Chapter 1 - PRELIMINARY - SEBI (Disclosure and Investor Protection Guidelines) 2000

SECURITIES AND EXCHANGE BOARD OF INDIA (DISCLOSURE AND INVESTOR PROTECTION) GUIDELINES, 2000 CHAPTER I PRELIMINARY 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; 4 ((iii-a) Application Supported by Blocked Amount (ASBA) means an application for subscribing to an issue containing an authorisation to block the application money in a bank account.) 5 ( 6 ((iii-b) ASBA Investor means an investor who intends to apply through ASBA process and (A) in case of public issue: (a) is a Resident Retail Individual Investor ; (b) is bidding at cut-off, with single option as to the number of shares bid for; (c) is applying through blocking of funds in a bank account with the SCSB; (d) has agreed not to revise his/her bid; (e) is not bidding under any of the reserved categories. (B) in case of rights issue , an applicant, who; (a) holds the shares of the issuer in dematerialized form as on record date and has applied for entitlements and /or additional shares in dematerialized form; (b) has not renounced his/ her entitlements in full or in part; (c) is not a renouncee; (d) is applying through a bank account maintained with SCSBs. )) 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; 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; 7 (viii-a) Convertible Debt Instrument means an instrument or security which creates or acknowledges indebtedness and is convertible into equity shares at a later date, at or without the option of the holder of the instrument or the security of a body corporate, whether constituting a charge on the assets of the body corporate or not); 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) 8 (Deleted) xii) Depository means a body corporate registered under Securities and Exchange Board of India (Depositories and Participants) Regulations, 1996; 9 (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.) 10 (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.) 11 (xiic) Fast Track Issue means a public issue or rights issue made by a listed company which satisfies all the requirements of clause 2.1.2A.) 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. 12 (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; 13 (xix a) Mutual fund means a mutual fund registered with the Board under the SEBI (Mutual Funds) Regulations, 1996.) 14 (xix b)) 15 ( 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) 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. 16 (xxiv a)) Qualified Institutional Buyer means a) a public financial institution as defined in section 4A of the Companies Act, 1956; b) a scheduled commercial bank; c) a mutual fund registered with the Board; d) a foreign institutional investor and sub-account registered with SEBI, other than a sub-account which is a foreign corporate or foreign individual; e) a multilateral and bilateral development financial institution; f) a venture capital fund registered with SEBI; g) a foreign venture capital investor registered with SEBI; h) a state industrial development corporation; i) an insurance company registered with the Insurance Regulatory and Development Authority (IRDA); j) a provident fund with minimum corpus of 25 crores; k) a pension fund with minimum corpus of 25 crores); l) National Investment Fund set up by resolution no. F. No. 2/3/2005-DDII dated November 23, 2005 of Government of India published in the Gazette of India. 17 ( 18 (xxiv b))) Resident retail individual investor means a Retail Individual Investor who is a person resident in India as defined in Foreign Exchange Management Act, 1999. 19 ( 20 ( 21 (xxiv c))) Retail Individual Investor means an investor who applies or bids for securities of or for a value of not more than 22 (Rs.1,00,000/-).) 23 ( 24 (xxiv d)) Retail Individual Shareholder means a shareholder of a listed company, who a) as on the record date (i.e., the date fixed for the purpose of determining eligible shareholders), is holding shares which, on the basis of the closing price of the shares as on the previous day, are worth up to 1,00,000/-; and b) applies or bids for securities of or for a value of not more than 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. 25 ((xxvi-a) Self Certified Syndicate Bank (SCSB) is a Banker to an Issue registered under SEBI (Bankers to an Issue) Regulations, 1994 which offers the service of making an Applications Supported by Blocked Amount and recognized as such by the Board) 26 ( 27 (xxvi-aa) 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. 28 (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 50 lacs. 29 (Provided that in case of the rights issue where the aggregate value of the securities offered is less than 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. ****** 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. 4 Inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/31/2008/30/7 dated July 30, 2008. 5 Substituted vide SEBI/CFD/DIL/DIP/Circular No. 38 dated August 20, 2009 for the following: ASBA Investor means an Investor who intends to apply through ASBA process and a. is a Resident Retail Individual Investor ; b. is bidding at cut-off, with single option as to the number of shares bid for; c. is applying through blocking of funds in a bank account with the SCSB; d. has agreed not to revise his/her bid; e. is not bidding under any of the reserved categories. 6 Inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/31/2008/30/7 dated July 30, 2008. 7 Inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/31/2008/28/8 dated August 28, 2008. 8 Omitted the following sub-clause 1.2.1(xi), vide SEBI/CFD/DIL/DIP/32/2008/28/08 dated August 28, 2008: 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; 9 Inserted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003. 10 Inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/13/2004/28/5 dated May 28, 2004. 11 Inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/28/2007/29/11 dated November 29, 2007. 12 Inserted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003. 13 Inserted vide SEBI/CFD/DIL/DIP/16/2005/19/9 dated September 19, 2005. 14 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. 15 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) . Initially inserted vide SEBI Circular No. DIP (Compendium) Circular No. 3 dated August 04, 2000. 16 Inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/31/2008/28/8 dated August 28, 2008. 17 Inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/31/2008/30/7 dated July 30, 2008. 18 Renumbered sub-clause (xxiva) as sub-clause (xxiv b) , vide SEBI Circular No. SEBI/CFD/DIL/DIP/31/2008/28/8 dated August 28, 2008. 19 Inserted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003. 20 Renumbered sub-clause (xxiv-a) as sub-clause (xxiv-aa) vide SEBI Circular No SEBI/CFD/DIL/DIP/31/2008/30/7 dated July 30, 2008. 21 Renumbered sub-clause (xxivaa) as sub-clause (xxiv c) vide SEBI Circular No. SEBI/CFD/DIL/DIP/31/2008/28/8 dated August 28, 2008. 22 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/- . 23 Inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/28/2007/29/11 dated November 29, 2007. 24 Renumbered sub-clause (xxiv b) as sub-clause (xxiv d) vide SEBI Circular No. SEBI/CFD/DIL/DIP/31/2008/28/8 dated August 28, 2008. 25 Inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/31/2008/30/7 dated July 30, 2008. 26 Renumbered sub-clause (xxiv-a) as sub-clause (xxiv-aa) vide SEBI Circular No. SEBI/CFD/DIL/DIP/31/2008/30/7 dated July 30, 2008. 27 Inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/12/2004/8/4 dated April 8, 2004. 28 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. 29 Inserted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003.