96 Lesson 4 • EP-SLCM

Regulatory Framework
• SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018
• Securities Contracts (Regulation) Rules, 1957

INTRODUCTION
Management of a public issue involves co-ordination of activities and co-operation of a number of agencies such
as managers to the issue, underwriters, brokers, registrar to the issue, solicitors/legal advisors, printers, publicity
ƒ†ƒ†˜‡”–‹•‹‰ƒ‰‡–•ǡϐ‹ƒ ‹ƒŽ‹•–‹–—–‹‘•ǡƒ—†‹–‘”•ƒ†‘–Š‡” ‘˜‡”‡–Ȁ–ƒ–—–‘”›ƒ‰‡ ‹‡••— Šƒ•‡‰‹•–”ƒ”
of Companies, Reserve Bank of India, SEBI etc. The whole process of issue of shares can be divided into two parts
(i) pre-issue activities and (ii) post issue activities. All activities beginning with the planning of capital issue till
the opening of the subscription list are pre-issue activities while, all activities subsequent to the opening of the
subscription list may be called post issue activities. As the demat shares are being admitted for dealings on the
stock exchanges, the securities can be issued only with the purpose of allotting the shares in Dematerialised form.
GENESIS
India ushered from a merit based regime (Controller of Capital Act) to disclosure based regime under SEBI. Under
Controller of Capital Issues (CCI) issue size and price were approved by CCI after examining the various parameters/
”ƒ–‹‘•Ǥ‹–Š–Š‡”‡’‡ƒŽ‘ˆƒ’‹–ƒŽ ••—‡•ȋ‘–”‘ŽȌ –ǡͳͻͶ͹ƒŽŽ–Š‡‰—‹†‡Ž‹‡•ǡ‘–‹ϐ‹ ƒ–‹‘•ǡ ‹” —Žƒ”•‡– Ǥ‹••—‡†„›
–Š‡‘ˆϐ‹ ‡‘ˆ–Š‡‘–”‘ŽŽ‡”‘ˆƒ’‹–ƒŽ ••—‡•„‡ ƒ‡†‡ˆ— –ǤŠ‡ ™ƒ•‰‹˜‡–Š‡ƒ†ƒ–‡–‘”‡‰—Žƒ–‡‹••—ƒ ‡‘ˆ
securities, namely the guidelines for Disclosure and Investor Protection, 1992. Later, the SEBI issued a compendium
containing consolidated Guidelines, circulars, instructions relating to issue of capital effective from January 27,
2000. The compendium titled the SEBI (Disclosure and Investor Protection) Guidelines, 2000 replaced the original
—‹†‡Ž‹‡•‹••—‡†‹ —‡ͳͻͻʹƒ† Žƒ”‹ϐ‹ ƒ–‹‘•–Š‡”‡‘ˆǤ—‰—•–ʹ͸ǡʹͲͲͻ–Š‡ ”‡• ‹†‡†–Š‡ ȋ Ȍ
—‹†‡Ž‹‡•ǡʹͲͲͲƒ†‘–‹ϐ‹‡†–Š‡ ȋ ••—‡‘ˆƒ’‹–ƒŽƒ†‹• Ž‘•—”‡‡“—‹”‡‡–•Ȍ‡‰—Žƒ–‹‘•ǡʹͲͲͻǤ
To align the provisions under ICDR Regulations with Companies Act, 2013 and allied regulations, SEBI issued a
consultation paper detailing the suggestive changes under various fund-raising options by listed issuers. Between
2009-till date, numerous amendments have been made to the ICDR Regulations. Different types of offerings to
raise funds in the primary market have been introduced. Further, there have been changes in market practices and
regulatory environment over a period of time. A need was thus felt to review and realign the ICDR Regulations
™‹–Š–Š‡•‡†‡˜‡Ž‘’‡–•ƒ†–‘‡•—”‡–Šƒ––Š‡›”‡ϐŽ‡ ––Š‡„‡•–’”ƒ –‹ ‡•ƒ†‘’–‡†‰Ž‘„ƒŽŽ›Ǥ ˜‹‡™‘ˆ–Š‡•ƒ‡ǡ
the SEBI constituted the Issue of Capital & Disclosure Requirements Committee (“ICDR Committee”) under the
Chairmanship of Shri Prithvi Haldea in June, 2017, to review the ICDR Regulations with the following objectives:
a) To simplify the language and complexities in the regulations;
b) To incorporate changes/new requirements which have occurred due to change in market practices and
regulatory environment; and
c) To make the regulations more readable and easier to understand.

ICDR Committee Suggestions

The ICDR Committee suggested certain policy changes. These suggestions were also taken to the Primary Market
Advisory Committee (PMAC) of the SEBI which comprises of eminent representatives from the Ministry of Finance,
Industry, Market Participants, academicians, the Institute of Chartered Accountants of India and the Institute of
Company Secretaries of India. The recommendations of the PMAC were incorporated in the draft of the proposed
ICDR Regulations. In addition to the public consultation, the draft regulations along with the key policy changes
were also forwarded to the Ministry of Finance (MoF), Ministry of Corporate Affairs (MCA) and the Reserve Bank
‘ˆ †‹ƒȋ Ȍˆ‘”–Š‡‹” ‘‡–•ǤŠ‡’”‘˜‹•‹‘•‘ˆ‘’ƒ‹‡• –ǡͳͻͷ͸ȋ™Š‡”‡˜‡”ƒ’’Ž‹ ƒ„Ž‡Ȍǡ‘’ƒ‹‡• –ǡ
2013, the SEBI (Substantial Acquisition & Substantial Takeover) Regulations, 2011, the SEBI (Share Based Employee
‡‡ϐ‹–•Ȍ‡‰—Žƒ–‹‘•ǡʹͲͳͶŠƒ˜‡„‡‡•—‹–ƒ„Ž›‹ ‘”’‘”ƒ–‡†Ǥ
 Lesson 4 • An Overview of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 97

  ˜‹†‡ ‹–• ‘–‹ϐ‹ ƒ–‹‘ †ƒ–‡† ͳͳ–Š ‡’–‡„‡”ǡ ʹͲͳͺ ‹••—‡† –Š‡   ȋ ••—‡ ‘ˆ ƒ’‹–ƒŽ ƒ† ‹• Ž‘•—”‡
‡“—‹”‡‡–•Ȍ ‡‰—Žƒ–‹‘•ǡ ʹͲͳͺ ȋǮ  ‡‰—Žƒ–‹‘•ǡ ʹͲͳͺǯȌ ™Š‹ Š ™ƒ• ‡ˆˆ‡ –‹˜‡ ˆ”‘ ͸Ͳ–Š †ƒ› ‘ˆ ‹–•
’—„Ž‹ ƒ–‹‘‹ˆϐ‹ ‹ƒŽ ƒœ‡––‡Ǥ

Šƒ’–‡”ƒ•’‡”  ‡‰—Žƒ–‹‘•ǡʹͲͳͺ Particulars

I. Preliminary
II. Initial Public Offer (IPO) on Main Board
III. Right Issue
IV. Further Public Offer
V. Preferential Issue
VI. —ƒŽ‹ϐ‹‡† •–‹–—–‹‘•Žƒ ‡‡–
VII. IPO of Indian Depositary Receipts (IDR)
VIII. Rights Issue of IDR
IX. IPO by Small and Medium Enterprises (SME)
X. Innovators Growth Platform (IGP)
XI. Bonus Issue
XI-A. Power to Relax Strict Enforcement of the Regulations
XII. Miscellaneous

TYPES OF ISSUES

Initial Further
Public Offer Public Offer

—ƒŽ‹ϐ‹‡†
Institutional
Placement
›’‡•‘ˆ Bonus
Issues Issue

Preferential
Issue
Rights Issue
of Securities
Private
Placement

”‹ƒ”›ƒ”‡–†‡ƒŽ•™‹–Š–Š‘•‡•‡ —”‹–‹‡•™Š‹ Šƒ”‡‹••—‡†–‘–Š‡’—„Ž‹ ˆ‘”–Š‡ϐ‹”•––‹‡Ǥ”‹ƒ”›ƒ”‡–’”‘˜‹†‡•

ƒ‘’’‘”–—‹–›–‘‹••—‡”•‘ˆ•‡ —”‹–‹‡•ǡ ‘˜‡”‡–ƒ•™‡ŽŽƒ• ‘”’‘”ƒ–‡•ǡ–‘”ƒ‹•‡ϐ‹ƒ ‹ƒŽ”‡•‘—” ‡•–‘‡‡––Š‡‹”
requirements of investment and/or discharge their obligations.
Š‡ˆ‘ŽŽ‘™‹‰ƒ”‡–Š‡˜ƒ”‹‘—•–›’‡•‘ˆ‹••—‡•‹–Š‡ ƒ’‹–ƒŽƒ”‡–Ǧ
• ‹–‹ƒŽ—„Ž‹ ˆˆ‡”ǣ –‡ƒ•ƒ‘ˆˆ‡”‘ˆ•’‡ ‹ϐ‹‡†•‡ —”‹–‹‡•„›ƒ—Ž‹•–‡†‹••—‡”–‘–Š‡’—„Ž‹ ˆ‘”•—„• ”‹’–‹‘
ƒ†‹ Ž—†‡•ƒ‘ˆˆ‡”ˆ‘”•ƒŽ‡‘ˆ•’‡ ‹ϐ‹‡†•‡ —”‹–‹‡•–‘–Š‡’—„Ž‹ „›ƒ›‡š‹•–‹‰Š‘Ž†‡”‘ˆ•— Š•‡ —”‹–‹‡•‹
an unlisted issuer. In order to qualify as an Initial public offer, the offer of securities must be by an unlisted
issuer company and such an issue shall be made to the public and not to the existing shareholders of the
unlisted issuer company.
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• —”–Š‡”—„Ž‹ ˆˆ‡”ȋ Ȍǣ –‹•ƒ‘ˆˆ‡”‘ˆ•’‡ ‹ϐ‹‡†•‡ —”‹–‹‡•„›ƒŽ‹•–‡†‹••—‡” ‘’ƒ›–‘–Š‡’—„Ž‹ ˆ‘”

subscription. In other words, another issue to the public other than its existing shareholders or to a select
group of persons by the listed persons is referred to as a Further Public offer.
• ‹‰Š–• ••—‡ǣ ‹‰Š–• ‹••—‡ ‘ˆ •‡ —”‹–‹‡• ‹• ƒ ‹••—‡ ‘ˆ •’‡ ‹ϐ‹‡† •‡ —”‹–‹‡• „› ƒ ‘’ƒ› –‘ ‹–• ‡š‹•–‹‰
shareholders as on a record date in a predetermined ratio.
• Preferential Allotment: It refers to an issue, where a listed issuer issues shares or convertible securities,
to a select group of persons on a private placement basis it is called a preferential allotment. The issuer is
required to comply with various provisions which inter alia include pricing, disclosures in the notice, lock in
‡– Ǥǡ‹ƒ††‹–‹‘–‘–Š‡”‡“—‹”‡‡–••’‡ ‹ϐ‹‡†‹–Š‡‘’ƒ‹‡• –ǡʹͲͳ͵Ǥ
• —ƒŽ‹ϐ‹‡† •–‹–—–‹‘ƒŽŽƒ ‡‡–ȋ Ȍǣ –”‡ˆ‡”•–‘ƒ‹••—‡„›ƒŽ‹•–‡†‡–‹–›–‘‘Ž›“—ƒŽ‹ϐ‹‡†‹•–‹–—–‹‘ƒŽ
buyers in accordance of Chapter VI of the SEBI (ICDR) Regulations, 2018.
• Bonus Issue: Bonus issue of shares means additional shares issued by the Company to its existing shareholders
to reward for their royalty and is an opportunity to enhance the shareholders wealth. The bonus shares are
issued without any cost to the Company by capitalizing the available reserves.

APPLICABILITY OF THE SEBI (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS)

REGULATIONS, 2018 [REGULATION 3]

RS. 50 crore or more

MEANING OF DRAFT OFFER DOCUMENT, LETTER OF OFFER AND RED HERRING PROSPECTUS
Draft Offer Documents

“Draft Offer document” means the offer document in draft stage. The draft offer †‘ —‡–•ƒ”‡ϐ‹Ž‡†™‹–Š–Š‡SEBI,
ƒ–Ž‡ƒ•–͵Ͳ†ƒ›•’”‹‘”–‘–Š‡ϐ‹Ž‹‰‘ˆ–Š‡ˆˆ‡” Document with ROC/Stock Exchanges. The SEBI may specify changes,
if any, in the Draft Offer Document and the Issuer or the Lead Merchant banker shall carry out such changes in the
†”ƒˆ–‘ˆˆ†‘ —‡–„‡ˆ‘”‡ϐ‹Ž‹‰–Š‡ˆˆ‡”†‘ —‡–™‹–ŠȀ•ǤŠ‡”ƒˆ–ˆˆ‡”†‘ —‡–‹•ƒ˜ƒ‹Žƒ„Ž‡‘–Š‡
SEBI website for public comments for a’‡”‹‘†‘ˆʹͳ†ƒ›•ˆ”‘–Š‡ϐ‹Ž‹‰‘ˆ–Š‡”ƒˆ–ˆˆ‡”‘ —‡–™‹–Š–Š‡ Ǥ
 Lesson 4 • An Overview of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 99

Offer Document
“Offer document” means Prospectus in case of a public issue or offer for sale and Letter of Offer in case of a right
‹••—‡ǡ ™Š‹ Š ‹• ϐ‹Ž‡† ™‹–Š ‡‰‹•–”ƒ” ‘ˆ ‘’ƒ‹‡• ȋȌ ƒ† –‘  š Šƒ‰‡•Ǥ  ‘ˆˆ‡” †‘ —‡– ‘˜‡”• ƒŽŽ –Š‡
relevant information to help an investor to make his/ her investment decision.
Red Herring Prospectus (RHP)
“Red Herring Prospectus” is a prospectus, which does not have details of either price or number of shares being
offered, or the amount of issue. This means that in case price is not disclosed, the number of shares and the upper
and lower price bands are disclosed. On the other hand, an issuer can state the issue size and the number of shares
ƒ”‡†‡–‡”‹‡†Žƒ–‡”Ǥ ˆ‘”ƒ  ƒ„‡ϐ‹Ž‡†™‹–Š–Š‡™‹–Š‘—––Š‡’”‹ ‡„ƒ†ƒ†–Š‡‹••—‡”ǡ‹•— Šƒ
ƒ•‡™‹ŽŽ‘–‹ˆ›–Š‡ϐŽ‘‘”’”‹ ‡‘”ƒ’”‹ ‡„ƒ†„›™ƒ›‘ˆƒƒ†˜‡”–‹•‡‡–‘‡†ƒ›’”‹‘”–‘–Š‡‘’‡‹‰‘ˆ–Š‡‹••—‡Ǥ
In the case of book-built issues, it is a process of price discovery and the price cannot be determined until the bidding
’”‘ ‡••‹• ‘’Ž‡–‡†Ǥ ‡ ‡ǡ•— Š†‡–ƒ‹Ž•ƒ”‡‘–•Š‘™‹–Š‡ ϐ‹Ž‡†™‹–Šƒ•’‡”–Š‡‘’ƒ‹‡• –ǡʹͲͳ͵Ǥ
Ž›‘ ‘’Ž‡–‹‘‘ˆ–Š‡„‹††‹‰’”‘ ‡••ǡ–Š‡†‡–ƒ‹Ž•‘ˆ–Š‡ϐ‹ƒŽ’”‹ ‡ƒ”‡‹ Ž—†‡†‹–Š‡‘ˆˆ‡”†‘ —‡–ǤŠ‡‘ˆˆ‡”
†‘ —‡–ϐ‹Ž‡†–Š‡”‡ƒˆ–‡”™‹–Š‹• ƒŽŽ‡†ƒ’”‘•’‡ –—•Ǥ

INITIAL PUBLIC OFFER / FURTHER PUBLIC OFFER

’—„Ž‹ ‹••—‡‘ˆ•’‡ ‹ϐ‹‡†•‡ —”‹–‹‡•„›ƒ‹••—‡” ƒ„‡‡‹–Š‡”ƒ ‹–‹ƒŽ—„Ž‹ ˆˆ‡”ȋ Ȍ‘”ƒ —”–Š‡”—„Ž‹ ˆˆ‡”
(FPO). An IPO is done by an unlisted issuer while a FPO is done by a listed issuer. As per the ICDR Regulations, the
‹••—‡”•ŠƒŽŽ ‘’Ž›™‹–Š–Š‡ˆ‘ŽŽ‘™‹‰ ‘†‹–‹‘•„‡ˆ‘”‡ƒ‹‰ƒ ‘ˆ•’‡ ‹ϐ‹‡†•‡ —”‹–‹‡•ǤŠ‡ ‘†‹–‹‘•‡‡†
–‘„‡•ƒ–‹•ϐ‹‡†„‘–Šƒ––Š‡–‹‡‘ˆϐ‹Ž‹‰–Š‡†”ƒˆ–‘ˆˆ‡”†‘ —‡–ȋ ‘‘Ž›”‡ˆ‡””‡†–‘ƒ•–Š‡”ƒˆ–‡† ‡””‹‰
”‘•’‡ –—•Ȍƒ†–Š‡–‹‡‘ˆ”‡‰‹•–‡”‹‰‘”ϐ‹Ž‹‰–Š‡ϐ‹ƒŽ‘ˆˆ‡”†‘ —‡–ȋ ‘‘Ž›”‡ˆ‡””‡†–‘ƒ•–Š‡”‘•’‡ –—•Ȍ
with the Registrar of Companies.

ELIGIBILITY REQUIREMENTS TO BE COMPLIED WITH FOR IPO

–‹–‹‡•‘–‡Ž‹‰‹„Ž‡–‘ƒ‡ƒ‹‹–‹ƒŽ’—„Ž‹ ‘ˆˆ‡”ȏ‡‰—Žƒ–‹‘ͷȋͳȌƬȋʹȌȐ

a) If the issuer, any of its promoters, promoter

group, selling shareholders* are debarred from
ENTITIES NOT ELIGIBLE TO MAKE AN IPO

accessing the capital market by the SEBI.

b) If any of the promoters or directors of the

issuer is a promoter or a director of any other
company

c) If the issuer or any of its promoters or directors

is a willful defaulter.

d) If any of the promoters or directors of the

issuer is a fugitive offender.

e) If there are any outstanding convertible securities or any

other right which would entitled any person with any
option to receive equity shares of the issuer.

Note: The restrictions under (a) and (b) above shall not apply to the persons or entities mentioned therein, who were
†‡„ƒ””‡†‹–Š‡’ƒ•–„›–Š‡ ƒ†–Š‡’‡”‹‘†‘ˆ†‡„ƒ”‡–‹•ƒŽ”‡ƒ†›‘˜‡”ƒ•‘–Š‡†ƒ–‡‘ˆϔ‹Ž‹‰‘ˆ–Š‡†”ƒˆ–‘ˆˆ‡”
document with the SEBI.

ȗDz•‡ŽŽ‹‰•Šƒ”‡Š‘Ž†‡”ȋ•Ȍdz‡ƒ•ƒ›•Šƒ”‡Š‘Ž†‡”‘ˆ–Š‡‹••—‡”™Š‘‹•‘ˆˆ‡”‹‰ˆ‘”•ƒŽ‡–Š‡•’‡ ‹ϐ‹‡†•‡ —”‹–‹‡•‹

a public issue in accordance with these Regulations.
 100 Lesson 4 • EP-SLCM

‘ƒ’’Ž‹ ƒ„‹Ž‹–›‘ˆ‡‰—Žƒ–‹‘ͷȋͳȌƬȋʹȌ

Ž‹‰‹„‹Ž‹–›”‡“—‹”‡‡–•ˆ‘”ƒ‹‹–‹ƒŽ’—„Ž‹ ‘ˆˆ‡”ȏ‡‰—Žƒ–‹‘͸ȋͳȌƬ͸ȋʹȌȐ
An issuer shall be eligible to make an IPO only if:
a. the issuer has net tangible assets of atleast Rs. 3 crores, calculated on a restated and consolidated basis, in
each of the preceding three full years of (12 months each) of which not more than 50% is held in monetary
assets.
However, if more than 50% of the net tangible assets are held in monetary assets, the issuer has utilized or
ƒ†‡ϐ‹” ‘‹–‡–•–‘—–‹Ž‹œ‡•— Š‡š ‡••‘‡–ƒ”›ƒ••‡–•‹‹–•„—•‹‡••‘”’”‘Œ‡ –ǤŠ‹•Ž‹‹–‘ˆͷͲΨ
shall not apply in case of IPO is made entirely through an offer for sale.
„Ǥ –Š‡‹••—‡”Šƒ•ƒƒ˜‡”ƒ‰‡‘’‡”ƒ–‹‰’”‘ϐ‹–‘ˆƒ–Ž‡ƒ•–•Ǥͳͷ ”‘”‡•ǡ ƒŽ —Žƒ–‡†‘ƒ”‡•–ƒ–‡†ƒ† ‘•‘Ž‹†ƒ–‡†
„ƒ•‹•ǡ†—”‹‰–Š‡–Š”‡‡’”‡ ‡†‹‰͵›‡ƒ”•ǡ™‹–Š‘’‡”ƒ–‹‰’”‘ϐ‹–‹‡ƒ Š‘ˆ–Š‡–Š”‡‡’”‡ ‡†‹‰›‡ƒ”•Ǣ
c. the issuer has a networth of atleast Rs.1 crore in each of the preceding three full years, calculated on a restated
and consolidated basis.
In case the issuer has changed its name within the last one year, atleast 50% of the revenue calculated on
a restated and consolidated basis, for the preceding one full year has been earned by it from the activity
indicated by the new name.
 ƒ•‡–Š‡Ž‹‰‹„‹Ž‹–› ‘†‹–‹‘•ƒ”‡‘–‡–Ǧ
An issuer not satisfying the above-mentioned conditions shall be eligible to make an initial public offer only if the
issue is made through the book-building process and the issuer undertakes to allot at least 75% of the net offer to
“—ƒŽ‹ϐ‹‡†‹•–‹–—–‹‘ƒŽ„—›‡”•ȋ •Ȍƒ†–‘”‡ˆ—†–Š‡ˆ—ŽŽ•—„• ”‹’–‹‘‘‡›‹ˆ‹–ˆƒ‹Ž•–‘†‘•‘Ǥ
Lesson 4 • An Overview of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 101

Ž‹‰‹„‹Ž‹–›”‹–‡”‹ƒˆ‘”ƒ‹‘ƒ”†‹•–‹‰ƒ•’‡” ȋ ȌǡʹͲͳͺ

Option I Net Tangible Assets of at Average operating Net worth of at least Rs.
least Rs. 3 crores (for past ’”‘ϐ‹–‘ˆ•Ǥͳͷ ”‘”‡•‹ 1 crore in each of the
Net tangib assets,
3 years) Not more than preceding three years (of preceding 3 full years
’”‘ϐ‹–ƒ„‹Ž‹–›ƒ†‡–™‘”–Š = + twelve months each), with +
50% in monetary assets
track record
‘’‡”ƒ–‹‰’”‘ϐ‹–‹‡ƒ Š‘ˆ
these preceding three years

Option II Issue through book If QIB part is not

building route with at subscribed, the issue
No net tangible assets, least 75% allotted to will fail even if it is
’”‘ϐ‹–ƒ„‹Ž‹–›ƒ†‡– = QIBs + oversubscribed on
worth track record overall basis

Š‡ƒ„‘˜‡‡Ž‹‰‹„‹Ž‹–› ‘†‹–‹‘•ƒ”‡‡š’Žƒ‹‡†„›–Š‡ˆ‘ŽŽ‘™‹‰šƒ’Ž‡ǣ
Ž‹‰‹„‹Ž‹–›‘†‹–‹‘‘ǣͳ
 ƒ•‡–Š‡‹••—‡”‹•’”‘’‘•‹‰–‘ϐ‹Ž‡‹–•†”ƒˆ–‘ˆˆ‡”†‘ —‡–™‹–Š–Š‡ ‹—‰—•–ʹͲͳͺǡ–Š‡–Š‡‡––ƒ‰‹„Ž‡
assets for the last 3 full years of 12 months each shall be atleast Rs.3 crores and not more than 50% of the same
shall be held in monetary assets. In the following table, it is seen that the net tangible assets is more than Rs.
͵ ”‘”‡• ‹ –Š‡ ›‡ƒ” ‡†‡† ƒ” Š ͵ͳǡ ʹͲͳͶǡ ƒ” Š ͵ͳǡ ʹͲͳͷ ƒ† ƒ” Š ͵ͳǡ ʹͲͳ͸Ǥ —”–Š‡” ‘‡–ƒ”› ƒ••‡–•
constitute less than 50% of the net tangible assets in each of the three previous ϐ‹ƒ ‹ƒŽyears:
(Rs. in lacs)

Year Ended March 31 2014 2015 ʹͲͳ͸ 2017 2018

Net Tangible Assets ͳͶͶͺǤͷ͸ 2275.53 ʹͷ͵ʹǤ͸Ͳ 3510.33 Ͷ͸ͷ͹ǤͷͲ
Monetary Assets ʹͻʹǤ͹͸ ͸ͳǤͻ͹ 108.25 302.33 288.17
Monetary Assets as a percentage 20.21 2.72 4.27 ͺǤ͸ͳ ͸Ǥͳͻ
of Net Tangible Assets
Dz‡– ƒ‰‹„Ž‡ ••‡–•dz ‡ƒ –Š‡ •— ‘ˆ ƒŽŽ ‡– ƒ••‡–• ‘ˆ –Š‡ ‹••—‡”ǡ ‡š Ž—†‹‰ ‹–ƒ‰‹„Ž‡ ƒ••‡–• ƒ• †‡ϐ‹‡† ‹
 ‘—–‹‰–ƒ†ƒ”†ʹ͸ȋʹ͸Ȍ‘” †‹ƒ ‘—–‹‰–ƒ†ƒ”†ȋ †Ȍ͵ͺǡƒ•ƒ’’Ž‹ ƒ„Ž‡ǡ‹••—‡†„›–Š‡ •–‹–—–‡
of Chartered Accountants of India.
Ž‹‰‹„‹Ž‹–›‘†‹–‹‘‘ǣʹ
 ƒ•‡ –Š‡ ‹••—‡” ’”‘’‘•‡• –‘ ϐ‹Ž‡ ‹–• †”ƒˆ– ‘ˆˆ‡” †‘ —‡– ™‹–Š –Š‡   ‹ —‰—•– ʹͲͳͺǡ –Š‡ –Š‡ ƒ˜‡”ƒ‰‡
‘’‡”ƒ–‹‰ ’”‘ϐ‹– ˆ‘” –Š”‡‡ ’”‡ ‡†‹‰ ›‡ƒ”• •ŠƒŽŽ „‡ ƒ–Ž‡ƒ•– • ͳͷ ”‘”‡•Ǥ —”–Š‡”ǡ –Š‡ ‘’ƒ› •ŠƒŽŽ Šƒ˜‡
‘’‡”ƒ–‹‰’”‘ϐ‹–‹‡ƒ Š‘ˆ–Š‡–Š”‡‡›‡ƒ”•ǤŠ‡ƒ˜‡”ƒ‰‡‘ˆ–Š‡’”‘ϐ‹–•ˆ‘”–Š‡͵’”‡ ‡†‹‰›‡ƒ”•‹••ǤͳͷǤ͹ͷcrores
which is more than the prescribed average of Rs.15 crores.
(Rs. in lacs)

Year Ended March 31 ʹͲͳ͸ 2017 2018

’‡”ƒ–‹‰”‘ϐ‹– ͳ͸͵ͲǤ͵ͳ ͳʹ͵ʹǤ͸ͷ ͳͺ͸ͶǤ͸͵
 102 Lesson 4 • EP-SLCM

Ž‹‰‹„‹Ž‹–›‘†‹–‹‘‘ǣ͵
 ƒ•‡–Š‡‹••—‡”’”‘’‘•‡•–‘ϐ‹Ž‡‹–•†”ƒˆ–‘ˆˆ‡”†‘ —‡–™‹–Š–Š‡ ‹—‰—•–ʹͲͳͺ–Š‡–Š‡‡–™‘”–Š•ŠƒŽŽ
„‡ƒ–Ž‡ƒ•–•Ǥͳ ”‘”‡‹‡ƒ Š‘ˆ–Š‡Žƒ•–͵ϐ‹ƒ ‹ƒŽ›‡ƒ”•Ǥ –Š‡ˆ‘ŽŽ‘™‹‰–ƒ„Ž‡ǡ‹–‹••‡‡–Šƒ––Š‡ ‘’ƒ›Šƒ•
ƒ‡–™‘”–Š‘ˆ•Ǥͳ ”‘”‡‹‡ƒ Š‘ˆ–Š‡Žƒ•––Š”‡‡ϐ‹ƒ ‹ƒŽ›‡ƒ”•’”‹‘”–‘–Š‡†ƒ–‡‘ˆ–Š‡ϐ‹Ž‹‰‘ˆ–Š‡†”ƒˆ–‘ˆˆ‡”
document with the SEBI.
(Rs. in lacs)

‡ƒ”†‹‰ƒ” Š͵ͳ 2014 ʹͲͳͷ 2016 2017 2018

Equity Share Capital ͳͶͶͺǤͷ͸ 2000.00 2000.00 2000.00 2022.00
Share Application Money 0.00 0.00 0.00 0.00 ͳ͸ͷǤͲͲ
Reserves & Surplus 0.00 304.52 590.02 1430.47 2742.71
Total ͳͶͶͺǤͷ͸ 2304.52 2590.02 3595.47 Ͷ͹͸ͶǤ͹ͳ
Less : Misc. Expenses not
0.00 0.00 0.00 0.00 0.00
written off
Less: Deferred Tax Assets 0.00 0.00 13.45 0.00 ͸ͳǤͲͺ
‡–™‘”–Š ͳͶͶͺǤͷ͸ ʹ͵ͲͶǤͷʹ ʹͷ͹͸Ǥͷ͹ ͵ͷͻͷǤͶ͹ Ͷ͹Ͳ͵Ǥ͸͵

‹ ‡–Š‡ƒŽŽ–Š‡ƒ„‘˜‡‡Ž‹‰‹„‹Ž‹–› ‘†‹–‹‘•ƒ”‡•ƒ–‹•ϐ‹‡†‹–Š‡‡šƒ’Ž‡ƒ†–Š‡”‡‹•‘ Šƒ‰‡‹–Š‡ƒ‡‘ˆ

the company, this company is eligible to make an Initial Public Offering.
However, in case an issuer does not satisfy the eligibility conditions stipulated above, it may make an Initial
Public Offer through the book building process and further undertake to allot atleast 75% of the net offer to
–Š‡’—„Ž‹ –‘“—ƒŽ‹ϐ‹‡†‹•–‹–—–‹‘ƒŽ„—›‡”•ƒ†–‘”‡ˆ—†ˆ—ŽŽ•—„• ”‹’–‹‘‘‡›‹ˆ‹–ˆƒ‹Ž•–‘†‘•‘Ǥȏ‡‰—Žƒ–‹‘
͸ȋʹȌȐ

General Conditions [Regulation 7]

• An issuer making an initial public offer shall ensure that:
a) it has made an application to one or more stock exchanges to seek an in-principle approval for listing
‘ˆ‹–••’‡ ‹ϐ‹‡†•‡ —”‹–‹‡•‘•— Š•–‘ ‡š Šƒ‰‡•ƒ†Šƒ• Š‘•‡‘‡‘ˆ–Š‡ƒ•–Š‡†‡•‹‰ƒ–‡†•–‘ 
exchange;
b) ‹–Šƒ•‡–‡”‡†‹–‘ƒƒ‰”‡‡‡–™‹–Šƒ†‡’‘•‹–‘”›ˆ‘”†‡ƒ–‡”‹ƒŽ‹•ƒ–‹‘‘ˆ–Š‡•’‡ ‹ϐ‹‡†•‡ —”‹–‹‡•
already issued and proposed to be issued;
Ȍ ƒŽŽ‹–••’‡ ‹ϐ‹‡†•‡ —”‹–‹‡•Š‡Ž†„›–Š‡’”‘‘–‡”•ƒ”‡‹†‡ƒ–‡”‹ƒŽ‹•‡†ˆ‘”’”‹‘”–‘ϐ‹Ž‹‰‘ˆ–Š‡‘ˆˆ‡”
document;
d) all its existing partly paid-up equity shares have either been fully paid-up or have been forfeited;
‡Ȍ ‹–Šƒ•ƒ†‡ϐ‹”ƒ””ƒ‰‡‡–•‘ˆϐ‹ƒ ‡–Š”‘—‰Š˜‡”‹ϐ‹ƒ„Ž‡‡ƒ•–‘™ƒ”†•͹ͷΨ‘ˆ–Š‡•–ƒ–‡†‡ƒ•
‘ˆϐ‹ƒ ‡ˆ‘”ƒ•’‡ ‹ϐ‹ ’”‘Œ‡ –’”‘’‘•‡†–‘„‡ˆ—†‡†ˆ”‘–Š‡‹••—‡’”‘ ‡‡†•ǡ‡š Ž—†‹‰–Š‡ƒ‘—–
–‘„‡”ƒ‹•‡†–Š”‘—‰Š–Š‡’”‘’‘•‡†’—„Ž‹ ‹••—‡‘”–Š”‘—‰Š‡š‹•–‹‰‹†‡–‹ϐ‹ƒ„Ž‡‹–‡”ƒŽƒ ”—ƒŽ•Ǥ
• The amount for general corporate purposes, as mentioned in objects of the issue in the draft offer document
and the offer document shall not exceed 25% of the amount being raised by the issuer.
 Lesson 4 • An Overview of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 103

š’Žƒƒ–‹‘ǣ
(i) “Project” means the object for which monies are proposed to be raised to cover the objects of the issue.
ȋ‹‹Ȍƒ”–‡”•Š‹’ ‹”•
In case of an ‹••—‡” ™Š‹ Š Šƒ† „‡‡ ƒ ’ƒ”–‡”•Š‹’ ϐ‹” ‘” ƒ Ž‹‹–‡† Ž‹ƒ„‹Ž‹–› ’ƒ”–‡”•Š‹’ǡ –Š‡ –”ƒ  ”‡ ‘”† ‘ˆ
†‹•–”‹„—–ƒ„Ž‡’”‘ϐ‹–‘ˆ–Š‡’ƒ”–‡”•Š‹’ϐ‹”‘”–Š‡•ŠƒŽŽ„‡ ‘•‹†‡”‡†‘Ž›‹ˆ–Š‡ϐ‹ƒ ‹ƒŽ•–ƒ–‡‡–•‘ˆ–Š‡
’ƒ”–‡”•Š‹’„—•‹‡••ˆ‘”–Š‡’‡”‹‘††—”‹‰™Š‹ Š–Š‡‹••—‡”™ƒ•ƒ’ƒ”–‡”•Š‹’ϐ‹” ‘ˆ‘”–‘ƒ†ƒ”‡”‡˜‹•‡†‹
the format prescribed for companies under the Companies Act, 2013 and also comply with the following:
(aȌ ƒ†‡“—ƒ–‡†‹• Ž‘•—”‡•ƒ”‡ƒ†‡‹–Š‡ϐ‹ƒ ‹ƒŽ•–ƒ–‡‡–•ƒ•”‡“—‹”‡†–‘„‡ƒ†‡‹–Š‡ˆ‘”ƒ–’”‡• ”‹„‡†
under the Companies Act, 2013;
ȋ„Ȍ –Š‡ϐ‹ƒ ‹ƒŽ•–ƒ–‡‡–•ƒ”‡†—Ž› ‡”–‹ϐ‹‡†„›ƒŠƒ”–‡”‡† ‘—–ƒ–•–ƒ–‹‰–Šƒ–ǣ
(i) the accounts and the disclosures made are in accordance with the provisions of Schedule III of the
Companies Act, 2013
(ii) the accounting standards of the Institute of Chartered Accountants of India have been followed;
ȋ‹‹‹Ȍ –Š‡ϐ‹ƒ ‹ƒŽ•–ƒ–‡‡–•’”‡•‡–ƒ–”—‡ƒ†ˆƒ‹”˜‹‡™‘ˆ–Š‡ϐ‹”ǯ•ƒ ‘—–•Ǥ

(iii) Spinning off of a division

 ƒ•‡ ‘ˆ ƒ ‹••—‡” ˆ‘”‡† ‘—– ‘ˆ ƒ †‹˜‹•‹‘ ‘ˆ ƒ ‡š‹•–‹‰ ‘’ƒ›ǡ –Š‡ –”ƒ  ”‡ ‘”† ‘ˆ †‹•–”‹„—–ƒ„Ž‡ ’”‘ϐ‹–• ‘ˆ
–Š‡†‹˜‹•‹‘•’—Ǧ‘ˆˆ•ŠƒŽŽ„‡ ‘•‹†‡”‡†‘Ž›‹ˆ–Š‡”‡“—‹”‡‡–•”‡‰ƒ”†‹‰ϐ‹ƒ ‹ƒŽ•–ƒ–‡‡–•ƒ•’”‘˜‹†‡†ˆ‘”
’ƒ”–‡”•Š‹’ϐ‹”•ƒ†•ƒ”‡ ‘’Ž‹‡†™‹–ŠǤ

Additional conditions for an offer for sale [Regulation 8]

Shares must be fully paid-up.

Shall be held by the sellers for a period of at least one year

’”‹‘”–‘–Š‡ϐ‹Ž‹‰‘ˆ–Š‡†”ƒˆ–‘ˆˆ‡”†‘ —‡–Ǥ

The holding period of such convertible securities, including depository

receipts, as well as that of resultant equity shares together shall be
considered for the purpose of calculation of one year period.

In case the equity shares received Further, such holding period of one year shall be required
on conversion or exchange of fully –‘„‡ ‘’Ž‹‡†™‹–Šƒ––Š‡–‹‡‘ˆϐ‹Ž‹‰‘ˆ–Š‡†”ƒˆ–‘ˆˆ‡”
paid-up compulsorily convertible document.
securities including depository
receipts are being offered for sale

If the equity shares arising out of the conversion or exchange of the fully paid-up
compulsorily convertible securities are being offered for sale, the conversion or exchange
•Š‘—Ž†„‡ ‘’Ž‡–‡†’”‹‘”–‘ϐ‹Ž‹‰‘ˆ–Š‡‘ˆˆ‡”†‘ —‡–ȋ‹Ǥ‡Ǥ”‡†Š‡””‹‰’”‘•’‡ –—•‹–Š‡
ƒ•‡‘ˆƒ„‘‘„—‹Ž–‹••—‡ƒ†’”‘•’‡ –—•‹–Š‡ ƒ•‡‘ˆƒϐ‹š‡†’”‹ ‡‹••—‡Ȍǡ’”‘˜‹†‡†ˆ—ŽŽ
disclosures of the terms of conversion or exchange are made in the draft offer document.
 104 Lesson 4 • EP-SLCM

The requirement of holding equity shares for a period of one year shall not apply:

‘Ǧ’’Ž‹ ƒ„‹Ž‹–›

The offer for sale of a government company or statutory authority or corporation

or any special purpose vehicle set up and controlled by any one or more of them,
which is engaged in the infrastructure sector;

Equity shares offered for sale were acquired pursuant to any scheme approved by a High Court
—†‡”–Š‡•‡ –‹‘•͵ͻͳ–‘͵ͻͶ‘ˆ‘’ƒ‹‡• –ǡͳͻͷ͸ǡ‘”ƒ’’”‘˜‡†„›ƒ–”‹„—ƒŽ‘”–Š‡‡–”ƒŽ
Government under the sections 230 to 234 of Companies Act, 2013, as applicable, in lieu of
business and invested capital which had been in existence for a period of more than one year
prior to approval of such scheme;

If the equity shares offered for sale were issued under a bonus issue on securities held for a
’‡”‹‘† ‘ˆ ƒ– Ž‡ƒ•– ‘‡ ›‡ƒ” ’”‹‘” –‘ –Š‡ ϐ‹Ž‹‰ ‘ˆ –Š‡ †”ƒˆ– ‘ˆˆ‡” †‘ —‡– ™‹–Š –Š‡   ƒ†
further subject to the following:

— Š •’‡ ‹ϐ‹‡† •‡ —”‹–‹‡• „‡‹‰ ‹••—‡† ‘—– ‘ˆ

free reserves and share premium existing in the Such equity shares not being issued by utilisation
„‘‘• ‘ˆ ƒ ‘—– ƒ• ƒ– –Š‡ ‡† ‘ˆ –Š‡ ϐ‹ƒ ‹ƒŽ ‘ˆ”‡˜ƒŽ—ƒ–‹‘”‡•‡”˜‡•‘”—”‡ƒŽ‹œ‡†’”‘ϐ‹–•‘ˆ–Š‡
›‡ƒ” ’”‡ ‡†‹‰ –Š‡ ϐ‹ƒ ‹ƒŽ ›‡ƒ” ‹ ™Š‹ Š –Š‡ AND issuer.
†”ƒˆ–‘ˆˆ‡”†‘ —‡–‹•ϐ‹Ž‡†™‹–Š Ǣ

Issue of Warrants [Regulation 13]

An issuer shall be eligible to issue warrants in an initial public offer subject to the following:

Tenure of such warrants shall not exceed eighteen In case the warrant holder does not exercise the
months from the date of their allotment in the option to take equity shares against any of the
initial public offer warrants held by the warrant holder, within three
months from the date of payment of consideration,
such consideration made in respect of such
warrants shall be forfeited by the issuer

Ž‹‰‹„‹Ž‹–›

Price or formula for determination of exercise  •’‡ ‹ϐ‹‡† •‡ —”‹–› ƒ› Šƒ˜‡ ‘‡ ‘” ‘”‡
price of the warrants shall be determined upfront warrants attached to it
and disclosed in the offer document and atleast
25 % of the consideration amount based on the
exercise price shall also be received upfront
 Lesson 4 • An Overview of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 ͳͲͷ

In case the exercise price of warrants is based on a formula, 25 % consideration amount based on the cap price of
the price band determined for the linked equity shares or convertible securities shall be received upfront.

ELIGIBILITY CRITERIA FOR FURTHER PUBLIC OFFER (FPO)

–‹–‹‡•‘–‡Ž‹‰‹„Ž‡–‘ƒ‡ƒ ȏ‡‰—Žƒ–‹‘ͳͲʹȐ
‹••—‡”•ŠƒŽŽ‘–„‡‡Ž‹‰‹„Ž‡–‘ƒ‡ƒ ‘ˆ•’‡ ‹ϐ‹‡†•‡ —”‹–‹‡•ǣ

(a) If the issuer, any (b) If any of the (C) If the issuer or (d) If any of the
of its promoters, promoters or any of its promoters promoters or
promoter group or directors of the or directors is a directors of the
directors, selling issuer is a promoter willful defaulter issuer is a fugitive
shareholders are or a director of any offender
debarred from other company
accessing the capital which is debarred
market from accessing
capital market by the
SEBI

Note : The restrictions under (a) and (b) above shall not apply to the persons or entities mentioned therein, who
™‡”‡†‡„ƒ””‡†‹–Š‡’ƒ•–„›–Š‡ ƒ†–Š‡’‡”‹‘†‘ˆ†‡„ƒ”‡–‹•ƒŽ”‡ƒ†›‘˜‡”ƒ•‘–Š‡†ƒ–‡‘ˆϐ‹Ž‹‰‘ˆ–Š‡
draft offer document with the SEBI.
Ž‹‰‹„‹Ž‹–›”‡“—‹”‡‡–•ˆ‘” ȏ‡‰—Žƒ–‹‘ͳͲ͵Ȑ
• An issuer may make a FPO if it has changed its name within the last one year and atleast 50% of the revenue
in the preceding one full year has been earned from the activity suggested by the new name.
• If an issuer does not satisfy the above-mentioned condition, it may make a FPO only, if, the issue is made
–Š”‘—‰Š–Š‡„‘‘Ǧ„—‹Ž†‹‰’”‘ ‡••ƒ†–Š‡‹••—‡”—†‡”–ƒ‡•–‘ƒŽŽ‘–ƒ–Ž‡ƒ•–͹ͷΨ‘ˆ–Š‡‡–‘ˆˆ‡”ǡ–‘“—ƒŽ‹ϐ‹‡†
institutional buyers and to refund full subscription money if it fails to make the said minimum allotment to
“—ƒŽ‹ϐ‹‡†‹•–‹–—–‹‘ƒŽ„—›‡”•Ǥ
General Conditions for FPO [Regulation 104]
An issuer making an FPO shall ensure that:

ƒ’’Ž‹ ƒ–‹‘‹•ƒ†‡ˆ‘”Ž‹•–‹‰‘ˆ–Š‡•’‡ ‹ϐ‹‡†•‡ —”‹–‹‡•–‘‘‡‘”‘”‡‘ˆ–Š‡”‡ ‘‰‹œ‡†

stock exchanges and choose one of the exchanges as the designated stock exchange.

 ƒ‰”‡‡‡– ‹• ‡–‡”‡† ‹–‘ ™‹–Š ƒ †‡’‘•‹–‘”› ˆ‘” †‡ƒ–‡”‹ƒŽ‹œƒ–‹‘ ‘ˆ •’‡ ‹ϐ‹‡†
securities already issued and proposed to be issued.

All its existing partly paid up equity shares have either been fully paid up or have been
forfeited. In other words, if a company has partly paid up equity shares, they shall not be
permitted to make a public issue

Š‡‹••—‡”•Š‘—Ž†ƒ‡ϐ‹”ƒ””ƒ‰‡‡–•‘ˆϐ‹ƒ ‡–Š”‘—‰Š˜‡”‹ϐ‹ƒ„Ž‡‡ƒ•–‘™ƒ”†•
͹ͷΨ‘ˆ–Š‡•–ƒ–‡†‡ƒ•‘ˆϐ‹ƒ ‡ˆ‘”–Š‡•’‡ ‹ϐ‹ ’”‘Œ‡ –’”‘’‘•‡†–‘„‡ˆ—†‡†ˆ”‘
the issue proceeds, excluding the amount to be raised through the proposed public issue
‘”–Š”‘—‰Š‡š‹•–‹‰‹†‡–‹ϐ‹ƒ„Ž‡‹–‡”ƒŽƒ ”—ƒŽ•Ǥ

Amount for General Corporate Purposes as mentioned in objects of the issue in the draft
offer document and the offer document shall not exceed 25% of the amount being raised
by the issuer.
 106 Lesson 4 • EP-SLCM

Issue of Warrants [Regulation 111]

An issuer shall be eligible to issue warrants in a further public offer subject to the following conditions:
• the tenure of such warrants shall not exceed eighteen months from the date of their allotment in the public
issue;
Ȉ ƒ•’‡ ‹ϐ‹‡†•‡ —”‹–›ƒ›Šƒ˜‡‘‡‘”‘”‡™ƒ””ƒ–•ƒ––ƒ Š‡†–‘‹–Ǣ
• the price or formula for determination of exercise price of the warrants shall be determined upfront and at
least 25% of the consideration amount based on the exercise price shall also be received upfront. However, in
case the exercise price of warrants is based on a formula, 25% consideration amount based on the cap price
of the price band determined for the linked equity shares or convertible securities shall be received upfront.
• in case the warrant holder does not exercise the option to take equity shares against any of the warrants held
by the warrant holder, within three months from the date of payment of consideration, such consideration
made in respect of such warrants shall be forfeited by the issuer.

PROMOTERS’ CONTRIBUTION
In Case of IPO [Regulation 14]

The promoters of the issuer shall hold at least 20% of the post-issue capital.
However, in case the post-issue shareholding of the promoters is less than 20%., alternative investment funds
‘”ˆ‘”‡‹‰˜‡–—”‡ ƒ’‹–ƒŽ‹˜‡•–‘”•‘”• Š‡†—Ž‡† ‘‡” ‹ƒŽ„ƒ•‘”’—„Ž‹ ϐ‹ƒ ‹ƒŽ‹•–‹–—–‹‘•‘”‹•—”ƒ ‡
‘’ƒ‹‡•”‡‰‹•–‡”‡†™‹–Š ƒ› ‘–”‹„—–‡–‘‡‡––Š‡•Š‘”–ˆƒŽŽ‹‹‹— ‘–”‹„—–‹‘ƒ••’‡ ‹ϐ‹‡†ˆ‘”–Š‡
’”‘‘–‡”•ǡ•—„Œ‡ ––‘ƒƒš‹—‘ˆ–‡’‡” ‡–‘ˆ–Š‡’‘•–Ǧ‹••—‡ ƒ’‹–ƒŽ™‹–Š‘—–„‡‹‰‹†‡–‹ϐ‹‡†ƒ•’”‘‘–‡”ȋ•ȌǤ
‘ƒ’’Ž‹ ƒ„‹Ž‹–›
Š‡”‡“—‹”‡‡–‘ˆ‹‹—’”‘‘–‡”•ǯ ‘–”‹„—–‹‘•ŠƒŽŽ‘–ƒ’’Ž›‹ ƒ•‡ƒ‹••—‡”†‘‡•‘–Šƒ˜‡ƒ›‹†‡–‹ϐ‹ƒ„Ž‡
promoter.

‹‹—”‘‘–‡”•ǯ‘–”‹„—–‹‘
The minimum promoters’ contribution shall be as follows:

”‘‘–‡”••ŠƒŽŽ ‘–”‹„—–‡ʹͲΨǤǡƒ•–Š‡ ƒ•‡ƒ›„‡ǡ‡‹–Š‡”„›™ƒ›‘ˆ‡“—‹–›•Šƒ”‡•‹ Ž—†‹‰‡“—‹–›

•Šƒ”‡•Š‡Ž†ǡ‹ˆƒ›ǡ‘”„›™ƒ›‘ˆ•—„• ”‹’–‹‘–‘ ‘˜‡”–‹„Ž‡•‡ —”‹–‹‡•Ǥ
If the price of the equity shares allotted pursuant to conversion is not pre-determined and not disclosed in
the offer document, the promoters shall contribute only by way of subscription to the convertible securities
being issued in the public issue and shall undertake in writing to subscribe to the equity shares pursuant to
conversion of such securities.

‘” ‹••—‡ ‘ˆ ‘˜‡”–‹„Ž‡ •‡ —”‹–‹‡• ™Š‹ Š ƒ”‡ ‘” ‹‹–‹ƒŽ ’—„Ž‹  ‘ˆˆ‡” ‘ˆ ‘˜‡”–‹„Ž‡ †‡„–
‘˜‡”–‹„Ž‡‘”‡š Šƒ‰‡ƒ„Ž‡‘†‹ˆˆ‡”‡–†ƒ–‡•ƒ† ‹•–”—‡–• ™‹–Š‘—– ƒ ’”‹‘” ’—„Ž‹  ‹••—‡ ‘ˆ
‹ˆ–Š‡’”‘‘–‡”•ǯ ‘–”‹„—–‹‘‹•„›™ƒ›‘ˆ‡“—‹–› ‡“—‹–›•Šƒ”‡•
•Šƒ”‡•ȋ ‘˜‡”•‹‘’”‹ ‡„‡‹‰’”‡Ǧ†‡–‡”‹‡†Ȍ
the promoters shall bring in a contribution of at least
such contribution shall not be at a price lower than 20% of the project cost in the form of equity shares,
the weighted average price of the equity share capital subject to contributing at least 20% of the issue size
arising out of conversion of such securities. from their own funds in the form of equity shares
However, if the project is to be implemented in stages, the promoters’ contribution shall be with respect to total
equity participation till the respective stage vis-à-vis the debt raised or proposed to be raised through the public
issue.
 Lesson 4 • An Overview of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 107

”‘‘–‡”•ǯ‘–”‹„—–‹‘–‘„‡„”‘—‰Š–‹„‡ˆ‘”‡—„Ž‹  ••—‡’‡•ȏ‡‰—Žƒ–‹‘ͳͶȋͶȌȐ
• Timing: The promoters shall bring full amount of the promoters’ contribution including premium at least
one day prior to the date of opening of the issue. In case the promoters have to subscribe to equity shares or
convertible securities towards minimum promoters’ contribution, the amount of promoters’ shall be kept in
an escrow account with a scheduled commercial bank, which shall be released to the issuer along with the
release of the issue proceeds. However, where the promoters’ contribution has already been brought in and
—–‹Ž‹•‡†ǡ–Š‡‹••—‡”•ŠƒŽŽ‰‹˜‡–Š‡ƒ•ŠϐŽ‘™•–ƒ–‡‡–†‹• Ž‘•‹‰–Š‡—•‡‘ˆ•— Šˆ—†•‹–Š‡‘ˆˆ‡”†‘ —‡–Ǥ
• ”‘Ǧ”ƒ–ƒ„ƒ•‹•ǣ Where the minimum promoters’ contribution is more than Rs.100 crore and the initial public
offer is for partly paid shares, the promoters shall bring in at least Rs.100 crore before the date of opening
of the issue and the remaining amount may be brought on a pro-rata basis before the calls are made to the
public.
Promoters’ contribution shall be computed on the basis of the post-issue expanded capital:
(a) assuming full proposed conversion of convertible securities into equity shares;
(b) assuming exercise of all vested options, where any employee stock options are outstanding at the time
of initial public offer.

‡ —”‹–‹‡• ‡Ž‹‰‹„Ž‡ˆ‘”‹‹—”‘‘–‡”•ǯ‘–”‹„—–‹‘ȏ‡‰—Žƒ–‹‘ͳͷȐ

‘”–Š‡ ‘’—–ƒ–‹‘‘ˆ‹‹—’”‘‘–‡”•ǯ ‘–”‹„—–‹‘ǡ–Š‡ˆ‘ŽŽ‘™‹‰•’‡ ‹ϐ‹‡†•‡ —”‹–‹‡••ŠƒŽŽ‘–„‡‡Ž‹‰‹„Ž‡ǣ

ȋƒȌ’‡ ‹ϐ‹‡†•‡ —”‹–‹‡•ƒ “—‹”‡††—”‹‰–Š‡’”‡ ‡†‹‰–Š”‡‡›‡ƒ”•ǡ‹ˆ ȋ„Ȍ •’‡ ‹ϐ‹‡† •‡ —”‹–‹‡• ƒ “—‹”‡† „›
these are:- promoters and AIFs/ FVCIs / scheduled
• acquired for consideration other than cash and revaluation of commercial banks/ PFIs/ insurance
assets or capitalisation of intangible assets is involved in such companies during the preceding one
transaction; or year at a price lower than the price
• resulting from a bonus issue by utilisation of revaluation reserves ƒ– ™Š‹ Š •’‡ ‹ϐ‹‡† •‡ —”‹–‹‡• ƒ”‡ „‡‹‰
Ȁ—”‡ƒŽ‹•‡†’”‘ϐ‹–•‘ˆ–Š‡‹••—‡”/from bonus issue against equity
offered to public in the initial public offer.
shares which are ineligible for minimum promoters’ contribution.

(c) promoters and AIFs during the preceding one year at a price less
than the issue price, against funds brought in by them during that period,
in case of an issuer formed by conversion of one or more partnership ȋ†Ȍ •’‡ ‹ϐ‹‡† •‡ —”‹–‹‡• ’Ž‡†‰‡† ™‹–Š ƒ›
ϐ‹”•Ȁ•ǡ ™Š‡”‡ –Š‡ ’ƒ”–‡”• ‘ˆ –Š‡ ‡”•–™Š‹Ž‡ ’ƒ”–‡”•Š‹’ ϐ‹”•Ȁ creditor.
LLPs are the promoters of the issuer and there is no change in the
management. *

ȗ  Žƒ—•‡ȋ Ȍǡ•’‡ ‹ϐ‹‡†•‡ —”‹–‹‡•ǡƒŽŽ‘–‡†–‘’”‘‘–‡”•ƒ‰ƒ‹•– ƒ’‹–ƒŽ‡š‹•–‹‰‹•— Šϐ‹”•ˆ‘”ƒ’‡”‹‘†of

more than one year on a continuous basis, shall be eligible.
However, Clause (b) shall not apply:
Ȉ ‹ˆ–Š‡’”‘‘–‡”•ƒ† •ǡƒ•ƒ’’Ž‹ ƒ„Ž‡’ƒ›–‘–Š‡‹••—‡”ǡ–Š‡†‹ˆˆ‡”‡ ‡„‡–™‡‡–Š‡’”‹ ‡ƒ–™Š‹ Š•’‡ ‹ϐ‹‡†
•‡ —”‹–‹‡• ƒ”‡ ‘ˆˆ‡”‡† ‹ –Š‡ ‹‹–‹ƒŽ ’—„Ž‹  ‘ˆˆ‡” ƒ† –Š‡ ’”‹ ‡ ƒ– ™Š‹ Š –Š‡ •’‡ ‹ϐ‹‡† •‡ —”‹–‹‡• Šƒ† „‡‡
acquired;
Ȉ ‹ˆ•— Š•’‡ ‹ϐ‹‡†•‡ —”‹–‹‡•ƒ”‡ƒ “—‹”‡†‹–‡”•‘ˆ–Š‡• Š‡‡—†‡”•‡ –‹‘͵ͻͳ–‘͵ͻͶ‘ˆ–Š‡‘’ƒ‹‡•
 –ǡͳͻͷ͸‘”•‡ –‹‘•ʹ͵ͲǦʹͶͲ‘ˆ–Š‡‘’ƒ‹‡• –ǡʹͲͳ͵ǡƒ•ƒ’’”‘˜‡†„›ƒ ‹‰Š‘—”–‘”ƒ–”‹„—ƒŽ‘”–Š‡
Central Government, as applicable, by promoters in lieu of business and invested capital that had been in
existence for a period of more than one year prior to such approval;
 108 Lesson 4 • EP-SLCM

• to an initial public offer by a government company, statutory authority or corporation or any special purpose
vehicle set up by any of them, which is engaged in infrastructure sector;
’‡ ‹ϐ‹‡† •‡ —”‹–‹‡• ”‡ˆ‡””‡† ƒ„‘˜‡ •ŠƒŽŽ „‡ ‡Ž‹‰‹„Ž‡ ˆ‘” –Š‡ ‘’—–ƒ–‹‘ ‘ˆ ’”‘‘–‡”•ǯ ‘–”‹„—–‹‘ǡ ‹ˆ •— Š
securities are acquired pursuant to a scheme which has been approved by a High Court under sections 391- 394
‘ˆ–Š‡‘’ƒ‹‡• –ǡͳͻͷ͸‘”ƒ’’”‘˜‡†„›”‹„—ƒŽ ‘”–Š‡‡–”ƒŽ ‘˜‡”‡–—†‡”•‡ –‹‘•ʹ͵ͲǦʹͶͲ‘ˆ–Š‡
Companies Act, 2013.

In Case of FPO

š‡’–‹‘ˆ”‘‡“—‹”‡‡–‘ˆ”‘‘–‡”•ǯ‘–”‹„—–‹‘ȏ‡‰—Žƒ–‹‘ͳͳʹȐ

The requirements of minimum promoters’ contribution shall not apply in case of:

ȋƒȌ‹••—‡”™Š‹ Š†‘‡•‘–Šƒ˜‡ƒ›‹†‡–‹ϐ‹ƒ„Ž‡’”‘‘–‡”Ǣ

(b) where the equity shares of the issuer are frequently traded on a stock
exchange for a period of at least three years immediately preceding
the reference date, and:
• –Š‡ ‹••—‡” Šƒ• ”‡†”‡••‡† ƒ– Ž‡ƒ•– ‹‡–› ϐ‹˜‡ ’‡” ‡– ‘ˆ –Š‡
complaints received from the investors till the end of the quarter
immediately preceding the month of the reference date, and;
• the issuer has been in compliance with the SEBI (Listing Obligations
and Disclosure Requirements) Regulations, 2015 for a minimum
period of three years immediately preceding the reference date

‹‹—”‘‘–‡”•ǯ‘–”‹„—–‹‘ȏ‡‰—Žƒ–‹‘ͳͳ͵Ȑ
• The promoters shall contribute in the public issue as follows:
a) either to the extent of 20% of the proposed issue size or to the extent of 20% of the post-issue capital;
b) in case of a composite issue (i.e., further public offer cum rights issue), either to the extent of 20%
of the proposed issue size or to the extent of 20% of the post-issue capital excluding the rights issue
component.
• In case of a public issue or composite issue of convertible securities, the minimum promoters’ contribution
shall be as follows:
a) the promoters shall contribute 20%, as the case may be, either by way of equity shares or by way of
subscription to the convertible securities. However, if the price of the equity shares allotted pursuant
to conversion is not pre-determined and not disclosed in the offer document, the promoters shall
contribute only by way of subscription to the convertible securities being issued in the public issue and
shall undertake in writing to subscribe to the equity shares pursuant to conversion of such securities.
b) in case of any issue of convertible securities which are convertible or exchangeable on different dates
and if the promoters’ contribution is by way of equity shares (conversion price being pre- determined),
such contribution shall not be at a price lower than the weighted average price of the equity share
capital arising out of conversion of such securities.
• In case of a further public offer or composite issue where the promoters contribute more than the stipulated
minimum promoters’ contribution, the allotment with respect to excess contribution shall be made at a price
determined in terms of the provisions relating to pricing of frequently trading shares or the issue price,
whichever is higher.
• In case the promoters have to subscribe to equity shares or convertible securities towards promoters’
contribution, the promoters shall satisfy the requirements of at least one day prior to the date of opening
of the issue and the amount of promoters’ contribution shall be kept in an escrow account with a scheduled
 Lesson 4 • An Overview of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 109

commercial bank and shall be released to the issuer along with the release of the issue proceeds.
Further, where the minimum promoters’ contribution is more than one hundred crore rupees and the further
public offer is for partly paid shares, the promoters shall bring in at least one hundred crore rupees before the
date of opening of the issue and the remaining amount may be brought on a pro-rata basis before the calls are
made to the public.
• The SR equity shares of promoters, if any, shall be eligible towards computation of minimum promoters’
contribution.

“Weighted average price”:

ȋƒȌ Dz™‡‹‰Š–dz‡ƒ•–Š‡—„‡”‘ˆ‡“—‹–›•Šƒ”‡•ƒ”‹•‹‰‘—–‘ˆ ‘˜‡”•‹‘‘ˆ•— Š•’‡ ‹ϐ‹‡†•‡ —”‹–‹‡•‹–‘

equity shares 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.

‡ —”‹–‹‡•‹‡Ž‹‰‹„Ž‡ˆ‘”‹‹—’”‘‘–‡”•ǯ ‘–”‹„—–‹‘ȏ‡‰—Žƒ–‹‘ͳͳͶȐ

‘”–Š‡ ‘’—–ƒ–‹‘‘ˆ‹‹—’”‘‘–‡”•ǯ ‘–”‹„—–‹‘ǡ–Š‡ˆ‘ŽŽ‘™‹‰•’‡ ‹ϐ‹‡†•‡ —”‹–‹‡••ŠƒŽŽ‘–„‡‡Ž‹‰‹„Ž‡ǣ

ȋƒȌ •’‡ ‹ϐ‹‡†•‡ —”‹–‹‡•ƒ “—‹”‡††—”‹‰–Š‡’”‡ ‡†‹‰–Š”‡‡›‡ƒ”•ǡ‹ˆ–Š‡•‡ƒ”‡ǣ
i) acquired for consideration other than cash and revaluation of assets or capitalisation of intangible
assets is involved in such transaction; or
‹‹Ȍ ”‡•—Ž–‹‰ˆ”‘ƒ„‘—•‹••—‡„›—–‹Ž‹•ƒ–‹‘‘ˆ”‡˜ƒŽ—ƒ–‹‘”‡•‡”˜‡•‘”—”‡ƒŽ‹•‡†’”‘ϐ‹–•‘ˆ–Š‡‹••—‡”‘”
from bonus issue against equity shares which are ineligible for minimum promoters’ contribution;
ȋ„Ȍ •’‡ ‹ϐ‹‡†•‡ —”‹–‹‡•’Ž‡†‰‡†™‹–Šƒ› ”‡†‹–‘”‘–Š‡”–Šƒ–Š‘•‡ˆ‘”„‘””‘™‹‰•„›–Š‡‹••—‡”‘”‹–••—„•‹†‹ƒ”‹‡•Ǥ
’‡ ‹ϐ‹‡† •‡ —”‹–‹‡• ”‡ˆ‡””‡† •ŠƒŽŽ „‡ ‡Ž‹‰‹„Ž‡ ˆ‘” –Š‡ ‘’—–ƒ–‹‘ ‘ˆ ’”‘‘–‡”•ǯ ‘–”‹„—–‹‘ǡ ‹ˆ •— Š •‡ —”‹–‹‡•
are acquired pursuant to a scheme which has been approved by the High Court under section 391 to 394 of
–Š‡‘’ƒ‹‡• –ǡͳͻͷ͸‘”ƒ’’”‘˜‡†„›ƒ–”‹„—ƒŽ‘”–Š‡‡–”ƒŽ ‘˜‡”‡–—†‡”•‡ –‹‘ʹ͵Ͳ–‘ʹ͵Ͷ‘ˆ–Š‡
Companies Act, 2013.
ǧ  

 ‘”‡ —”‹–‹‡• ‡Ž†„›”‘‘–‡”•ȏ‡‰—Žƒ–‹‘•ͳ͸ƬͳͳͷȐ

ƒ’—„Ž‹ ‹••—‡ǡ–Š‡•’‡ ‹ϐ‹‡†•‡ —”‹–‹‡•Š‡Ž†„›’”‘‘–‡”••ŠƒŽŽ„‡Ž‘ ‡†Ǧ‹ˆ‘”–Š‡’‡”‹‘†•–‹’—Žƒ–‡†Š‡”‡—†‡”ǣ

The promoters contribution including contribution made by AIFs or FVCIs or scheduled

Promoters commercial banks or PFIs or insurance companies registered with IRDA, shall be locked-
Contribution in for a period of 3 years from the date of commencement of commercial production or
from the date of allotment in the IPO/FPO, whichever is later

Promoters’ holding
in excess of Promoters’ holding in excess of minimum promoters’ contribution shall be locked-in for
minimum promoters’ a period of 1 year from the date of allotment in the initial public offer.
contribution

SR equity shares shall be under lock-in until conversion into equity shares having voting
In case of SR Equity ”‹‰Š–••ƒ‡ƒ•–Šƒ–‘ˆ‘”†‹ƒ”›•Šƒ”‡•‘”•ŠƒŽŽ„‡Ž‘ ‡†Ǧ‹ˆ‘”ƒ’‡”‹‘†•’‡ ‹ϐ‹‡†ƒ„‘˜‡ǡ
whichever is later. In case of FPO, the SR equity shares shall be under lock-in until their
Shares conversion to equity shares having voting rights same as that of ordinary shares, provided
they are in compliance with the other provisions of these regulations.
 110 Lesson 4 • EP-SLCM

“Date of commencement of commercial production” means the last date of the month in which commercial
production of the project in respect of which the funds raised are proposed to be utilized as stated in the
offer document, is expected to commence.

‡ —”‹–‹‡•Š‡Ž†„›’‡”•‘•‘–Š‡”–Šƒ”‘‘–‡”•ȏ‡‰—Žƒ–‹‘ͳ͹Ȑ
The entire pre-issue share capital, held by persons other than the promoters, shall be locked-in for a period of one
year from the date of allotment in the initial public offer.
The provisions of this regulation shall not apply, in case of:
(i) Equity shares allotted to employees under employee stock option or employee stock purchase scheme prior
to initial public offer, if the issuer has made full disclosures with respect to such option; and
(ii) Equity shares held by an employee stock option trust or transferred to the employees by an employee stock
option trust pursuant to exercise of options by the employees, in accordance with the employee stock option
plan or employee stock purchase scheme;
(iii) Equity shares held by a venture capital fund or AIF of category I & II or a FVCI and such equity shares shall be
locked-in for a period of at least one-year from the date of purchase by the venture capital or AIF or FVCI.

For Point No. (iii), in case such equity shares have resulted pursuant to conversion of fully paid- up compulsorily
convertible securities, the holding period of such convertible securities as well as that of resultant equity
shares together shall be considered for the purpose of calculation of one year period and convertible securities
shall be deemed to be fully paid- up, if the entire consideration payable thereon has been paid and no further
consideration is payable at the time of their conversion.

‘ Ǧ‹‘ˆ’ƒ”–›Ǧ’ƒ‹†•‡ —”‹–‹‡•ȏ‡‰—Žƒ–‹‘•ͳͻƬͳͳ͹Ȑ

ˆ–Š‡•’‡ ‹ϐ‹‡†•‡ —”‹–‹‡•™Š‹ Šƒ”‡•—„Œ‡ ––‘Ž‘ Ǧ‹ƒ”‡’ƒ”–Ž›’ƒ‹†Ǧ—’ƒ†–Š‡ƒ‘—– ƒŽŽ‡†Ǧ—’‘•— Š•’‡ ‹ϐ‹‡†
•‡ —”‹–‹‡•‹•Ž‡••–Šƒ–Š‡ƒ‘—– ƒŽŽ‡†Ǧ—’‘–Š‡•’‡ ‹ϐ‹‡†•‡ —”‹–‹‡•‹••—‡†–‘–Š‡’—„Ž‹ ǡ–Š‡Ž‘ Ǧ‹•ŠƒŽŽ‡†
‘Ž›‘–Š‡‡š’‹”›‘ˆ–Š”‡‡›‡ƒ”•ƒˆ–‡”•— Š•’‡ ‹ϐ‹‡†•‡ —”‹–‹‡•Šƒ˜‡„‡ ‘‡’ƒ”‹’ƒ••—™‹–Š–Š‡•’‡ ‹ϐ‹‡†•‡ —”‹–‹‡•
issued to the public.
 • ”‹’–‹‘‘””‡ ‘”†‹‰‘ˆ‘Ǧ–”ƒ•ˆ‡”ƒ„‹Ž‹–›ȏ‡‰—Žƒ–‹‘•ʹͲƬͳͳͺȐ
Š‡ ‡”–‹ϐ‹ ƒ–‡•‘ˆ•’‡ ‹ϐ‹‡†•‡ —”‹–‹‡•™Š‹ Šƒ”‡•—„Œ‡ ––‘Ž‘ Ǧ‹•ŠƒŽŽ ‘–ƒ‹–Š‡‹• ”‹’–‹‘Dz‘Ǧ–”ƒ•ˆ‡”ƒ„Ž‡dz
ƒ†•’‡ ‹ˆ›–Š‡Ž‘ Ǧ‹’‡”‹‘†ƒ†‹ ƒ•‡•— Š•’‡ ‹ϐ‹‡†•‡ —”‹–‹‡•ƒ”‡†‡ƒ–‡”‹ƒŽ‹•‡†ǡ–Š‡‹••—‡”•ŠƒŽŽ‡•—”‡–Šƒ–
the lock-in is recorded by the depository.
Ž‡†‰‡‘ˆ‘ ‡† Šƒ”‡•ȏ‡‰—Žƒ–‹‘•ʹͳƬͳͳͻȐ
’‡ ‹ϐ‹‡† •‡ —”‹–‹‡•ǡ ‡š ‡’–  ‡“—‹–› •Šƒ”‡•ǡ Š‡Ž† „› –Š‡ ’”‘‘–‡”• ƒ† Ž‘ ‡† ‹ ƒ› „‡ ’Ž‡†‰‡† ƒ• ‘ŽŽƒ–‡”ƒŽ
•‡ —”‹–› ˆ‘” ƒ Ž‘ƒ ‰”ƒ–‡† „› ƒ • Š‡†—Ž‡† ‘‡” ‹ƒŽ „ƒ ‘” ƒ ’—„Ž‹  ϐ‹ƒ ‹ƒŽ ‹•–‹–—–‹‘ ‘” ƒ •›•–‡‹ ƒŽŽ›
‹’‘”–ƒ–‘Ǧ„ƒ‹‰ϐ‹ƒ ‡ ‘’ƒ›‘”ƒŠ‘—•‹‰ϐ‹ƒ ‡ ‘’ƒ›ǡ•—„Œ‡ ––‘–Š‡ˆ‘ŽŽ‘™‹‰ǣ
ƒȌ ‹ˆ–Š‡•’‡ ‹ϐ‹‡†•‡ —”‹–‹‡•ƒ”‡Ž‘ ‡†Ǧ‹ƒ•’‡”‡‰—Žƒ–‹‘ͳ͸ȋƒȌǦ‘ Ǧ‹‘ˆ•’‡ ‹ϐ‹‡† securities held
by the promoters, the loan has been granted to the issuer company or its subsidiary/subsidiaries
for the purpose ‘ˆϐ‹ƒ ‹‰‘‡‘”‘”‡‘ˆ–Š‡‘„Œ‡ –•‘ˆ –Š‡‹••—‡ƒ†’Ž‡†‰‡‘ˆ•’‡ ‹ϐ‹‡† securities
is one of the terms of sanction of the loan.
„Ȍ ‹ˆ –Š‡ •’‡ ‹ϐ‹‡† •‡ —”‹–‹‡• ƒ”‡ Ž‘ ‡†Ǧ‹ ƒ• ’‡” ‡‰—Žƒ–‹‘ ͳ͸ ȋ„ȌǦ ‘ Ǧ‹ ‘ˆ •’‡ ‹ϐ‹‡† •‡ —”‹–‹‡•
Š‡Ž†„›–Š‡’”‘‘–‡”•ƒ†–Š‡’Ž‡†‰‡‘ˆ•’‡ ‹ϐ‹‡†•‡ —”‹–‹‡•‹•‘‡‘ˆ–Š‡–‡”•‘ˆ•ƒ –‹‘‘ˆ–Š‡
loan.
However, such lock-in shall continue pursuant to the invocation of the pledge and such transferee shall not be
‡Ž‹‰‹„Ž‡–‘–”ƒ•ˆ‡”–Š‡•’‡ ‹ϐ‹‡†•‡ —”‹–‹‡•–‹ŽŽ–Š‡Ž‘ Ǧ‹’‡”‹‘†•–‹’—Žƒ–‡†‹–Š‡•‡”‡‰—Žƒ–‹‘•ǡŠƒ•‡š’‹”‡†Ǥ
 Lesson 4 • An Overview of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 111

”ƒ•ˆ‡”ƒ„‹Ž‹–›‘ˆŽ‘ ‡†Ǧ‹•’‡ ‹ϐ‹‡†•‡ —”‹–‹‡•ȏ‡‰—Žƒ–‹‘•ʹʹƬͳʹͲȐ

Subject to the provisions of the SEBI (Substantial Acquisition of shares and Takeovers) Regulations, 2011, the
•’‡ ‹ϐ‹‡† •‡ —”‹–‹‡• ‡š ‡’–  ‡“—‹–› •Šƒ”‡• Š‡Ž† „› –Š‡ ’”‘‘–‡”• ƒ† Ž‘ ‡†Ǧ‹ ƒ• ’‡” ”‡‰—Žƒ–‹‘ ͳͳͷ ƒ› „‡
transferred to another promoter or any person of the promoter group or a new promoter or a person in control of
the issuer.
‘™‡˜‡”ǡŽ‘ Ǧ‹‘•— Š•’‡ ‹ϐ‹‡†•‡ —”‹–‹‡••ŠƒŽŽ ‘–‹—‡ˆ‘”–Š‡”‡ƒ‹‹‰’‡”‹‘†™‹–Š–Š‡–”ƒ•ˆ‡”‡‡ƒ†•— Š
transferee shall not be eligible to transfer them till the lock-in period stipulated in these regulations has expired.
    Ƭ 
’’‘‹–‡–‘ˆ‡ƒ†ƒƒ‰‡”•ǡ–Š‡” –‡”‡†‹ƒ”‹‡•ƒ†‘’Ž‹ƒ ‡ˆϐ‹ ‡”ȏ‡‰—Žƒ–‹‘ʹ͵ƬͳʹͳȐ
• The issuer shall appoint one or more merchant bankers, which are registered with the SEBI, as lead manager(s)
to the issue.
• Where the issue is managed by more than one lead manager, the rights, obligations and responsibilities,
relating inter alia to disclosures, allotment, refund and underwriting obligations, if any, of each lead manager
shall be predetermined and be disclosed in the draft offer document and the offer document.
Ȉ –Ž‡ƒ•–‘‡Ž‡ƒ†ƒƒ‰‡”–‘–Š‡‹••—‡•ŠƒŽŽ‘–„‡ƒƒ••‘ ‹ƒ–‡ǡƒ•†‡ϐ‹‡†—†‡”–Š‡ ȋ‡” Šƒ–ƒ‡”•Ȍ
Regulations, 1992 of the issuer.
• If any of the lead manager is an associate of the issuer, it shall disclose itself as an associate of the issuer and
its role shall be limited to marketing of the issue.
• The issuer shall, in consultation with the lead manager(s), appoint other intermediaries which are registered
with the SEBI after the lead manager(s) have independently assessed the capability of other intermediaries
to carry out their obligations.
• The issuer shall enter into an agreement with the lead manager(s) and enter into agreements with other
intermediaries as required under the respective regulations applicable to the intermediary concerned.
Ȉ — Šƒ‰”‡‡‡–•ƒ›‹ Ž—†‡•— Š‘–Š‡” Žƒ—•‡•ƒ•–Š‡‹••—‡”ƒ†–Š‡‹–‡”‡†‹ƒ”‹‡•ƒ›†‡‡ϐ‹–™‹–Š‘—–
diminishing or limiting in any way the liabilities and obligations of the lead manager(s), other intermediaries
ƒ†–Š‡‹••—‡”—†‡”–Š‡ –ǡ–Š‡‘’ƒ‹‡• –ǡʹͲͳ͵‘”–Š‡‘’ƒ‹‡• –ǡͳͻͷ͸ȋ–‘–Š‡‡š–‡–ƒ’’Ž‹ ƒ„Ž‡Ȍǡ
–Š‡ ‡ —”‹–‹‡• ‘–”ƒ –• ȋ‡‰—Žƒ–‹‘Ȍ  –ǡ ͳͻͷ͸ǡ –Š‡ ‡’‘•‹–‘”‹‡•  –ǡ ͳͻͻ͸ ƒ† –Š‡ ”—Ž‡• ƒ† ”‡‰—Žƒ–‹‘•
ƒ†‡–Š‡”‡—†‡”‘”ƒ›•–ƒ–—–‘”›‘†‹ϐ‹ ƒ–‹‘‘”•–ƒ–—–‘”›‡ƒ –‡––Š‡”‡‘ˆǤ
• In case of ASBA process, the issuer shall take cognizance of the deemed agreement of the issuer with the self-
‡”–‹ϐ‹‡†•›†‹ ƒ–‡„ƒ•Ǥ
• The issuer shall, in case of an issue made through the book building process, appoint syndicate member(s)
and in the case of any other issue, appoint bankers to issue, at centres.
• The issuer shall appoint a registrar to the issue, registered with the SEBI which has connectivity with all the
depositories.
• If the issuer itself is a registrar, it shall not appoint itself as registrar to the issue.
• The lead manager shall not act as a registrar to the issue in which it is also handling the post-issue
responsibilities.
Ȉ Š‡‹••—‡”•ŠƒŽŽƒ’’‘‹–ƒ ‘’Ž‹ƒ ‡‘ˆϐ‹ ‡”™Š‘•ŠƒŽŽ„‡”‡•’‘•‹„Ž‡ˆ‘”‘‹–‘”‹‰–Š‡ ‘’Ž‹ƒ ‡‘ˆ–Š‡
securities laws and for redressal of investors’ grievances.
‹• Ž‘•—”‡•‹†”ƒˆ–‘ˆˆ‡”†‘ —‡–ƒ†‘ˆˆ‡”†‘ —‡–ȏ‡‰—Žƒ–‹‘ʹͶƬͳʹʹȐ
• The draft offer document and the offer document shall contain all material disclosures which are true and
adequate to enable the applicants to take an informed investment decision.
 112 Lesson 4 • EP-SLCM

• The red-herring prospectus, shelf prospectus and prospectus shall contain:

ȋ‹Ȍ †‹• Ž‘•—”‡••’‡ ‹ϐ‹‡†‹–Š‡‘’ƒ‹‡• –ǡʹͲͳ͵Ǣƒ†
ȋ‹Ȍ †‹• Ž‘•—”‡••’‡ ‹ϐ‹‡†‹ƒ”–‘ˆ Š‡†—Ž‡ ‘ˆ ‡‰—Žƒ–‹‘•ʹͲͳͺǤ  ƒ•‡‘ˆ –Š‡†‹• Ž‘•—”‡•
are subject to the provisions of Parts C and D thereof.
• The lead manager(s) shall exercise due diligence and satisfy themselves about all aspects of the issue
including the veracity and adequacy of disclosures made in the draft offer document and the offer document.
• The lead manager(s) shall call upon the issuer, its promoters and its directors or in case of an offer for sale,
–Š‡•‡ŽŽ‹‰•Šƒ”‡Š‘Ž†‡”•ǡ–‘ˆ—Žϐ‹Ž–Š‡‹”‘„Ž‹‰ƒ–‹‘•ƒ•†‹• Ž‘•‡†„›–Š‡‹–Š‡†”ƒˆ–‘ˆˆ‡”†‘ —‡–ƒ†–Š‡
offer document and as required in terms of the ICDR Regulations 2018.
• The lead manager(s) shall ensure that the information contained in the offer document and the particulars
ƒ•’‡”ƒ—†‹–‡†ϐ‹ƒ ‹ƒŽ•–ƒ–‡‡–•‹–Š‡‘ˆˆ‡”†‘ —‡–ƒ”‡‘–‘”‡–Šƒ•‹š‘–Š•‘Ž†ˆ”‘–Š‡‹••—‡
opening date.

‹Ž‹‰‘ˆ‘ˆˆ‡”‘ —‡–ȏ‡‰—Žƒ–‹‘•ʹͷƬͳʹ͵Ȑ
Ȉ ”‹‘”–‘ƒ‹‰ƒ Ȁ ǡ–Š‡‹••—‡”•ŠƒŽŽϐ‹Ž‡–Š”‡‡ ‘’‹‡•‘ˆ–Š‡†”ƒˆ–‘ˆˆ‡”†‘ —‡–™‹–Š–Š‡ ‘ ‡”‡†
”‡‰‹‘ƒŽ ‘ˆϐ‹ ‡ ‘ˆ –Š‡   —†‡” –Š‡ Œ—”‹•†‹ –‹‘ ‘ˆ ™Š‹ Š –Š‡ ”‡‰‹•–‡”‡† ‘ˆϐ‹ ‡ ‘ˆ –Š‡ ‹••—‡” ‘’ƒ› ‹•
Ž‘ ƒ–‡†ǡƒŽ‘‰™‹–Šˆ‡‡•ƒ••’‡ ‹ϐ‹‡†ǡ–Š”‘—‰Š–Š‡Ž‡ƒ†ƒƒ‰‡”ȋ•ȌǤ
• The lead manager(s) shall submit the following to the SEBI along with the draft offer document:
» ƒ ‡”–‹ϐ‹ ƒ–‡ǡ ‘ϐ‹”‹‰ –Šƒ– ƒ ƒ‰”‡‡‡– Šƒ• „‡‡ ‡–‡”‡† ‹–‘ „‡–™‡‡ –Š‡ ‹••—‡” ƒ† –Š‡ Ž‡ƒ†
manager(s);
» ƒ†—‡†‹Ž‹‰‡ ‡ ‡”–‹ϐ‹ ƒ–‡Ǣ
» ‹ ƒ•‡ ‘ˆ ƒ ‹••—‡ ‘ˆ ‘˜‡”–‹„Ž‡ †‡„– ‹•–”—‡–•ǡ ƒ †—‡ †‹Ž‹‰‡ ‡ ‡”–‹ϐ‹ ƒ–‡ ˆ”‘ –Š‡ †‡„‡–—”‡
trustee.
• Š‡‹••—‡”•ŠƒŽŽƒŽ•‘ϐ‹Ž‡–Š‡†”ƒˆ–‘ˆˆ‡”†‘ —‡–™‹–Š–Š‡•–‘ ‡š Šƒ‰‡ȋ•Ȍ™Š‡”‡–Š‡•’‡ ‹ϐ‹‡†•‡ —”‹–‹‡•
are proposed to be listed, and submit to the stock exchange(s), the Permanent Account Number, bank account
number and passport number of its promoters where they are individuals, and Permanent Account Number,
bank account number, company registration number or equivalent and the address of the Registrar of
Companies (ROC) with which the promoter is registered, where the ROC promoter is a body corporate.
Ȉ Š‡ ƒ›•’‡ ‹ˆ› Šƒ‰‡•‘”‹••—‡‘„•‡”˜ƒ–‹‘•ǡ‘–Š‡†”ƒˆ–‘ˆˆ‡”†‘ —‡–ϐ‹Ž‡†™‹–Š‹–™‹–Š‹ƒ’‡”‹‘†
of 30 days from the later of the following dates:
ƒȌ –Š‡†ƒ–‡‘ˆ”‡ ‡‹’–‘ˆ–Š‡†”ƒˆ–‘ˆˆ‡”†‘ —‡–ϐ‹Ž‡†™‹–Š–Š‡ Ǣ‘”
b) the date of receipt of satisfactory reply from the lead managers, where the SEBI has sought any
Žƒ”‹ϐ‹ ƒ–‹‘‘”ƒ††‹–‹‘ƒŽ‹ˆ‘”ƒ–‹‘ˆ”‘–Š‡Ǣ‘”
Ȍ –Š‡†ƒ–‡‘ˆ”‡ ‡‹’–‘ˆ Žƒ”‹ϐ‹ ƒ–‹‘‘”‹ˆ‘”ƒ–‹‘ˆ”‘ƒ›”‡‰—Žƒ–‘”‘”ƒ‰‡ ›ǡ™Š‡”‡–Š‡ Šƒ•
•‘—‰Š–ƒ› Žƒ”‹ϐ‹ ƒ–‹‘‘”‹ˆ‘”ƒ–‹‘ˆ”‘•— Š”‡‰—Žƒ–‘”‘”ƒ‰‡ ›Ǣ‘”
d) the date of receipt of a copy of in-principle approval letter issued by the recognised stock exchanges.
Ȉ ˆ –Š‡   •’‡ ‹ϐ‹‡• ƒ› Šƒ‰‡• ‘” ‹••—‡• ‘„•‡”˜ƒ–‹‘• ‘ –Š‡ †”ƒˆ– ‘ˆˆ‡” †‘ —‡–ǡ –Š‡ ‹••—‡” ƒ† Ž‡ƒ†
manager(s) shall carry out such changes in the draft offer document and shall submit to the Board an updated
draft offer document complying with the observations issued by the Board and highlighting all changes made
‹ –Š‡ †”ƒˆ– ‘ˆˆ‡” †‘ —‡– ƒ† „‡ˆ‘”‡ ϐ‹Ž‹‰ –Š‡ ‘ˆˆ‡” †‘ —‡–• ™‹–Š –Š‡ ‡‰‹•–”ƒ” ‘ˆ ‘’ƒ‹‡• ‘” ƒ
appropriate authority, as applicable.
Ȉ ˆ–Š‡”‡ƒ”‡ƒ› Šƒ‰‡•‹–Š‡†”ƒˆ–‘ˆˆ‡”†‘ —‡–‹”‡Žƒ–‹‘–‘–Š‡ƒ––‡”••’‡ ‹ϐ‹‡†‹–Š‡•‡”‡‰—Žƒ–‹‘•ǡ
ƒ—’†ƒ–‡†‘ˆˆ‡”†‘ —‡–‘”ƒˆ”‡•Š†”ƒˆ–‘ˆˆ‡”†‘ —‡–ǡƒ•–Š‡ ƒ•‡ƒ›„‡ǡ•ŠƒŽŽ„‡ϐ‹Ž‡†™‹–Š–Š‡ Ǥ