Regulation 113 - Minimum promoters’ contribution - Securities And Exchange Board of India (Issue Of Capital And Disclosure Requirements) Regulations, 2018

Minimum promoters contribution 113. (1) The promoters shall contribute in the public issue as follows: a) either to the extent of twenty per cent. of the proposed issue size or to the extent of twenty per cent. 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 twenty per cent. of the proposed issue size or to the extent of twenty per cent. of the post-issue capital excluding the rights issue component. (2) 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 twenty per cent. as stipulated in clause (a) or (b) of sub-regulation (1), as the case may be, either by way of equity shares or by way of subscription to the convertible securities: Provided that 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. (3) 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 of regulation 164 or the issue price, whichever is higher. (4) In case the promoters have to subscribe to equity shares or convertible securities towards promoters contribution, the promoters shall satisfy the requirements of this regulation 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 commercial bank and shall be released to the issuer along with the release of the issue proceeds: Provided further that 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. 1 [ (5) The SR equity shares of promoters, if any, shall be eligible towards computation of minimum promoters contribution. ] Explanation: (I) For the purpose of this regulation, 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 further public offer. (II) For computation of weighted average price : (a) weight means the number of equity shares arising out of conversion of such specified securities into 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. ************* NOTES:- 1. Inserted vide Notification No. SEBI/LAD-NRO/GN/2019/29 dated 29-07-2019