Regulation 236 - Minimum promoters’ contribution - Securities And Exchange Board of India (Issue Of Capital And Disclosure Requirements) Regulations, 2018

PART III: PROMOTERS CONTRIBUTION Minimum promoters contribution 236. (1) The promoters of the issuer shall hold at least twenty per cent. of the post-issue capital: Provided that in case the post-issue shareholding of the promoters is less than twenty per cent., alternative investment funds or foreign venture capital investors or scheduled commercial banks or public financial institutions or insurance companies registered with Insurance Regulatory and Development Authority of India 1 [ or any non-individual public shareholder holding at least five per cent. of the post-issue capital or any entity (individual or non-individual) forming part of promoter group other than the promoter(s) ] may contribute to meet the shortfall in minimum contribution as specified for the promoters, subject to a maximum of ten per cent. of the post-issue capital without being identified as promoter(s); Provided further that the requirement of minimum promoters contribution shall not apply in case an issuer does not have any identifiable promoter. (2) The minimum promoters contribution shall be as follows: a) the promoters shall contribute twenty per cent. as stipulated 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 offer 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. c) subject to the provisions of clause (a) and (b) above, in case of an initial public offer of convertible debt instruments without a prior public issue of equity shares, the promoters shall bring in a contribution of at least twenty per cent. of the project cost in the form of equity shares, subject to contributing at least twenty per cent. of the issue size from its own funds in the form of equity shares: Provided that 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- -vis the debt raised or proposed to be raised through the public offer. d) The promoters shall satisfy the requirements of this regulation at least one day prior to the date of opening of the issue. e) In case the promoters have to subscribe to equity shares or convertible securities towards minimum promoters contribution, the amount of promoters contribution 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: Provided that where the promoters contribution has already been brought in and utilised, the issuer shall give the cash flow statement disclosing the use of such funds in the offer document; Explanation: For the purpose of this regulation: (I) 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. (II) For computation of weighted average price : (a) weights 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/2024/178 dated 17-05-2024