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TMI BlogGUIDELINES FOR PREFERENTIAL ISSUESX X X X Extracts X X X X X X X X Extracts X X X X ..... issue of shares on preferential basis 2(, other than an issue of shares on preferential basis to Qualified Institutional Buyers not exceeding five in number,) shall be made at a price not less than higher of the following:) i) The average of the weekly high and low of the closing prices of the related shares quoted on the stock exchange during the six months preceding the relevant date; OR ii) The average of the weekly high and low of the closing prices of the related shares quoted on a stock exchange during the two weeks preceding the relevant date. 3(13.1.1.2 Where the equity shares of a company have been listed on a stock exchange for a period of less than six months as on the relevant date, the issue of shares on preferential basis 4(, other than an issue of shares on preferential basis to Qualified Institutional Buyers not exceeding five in number,) can be made at a price not less than the higher of the following: i) The price at which shares were issued by the company in its IPO or the value per share arrived at in a scheme of arrangement under sections 391 to 394 of the Companies Act, 1956, pursuant to which the shares of the company were listed, as the case may be; OR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prior to the date on which the holder of the warrants becomes entitled to apply for the said shares. 13.1.2.2 The resolution to be passed in terms of Section 81(1A) shall clearly specify the relevant date on the basis of which price of the resultant shares shall be calculated. 13.1.2.3 (a) An amount equivalent to atleast 13(twenty five percent) of the price fixed in terms of Clause 13.1.1.1 above shall become payable for the warrants on the date of their allotment. (b) The amount referred to in sub-clause (a), shall be adjusted against the price payable subsequently for acquiring the shares by exercising an option for the purpose. (c) The amount referred to in sub-clause (a) shall be forfeited if the option to acquire shares is not exercised. 13.1.3 Pricing of shares on conversion 13.1.3.1 Where PCDs/ FCDs/ other convertible instruments, are issued on a preferential basis, providing for the issuer to allot shares at a future date, the issuer shall determine the price at which the shares could be allotted in the same manner as specified for pricing of shares allotted in lieu of warrants as indicated in Paras 13.1.2.1& 13.1.2.2 above. 14(13.1A The explanatory statement to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt to exercise of options attached to warrants issued on preferential basis to the promoter / promoter group of the issuer, in addition to the instruments or shares specified in sub-clauses (a) and (b) of clause 13.3.1, shall be locked-in for a period of one year from the date of their allotment.)) 23((c-a) The instruments allotted on preferential basis and the shares allotted pursuant to exercise of options attached to warrants issued on preferential basis to any person other than the promoter / promoter group of the issuer shall be locked-in for a period of one year from the date of their allotment.) 24((d)) The lock-in on shares acquired by conversion of the convertible instrument 25(other than warrants) 26(Deleted), shall be reduced to the extent the convertible instrument 27(other than warrants) 28(Deleted) have already been locked-in. 29((e) the lock-in period in respect of the shares issued on preferential basis pursuant to a scheme approved under Corporate Debt Restructuring framework of Reserve Bank of India, shall commence from the date of allotment and shall continue for a period of one year and in case of allotment of partly paid up shares the lock-in period shall c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 20% of the total capital of the company, in case the said minimum promoters' contribution is free of lock-in at the time of the preferential issue. 32(13.3.2 These locked in shares/instruments may be transferred to and amongst promoter/ promoter group or to a new promoter(s) or person(s) in control of the company, subject to continuation of lock-in in the hands of transferee(s) for the remaining period and compliance of Securities and Exchange Board of India (Substantial Acquisition of shares and Takeovers) Regulations, 1997, as applicable.) 13.4 Currency of shareholders resolutions 13.4.1 Allotment pursuant to any resolution passed at a meeting of shareholders of a 33(company) granting consent for preferential issues of any financial instrument, shall be completed within a period of 34(fifteen days) from the date of passing of the resolution. 35(Provided that where the allotment on preferential basis is pending on account of pendency of any approval of such allotment by any regulatory authority or the Central Government, the allotment shall be completed within 15 days from the date of such approval.) 36(Provided that where the Board has granted relaxation to the issuer in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preferential issue proceeds shall be disclosed under an appropriate head in the balance sheet of the company indicating the purpose for which such monies have been utilised. The details of unutilised monies shall also be disclosed under a separate head in the balance sheet of the company indicating the form in which such unutilised monies have been invested.) 13.6 Preferential allotments to FIIs 13.6.1 Preferential allotments, if any to be made in case of Foreign Institutional Investors, shall also be governed by the guidelines issued by the Government of India/ Board/ Reserve Bank of India on the subject. 13.7 Non-Applicability of the guidelines 13.7.1 Clauses 13.1 to 13.5 shall not be applicable in the following cases: (i) where the further shares are allotted in pursuance to the merger and amalgamation scheme approved by the High court. (ii) (a) where further shares are allotted to a person / group of persons in accordance with the provisions of rehabilitation packages approved by BIFR. (b) In case, such persons are promoters or belong to promoter group as defined in 45(Explanation I and II 46(to clause 6.8.3.2)) of Chapter VI of these guidelines, the lock-in provisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... words "for the purpose of clauses 13.1.1.1 and 13.1.1.2". 11 Substituted vide SEBI Circular No. SEBI/CFD/DIL/DIP/32/2008/28/08 dated August 28, 2008, for the words "13.1.1.1". 12 Substituted vide SEBI Circular No. SEBI/CFD/DIL/DIP/32/2008/28/08 dated August 28, 2008, for the words "13.1.1.1". 13 Substituted vide SEBI Circular No. SEBI/CFD/DIL/DIP/34/2009/24/09 dated February 24, 2009, for the words " ten percent" 14 Inserted vide SEBI Circular No. DIP (Compendium) Circular No. 3 dated August 04, 2000. 15 Inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/25/2007/30/4 dated April 30, 2007. 16 Inserted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003. 17 Renumbered as "13.1B", vide SEBI Circular No. SEBI/CFD/DIL/DIP/14/2005/25/1 dated January 25, 2005. 18 Inserted clause, vide SEBI Circular No. SEBI/CFD/DIL/DIP/28/2007/29/11 dated November 29, 2007. 19 Substituted vide SEBI Circular No. SEBI/CFD/DIL/DIP/23/2006/16/10 dated October 16, 2006 for the words "Clause [6.4.2 (m)]" 20 Inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/32/2008/28/08 dated August 28, 2008. 21 Inserted vide SEBI Circular No. DIP (Compendium) Circular No. 3 dated August 04, 2000. 22 Substitute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay 2, 2003: "These locked in shares/instruments can be transferred to and amongst promoter/promoter group subject to continuation of lock-in in the hands of transferees for the remaining period and compliance of Securities and Exchange Board of India (Substantial Acquisition of shares and Takeovers) Regulations, 1997, if applicable" 33 Substituted vide vide SEBI Circular No. DIP (Compendium) Circular No. 3 dated August 04, 2000 for the words "DFI". 34 Substituted vide SEBI Circular No. SEBI/CFD/DIL/DIP/12/2004/8/4 dated April 8, 2004 for the words "three months". 35 Inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/12/2004/8/4 dated April 8, 2004. 36 Inserted proviso, vide SEBI Circular No. SEBI/CFD/DIL/DIP/34/2009/24/09 dated February 24, 2009. 37 Inserted vide SEBI Circular No. DIP (Compendium) Circular No. 3 dated August 04, 2000. 38 Inserted clause 13.4.2A, vide SEBI Circular No. SEBI/CFD/DIL/DIP/12/2004/8/4 dated April 8, 2004. 39 Renumbered from Clause no. 13.4.1 (b) to Clause no. 13.4.3 vide SEBI Circular No. DIP (Compendium) Circular No. 3 dated August 04, 2000. 40 Substituted vide SEBI Circular No. SEBI/CFD/DIL/DIP/14/2005/25/1 dated January 25, 2005 for the words ..... 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