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TMI BlogSECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE AND LISTING OF NON-CONVERTIBLE REDEEMABLE PREFERENCE SHARES) REGULATIONS, 2013X X X X Extracts X X X X X X X X Extracts X X X X ..... SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE AND LISTING OF NON-CONVERTIBLE REDEEMABLE PREFERENCE SHARES) REGULATIONS, 2013 - By: - Mr. M. GOVINDARAJAN - Corporate Laws / IBC / SEBI - Dated:- 4-7-2013 - - Non Convertible Redeemable Preference Share means a preference share which is redeemable in accordance with the provisions of the Companies Act, 1956 and does not include a preference share which is convertible into or exchangeable with equity shares of the issuer of a later date, with or without the option of the holder. SEBI has issued regulations on the issue and listing of non convertible redeemable preference shares in exercise of the powers conferred on it by Section 30(1) of SEBI Act, 1992 vide Notification No. LAD-NRO/GN/2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 013-14/11/6063 dated 12.06.2013. These regulations came into effect from 12.06.2013. These regulations are applicable to- Public issue of non convertible redeemable preference shares; Listing of non convertible redeemable preference shares on a recognized stock exchange which are issued by a public company through public issue or on private placement basis; and Issue and listing of perpetual non cumulative preference shares and perpetual debt instrument, issued by banks on private placement basis in compliance with guidelines issued by Reserve Bank of India. The following are the conditions for issue requirements for public issues: The issuer has not been restrained or prohibited or debarred by the Board from accessing sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urities market or dealing in securities and such direction or order is in force; The issuer has made an application to one or more recognized stock exchange; Where the application is made to more than one recognized stock exchange the issuer shall choose on the of them as designated stock exchange; Where any of such stock exchanges have nationwide trading terminals, the issuer shall choose one of them as the designated stock exchange; Approval in principle is to be obtained for listing of its non convertible redeemable preference shares on the recognized stock exchanges where the application for listing has been made; Credit ratings from at least one credit rating agency registered with the Board is to be obtained and the same is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be disclosed in the offer document; Where credit ratings are obtained from more than one credit rating agencies, all the ratings, including the unaccepted ratings, shall be disclosed in the offer document; The issue is to be assigned a rating of not less than AA or equivalent by a credit rating agency registered with the Board; It is to enter into an agreement with a depository registered with the Board for dematerialization of the non convertible redeemable preference shares that are proposed to be issued to the public, in accordance with the Depositories Act, 1996 and regulations made thereunder; The issuer shall create a capital redemption reserve in accordance with the provisions of the Companies Act, 1956 ; The issuer s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hall not issue non convertible redeemable preference shares for providing loan to or acquisition of shares of any person who is part of the same group or who is under the same management, other than to subsidiaries of the issuer; In case of public issue of non convertible redeemable preference shares, the issuer shall appoint one or more merchant bankers registered with the Board at least one of whom shall be a merchant banker. The following are to be disclosed in the offer document: The offer document shall contain all material disclosures which are necessary for the subscribers of the non convertible redeemable preference shares to take an informed investment decision; The issuer and the lead merchant banker shall ensure that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the offer document contains the following: The disclosures specified in Schedule II of the Companies Act, 1956 ; Disclosure specified in Schedule I of these regulations; and Additional disclosures as may be specified by the Board. The following are the procedure for filing draft offer document: No issuer shall make a public issue of non convertible redeemable preference shares unless a draft offer document has been filed with the designated stock exchange through the lead merchant banker; The draft offer document shall be made public by posting in the website of the designated stock exchange for seeking public comments for a period of seven working days from the date of filing the draft offer documents with the st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ock exchange; The same may be displayed on the website of the issuer, merchant bankers and the stock exchanges where the non convertible redeemable preference shares are proposed to be listed; The lead merchant banker shall ensure that the draft offer document clearly specifies the names and contact particulars of the compliance officer of the lead merchant banker and the issuer including the postal and email address, telephone and fax numbers; The lead merchant banker shall ensure that all comments received on the draft offer document are suitably addressed prior to the filing of the offer document with the Registrar of Companies; The offer document shall not omit disclosure of any material fact which may make the statements mislea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding; A copy of the draft and final offer document shall be forwarded to the Board for its records, simultaneously with filing of these documents with the designated stock exchange; The lead merchant banker shall, prior to filing of the offer document with the Registrar of Companies furnish to the Board a due diligence certificate as per Schedule II of these regulations; The issuer is to issue advertisements for public issues as detailed below: The issuer shall make an advertisement in one English national daily newspaper and one Hindi national daily newspaper with wide circulation at the place where the registered office of the issuer is situated, on or before the issue opening date and such advertisement shall, amongst other t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hings, contain the disclosures as per Schedule I; No advertisement shall mislead in material particulars or contain any information in a distorted manner or which is manipulative or deceptive; The advertisement shall be truthful, fair and clear and shall contain a statement, promise or forecast which is untrue or misleading; The credit rating shall be prominently displayed in the advertisement; Any advertisement issued by the issuer shall not contain any matters which are extraneous to the contents of the offer document; The advertisement shall urge the investors to invest only on the basis of information contained in the offer document; Any corporate or product advertisement issued by the issuer during the subscription period s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hall not make any reference to the issue of non convertible redeemable preference shares or be used for solicitation. The following are the other issues involved in this regard: The issuer and lead merchant banker shall ensure that- Every application form issued by the issuer is accompanied by a copy of the abridged prospectus; The abridged prospectus shall not contain matters which are extraneous to the contents of the prospectus; Adequate space shall be provided in the application form to enable the investors to fill in various details like name, address etc.,; The issuer may provide the facility for subscription of application in electronic mode; The issuer shall company with the relevant applicable requ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irements as may be specified by the Board; The issuer may determine the price in consultation with the merchant bankers and the issue may be at fixed price or the price may be determined through book building process in accordance with the procedure as may be specified by the Board; The issuer shall redeem the non convertible redeemable preference shares in terms of the offer document; The issuer may decide the amount of minimum subscription which it seeks to raise by the public issue of non convertible redeemable preference shares in accordance with the provisions of Companies Act and disclose the same in the offer document; In the event of non receipt of minimum subscription all application moneys received in the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ublic issue shall be refunded forthwith to the applicants. In the event of the application monies are refunded beyond eight days from the last day of the offer, then such amounts shall be refunded together with interest at such rate as may be set out in the offer document which shall not be less than 15% per annum; A public issue may be underwritten by an underwriter registered with the Board and in such a case adequate disclosures regarding underwriting arrangements shall be made in the offer document. The following is the procedure of mandatory listing of non convertible redeemable preference shares: The issuer shall make an application for listing to one or more recognized stock exchanges in terms of Section 73(1) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Companies Act, 1956 ; The issuer shall comply with the conditions of listing of such non convertible redeemable preference shares as specified in the listing agreement with the stock exchange where such non convertible redeemable preference shares are sought to be listed; Where the issuer has disclosed the intention to seek listing of non convertible redeemable preference shares issued on private placement basis, the issuer shall forward the listing application along with the disclosures specified in Schedule I to the recognized stock exchange within 15 days from the date of allotment. The following are the conditions for listing of non convertible redeemable preference shares issued on private placement basis: The issuer is to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issue in compliance with the provisions of the Companies Act, 1956 , rules prescribed there under and other applicable laws; Credit rating has been obtained from at least one credit rating agency registered with the Board; Where credit ratings are obtained from more than one credit rating agencies, all the ratings shall be disclosed in the offer document; The shares proposed to be listed are in dematerialized form; The issuer shall make disclosures as specified in Schedule I of these regulations accompanied by the latest annual report of the issuer; The above said disclosures shall be made on the web sites of stock exchanges where such securities are proposed to be listed; The minimum application size for each investor is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... less than Rs.10 lakh. The following are the conditions for continuous listing and trading: All the issuers making issue on private placement basis shall comply with the conditions of listing specified in the respective listing agreement; Each rating shall be reviewed by the credit rating agency at least once a year and any revision in the rating shall be promptly disclosed by the issuer to the stock exchange(s) where such shares are listed; Any change in rating shall be promptly disseminated to investors and prospective investors in such manner as the stock exchange where such securities are listed may determine from time to time; The issuer and stock exchanges shall disseminate all information and reports to the investors and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the general public by placing them on their websites; The non convertible redeemable preference shares shall be traded and such trades shall be cleared and settled in recognized stock exchange subject to conditions specified by the Board; The trades shall be reported on a recognized stock exchange having a nation wide trading terminal or such other platform as may be specified by the Board; The Board may specify conditions for reporting of trades on the recognized stock exchange or other platform. The Board has power to inspect the documents and call for information from the issuer, merchant bankers etc., and to issue directions. The Board is having power to issue general order or circular in this regard. - - Scholarly article ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s for knowledge sharing authors experts professionals Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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