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TMI BlogPROMOTERS’ CONTRIBUTION AND LOCK-IN REQUIREMENTSX X X X Extracts X X X X X X X X Extracts X X X X ..... isted companies, the promoters shall participate either to the extent of 20% of the proposed issue or ensure post-issue share holding to the extent of 20% of the post-issue capital. 4.4 Promoters' Contribution in Case of Composite Issues 4.4.1 In case of composite issues of a listed company, the promoters' contribution shall at the option of the promoter(s) be either 20% of the proposed public issue or 20% of the post-issue capital. 4.4.2 Rights issue component of the composite issue shall be excluded while calculating the post-issue capital. 4.5 3(Deleted) 4.6 Securities Ineligible for Computation of Promoters' Contribution 4.6.1 Where the promoters of any company making an issue of securities have acquired equity during the preceding three years, before filing the offer documents with the Board, such equity shall not be considered for computation of promoters contribution if it is; (i) acquired for consideration other than cash and revaluation of assets or capitalisation of intangible assets is involved in such transaction(s); or (ii) resulting from a bonus issue, out of revaluation reserves or reserves created without accrual of cash resources 4(or against shares which a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... offer is made. Provided that if the partners' capital existed in the firm for a period of more than one year on a continuous basis, the shares allotted to promoters against such capital shall be considered eligible. 4.6.4 In respect of Clauses 4.6.1, 4.6.2 and 4.6.3, such ineligible shares acquired in pursuance to a scheme of merger or amalgamation approved by a High Court shall be eligible for computation of promoters' contribution. 9(4.6.4A Pledged securities held by promoters shall not be eligible for computation of promoters' contribution.) 4.6.5 For the purposes of computing the promoters' contribution referred to in Clauses 4.1.1, 10(Deleted) 4.2.1, 4.3.1 11(and) 4.4.1 12(Deleted) above, minimum contribution of ₹ 25000 per application from each individual and minimum contribution of ₹ 1 lac from firms and companies (not being business associates like dealers and distributors), shall be eligible to be considered towards promoters' contribution. 4.6.6 No securities forming part of promoters' contribution shall consist of any private placement made by solicitation of subscription from unrelated persons either directly or through any intermediary. 4.6.7 The sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tract the pricing provisions of Guidelines on preferential allotment, if the issue price is lower than the price as determined on the basis of said preferential allotment guidelines. 4.9 Promoters' Contribution to be brought in before Public Issue Opens 4.9.1 Promoters shall bring in the full amount of the promoters' contribution including premium at least one day prior to the issue opening date 16(which shall be kept in an escrow account with a Scheduled Commercial Bank and the said contribution/ amount shall be released to the company along with the public issue proceeds.) 17(Provided that, where the promoters' contribution has been brought prior to the public issue and has already been deployed by the company, the company shall give the cash flow statement in the offer document disclosing the use of such funds received as promoters' contribution.) Provided 18(further) that where the promoters' minimum contribution exceeds ₹ 100 crores, the promoters shall bring in ₹ 100 crores before the opening of the issue and the remaining contribution shall be brought in by the promoters in advance on pro-rata 19(basis) before the calls are made on public. 4.9.2 The company' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the offer document. 4.12 Lock-in of Excess Promoters' Contribution 4.12.1 In case of a public issue by unlisted company, if the promoters' contribution in the proposed issue exceeds the required minimum contribution, such excess contribution shall also be locked in for a period of 23(one year). 4.12.2 In case of a public issue by a listed company, participation by promoters in the proposed public issue in excess of the required minimum percentage shall also be locked-in for a period of 24(one year) as per the lock-in provisions as specified in Guidelines on Preferential issue. Provided that excess promoters' contribution as per Clause 4.10.1(a) of Part I of this Chapter shall not be subject to lock-in. 4.12.3 In case shortfall in the firm allotment category is met by the promoter as specified in clause 8.5(e), such subscription shall be locked in for a period of 25(one year). 4.13 26(Deleted) 4.13.1 27(Deleted) 4.14 Lock-in of pre-issue share capital of an unlisted company 4.14.1 28(The entire pre-issue capital, other than that locked-in as minimum promoters' contribution, shall be locked-in for a period of one year from the date of allotment 29(in the proposed public is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce for a period of more than one year prior to the restructuring scheme under sections 391-394 of the Companies Act, 1956, as approved by a High Court, which entitled acquisition of such shares.) 34(Provided further that in case equity shares, received on conversion of fully paid compulsorily convertible securities, including depository receipts, are being offered for sale, the holding period of such convertible securities as well as that of resultant equity shares together shall be considered for the purpose of calculation of the eligibility period.) Explanation: For the purposes of 35(1st proviso above), the term "Infrastructure sector" shall have the same meaning as assigned to it in Explanation to proviso to sub-clause (i) of clause 3.7.1.) (iii) pre-IPO shares held by employees other than promoters, which were issued under employee stock option or employee stock purchase scheme of the issuer company before the IPO. However the same is subject to the issuer company complying with the requirements laid down in Clause 22.4 of SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999.) 36(4.14A Lock-in of securities issued on firm allotment basi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccordance with the following provisions 75(as on the date of filing of draft offer document with SEBI, unless specified otherwise in this Part):" 2 Omitted the following clause vide SEBI Circular No. RMB (Compendium) Series Circular No. 2 (1999-2000) dated February 16, 2000: "For unlisted companies eligible to bring out public issue at premium in accordance with Clause 3.2.2 in Chapter III, the promoters shall contribute not less than 50% of the post issue capital of the issuer company." 3 Omitted the following clauses vide SEBI Circular No. RMB (Compendium) Series Circular No. 2 (1999-2000) dated February 16, 2000: "4.5 Promoters contribution in case of public issues by infrastructure companies 4.5.1 For unlisted infrastructure companies eligible to bring out public issues at premium in accordance with Clause 3.2.3 of Chapter III, the promoters alongwith equipment suppliers and other strategic investors shall contribute not less than 50% of the post issue capital of the issuer company at the same or higher price than the price at which the securities are being offered to the public. 4.5.2 The contribution by equipment suppliers and other strategic investors sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uted vide SEBI Circular No. DIP (Compendium) Circular No. 3 dated August 04, 2000 for the words "three years". 26 Omitted the following clause vide SEBI Circular No. SEBI/CFD/DIL/DIP/28/2007/29/11 dated November 29, 2007: "4.13 Securities Issued Last to be Locked-in First" 27 Omitted the following clause vide SEBI Circular No. SEBI/CFD/DIL/DIP/28/2007/29/11 dated November 29, 2007: "4.13.1 The securities forming part of promoters' contribution as specified in Clauses 4.1.1, 4.1.2, 4.2.1, 4.3.1, 4.4.1 & 4.5.1 of Part I of this Chapter and issued last to the promoters shall be locked in first for the specified period. Provided that the securities issued to the financial institutions appearing as promoters, if issued last, shall not be locked-in before the shares allotted to the other promoters." 28 Substituted vide SEBI Circular No. SEBI/CFD/DIL/DIP/19/2006/31/3 dated March 31, 2006 for the following: "The entire pre-issue share capital, other than that locked-in as promoters' contribution, shall be locked-in for a period of one year from the date of commencement of commercial production or the date of allotment in the public issue, whichever is later. Provided that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n case of unlisted companies, any security issued to promoter or to any other shareholder, during the preceding one year, at a price lower than the price at which equity is being offered to public shall be locked-in for a period of 3 years from the date of allotment of the proposed issue of capital." 31 Substituted sub-clause (i) vide SEBI Circular No. SEBI/CFD/DIL/DIP/23/2006/16/10 dated October 16, 2006 for the following: "(i) pre-issue share capital held by Venture Capital Funds and Foreign Venture Capital Investors registered with the Board. However, the same shall be locked-in as per the provisions of the SEBI (Venture Capital Funds) Regulations, 1996 and SEBI (Foreign Venture Capital Investors) Regulations, 2000 and any amendments thereto;" 32 Inserted proviso to sub-clause (ii), vide SEBI Circular No. SEBI/CFD/DIL/DIP/ 27/2007/10/7 dated July 10, 2007. 33 Inserted Proviso to sub-clause (ii) clause 4.14.2, vide SEBI Circular No. SEBI/CFD/DIL/DIP/32/2008/28/08 dated August 28, 2008 34 Inserted, vide SEBI Circular No. SEBI/CFD/DIL/DIP/36/2009/09/07 dated July 9, 2009. 35 Substituted vide SEBI circular No. SEBI/CFD/DIL/DIP/32/2008/28/08 dated August 28, 2008 for the words ..... X X X X Extracts X X X X X X X X Extracts X X X X
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