earnings shall not be used as a justification for the issue price in the offer document.
Provided further that the accounting ratios disclosed in the prospectus in support of basis of the issue price shall
be calculated after giving effect to the consequent increase of capital on account of compulsory conversions
outstanding, as well as on the assumption that the options outstanding, if any, to subscribe for additional capital
will be exercised.
387
((ii) The issuer company and the lead merchant banker shall provide the accounting ratios as mentioned in sub
clause (i) to clause 6.27 above to justify the basis of issue price.
Provided that, the lead merchant banker shall not proceed with the issue in case the accounting ratios mentioned
above, do not justify the issue price.
(iii) In case of Book Built issues, the offer document shall state that the final price has been determined on the basis of
the demand from the investors.)”

Prior to the above, sub -clauses (ii) and (iii) above were initially inserted vide SEBI Circular No. DIP (Compendium)
Circular No. 3 dated August 04, 2000.

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Provided further that the accounting ratios disclosed in the offer documents in
support of basis of the issue price shall be calculated after giving effect to the
consequent increase in capital on account of compulsory conversions outstanding, as
well as on the assumption that the options outstanding, if any, to subscribe for
additional capital will be exercised.”
388
((h) the face value of shares (including the statement about the issue price being
“X” times of the face value))).

6.28 Management perceptions of risk factors (e.g. Sensitivity to foreign exchange rate
fluctuations, difficulty in availability of raw materials or in marketing of products, cost/
time overrun).

6.29 Outstanding litigations

6.30 Whether all Payment/ Refunds, Debentures, Deposits of banks or companies,

Interest on Deposits, Debenture Interest, Institutional Dues have been paid up to
date.

6.31 If not, details of the arrears if any to be stated.

6.32 Any material development after the date of the latest balance sheet and its impact on
performance and prospects of the company.

6.33 Expert opinion obtained if any.

6.34 Change, if any, in directors and auditors during the last three years and reasons
thereof.

6.35 Option to Subscribe.

a. The details of option to subscribe for securities to be dealt in a depository.
b. The lead merchant banker shall incorporate a statement in the offer document and
in the application form to the effect that the investor shall have an option either to
receive the security certificates or to hold the securities in dematerialised form
with a depository.
c. 389 (In case of public issues by unlisted companies, the lead merchant banker shall
incorporate a statement in the offer documents that the trading in the securities
shall be in dematerialised form only for all the investors.)

6.36 Material contracts and time and place of inspection.

6.37 Financial Performance of the Company for the Last Five Years:(Figures to be
taken from the audited annual accounts in tabular form)
a. Balance Sheet Data: Equity Capital, Reserves (State Revaluation Reserve, the year of
revaluation and its monetary effect on assets) and borrowings
b. Profit and Loss data: Sales, Gross profit, Net profit, dividend paid, if any
388
Inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/13/2004/28/5 dated May 28, 2004.

389
Inserted vide SEBI Circular No. RMB (Compendium) Series Circular No. 2 (1999-2000) dated February 16, 2000.
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c. Any change in accounting policies during the last three years and their effect on the
profits and the reserves of the company
d. Lead Merchant Banker shall ensure that the financial information about the issuer
company appearing in the abridged prospectus, is as per Auditors’ report of the
prospectus.

6.38 Statements after minimum subscription clause:

a) Minimum subscription clause shall appear followed by the statement given below:
(b) No statement made in this Form shall contravene any of the provisions of the
Companies Act, 1956 and the rules made thereunder".”

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