SEBI Guidelines - 2000
For
Issue of Shares to the Public
Some of the important guidelines are given below:
[Link] appointment of category-1 Merchant
Banker is compulsory to manage an issue. The
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.
[Link] 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 issuer company specifying their mutual
rights, liabilities and obligations relating to the
issue.
[Link] 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.
(b) The company gives an option to
subscribers / shareholders / investors to receive
the security certificate or hold securities in
dematerialised form with a depository.
[Link] issuers have the option to have a public
issue underwritten by the underwriter.
[Link] respect of every underwritten issue, the
lead merchant banker shall accept a minimum
underwriting obligation of 5% of the total
underwriting commitment or Rs 25 lacs
whichever is less.
[Link] list for public issue shall be kept
open for at least 3 working days and not more
than 10 working days. However, public issues
made by infrastructure companies may be kept
open up to 21 working days.
[Link] 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 face value
of Rs 10 each.
[Link] the public issue is at a premium, the
minimum amount payable on application shall
not be less than Rs 2,000 irrespective of the size
of premium.
[Link] minimum application moneys to be paid
by an applicant along with the application
money shall not be less than 25% of the issue
price.
[Link] minimum number of instruments for
which an application has to be made shall be not
less than the tradeable lot (e.g., offer price upto
Rs 100, minimum tradeable lot is 100 shares).
[Link] respect of applications for the value of Rs
50,000 or more, the applicant(s) shall mention
his (her) / their permanent account number
(PAN) / GIR number and income tax circle /
ward, district or the non-allotment of PAN/GIR
number, as the case may be. Applications not
complying with these provisions are liable to be
rejected.
[Link] case of 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 been 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.
[Link] case of 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.
[Link] case of over-subscription, the allotment
shall be on proportionate basis subject to a
minimum of 50% of the net public offer to be
reserved for allotment to individuals applying
for 1,000 or less shares.
[Link] must be made full paid up within 12
months except where the total issue size exceeds
Rs 500 crores.
[Link] orders of the value over Rs 1,500
and shares/debentures certificates shall be sent
by registered post only.