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TMI BlogAmendments to the SEBI (Disclosure and Investor Protection){DIP} Guidelines,2000X X X X Extracts X X X X X X X X Extracts X X X X ..... lines, 2000; (hereinafter referred as the guidelines ) incorporating the modifications approved by the SEBI Board. The amendments are detailed in Annexure I and are categorized and summarized as follows 4. Restriction on splitting of shares 4.1 At present, the guidelines permit the issuer to determine the denomination of shares for public / rights issue and to change the standard denomination. It was observed that many issuers were going in for share splits just before the IPOs. Based on recommendation of advisory committee, the guidelines have been amended to restrict pre IPO splitting of shares. The amendments inter alia provide for a floor face value of Re.1 per share, the face value to necessarily be ₹ 10 per share for issue price below ₹ 500/- per share, and permit issuer companies to fix the face value below ₹ 10/- per share only in cases where the issue price is ₹ 500/- or more. 5. Terms of the issue 5.1 The existing provisions in the guidelines define minimum tradable/ application lot in terms of number of shares based on the offer price per share. Further, the minimum application money is stipulated at not less than ₹ 2000/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal amount to be raised through the tranche alongwith over subscription option. 7.2 As per clause 12.10.4(b) of the guidelines, the maximum target amount raised, shall not exceed twice the minimum target. It has been observed that the public issue of bonds, where tax savings bonds / infrastructure bonds are offered, have received heavy oversubscription (which exceed the maximum target amount mentioned in the prospectus). In such a scenario, returning of the excess subscription would adversely affect the investors whose tax planning measures normally take into account such investments. 7.3 In view of above, the guidelines have been amended to provide that once the issue size and over subscription limits are disclosed in the shelf prospectus, issuers can raise and retain any amount through the tranche issues subject to the same being within the respective limits specified in shelf prospectus and also subject to the condition that the issuer has to disclose the minimum amount proposed to be raised and the maximum over subscription proposed to be retained in the information memorandum / prospectus filed in respect of issues under a shelf prospectus. 8. Definition of Employees ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In clause 1.2.1, after sub-clause (xiia), the following sub-clause (xxvi-a) shall be inserted, namely: - (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. II. Chapter III PRICING BY COMPANIES ISSUING SECURITIES 1. Clause 3.7.1 shall be substituted by the following, namely : - 3.7.1 An eligible company shall be free to make public or rights issue of equity shares in any denomination determined by it in accordance with sub-section (4) of section 13 of the Companies Act, 1956 and in compliance with the following and other norms as may be specified by SEBI from time to time. i. In case of initial public offer by an unlisted company, a. if the issue price is ₹ 500/- or more, the issuer company shall have a discretion to fix the face value below ₹ 10/- per share subject to the condition that the face value shall in no case be less than ₹ 1 per share. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the company (2). after Explanation 2, the following shall be inserted, namely: - 2A. In a public issue (not being a composite issue) by a listed company, the reservation on competitive basis can be made for the shareholders who, on the record date ( date fixed for the purpose of determining the eligible shareholders) , are holding shares worth up to ₹ 50,000/- determined on the basis of closing price as on the previous day. Provided that the allotment to such shareholders shall be on proportionate basis as in case of allotment in public category. (3) Clause 8.6.1, Clause 8.6.1(i), Clause 8.6.1(ii) and Clause 8.6.1(iii) shall be substituted by the following : 8.6.1.1. Minimum application value i) The minimum application value shall be within the range of ₹ 5,000 to Rs, 7,000. The issuer company, in consultation with the merchant banker, shall stipulate the minimum application size (in terms of number of shares) falling within the aforesaid range of minimum application value and make upfront disclosures in this regard, in the offer document. Explanation :For the purpose of this clause, the minimum application value shall be with reference to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e words the draft Red Herring prospectus , the words and comma the draft prospectus, shall be inserted; (7) Clause 8A.7 shall be substituted by the following, namely- 8A.7(a) In case of an initial public offer by a unlisted company, the promoters and pre-issue shareholders and in case of public issue by a listed company, the promoters and pre- issue shareholders holding more than 5% shares ,may lend the shares subject to the provisions of this Chapter. (b) The SA shall borrow shares from the promoters or the pre-issue shareholders of the issuer company or both, to the extent of the proposed over-allotment. Provided that the shares referred to in this clause shall be in dematerialized form only. (8) Clause 8A.21 shall be substituted by the following, namely- 8A.21 For the purpose of the Chapter VIII-A, (a) promoter means a promoter as defined in Explanation I to clause 6.4.2.1of these guidelines. (b) Over allotment shall mean as an allotment or allocation of shares in excess of the size of a public issue, made by the SA out of shares borrowed from the promoters or the pre-issue shareholders or both, in pursuance of a green shoe option exercised by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the total number of shares applied for. The actual entitlement shall be as follows: Sr. No. Name of Investor Total Number of shares applied for Total number of shares eligible to be allotted ( No. of shares applied for / 8.25) 1 A 81 81 /8.25 = 9.82 shares rounded off to 10 shares 2 B 72 72/8.25 = 8.73 shares rounded off to 9 shares (i.e. minimum application size). 3 C 45 shares 45/8.25=5.45 shares. Application liable to be rejected. (as the entitlement is less than the minimum application size). However, the successful applicants out of the total applicants shall be determined by drawal of lots X. After Schedule XVIII, the following Schedule shall be added Schedule XVIIIA (Clause 8.6.1(iii)) Illustration explaining the minimum application size An issue is being made at a price of ₹ 390 per share. In this case, the issuer in consultation with the merchant banker ..... X X X X Extracts X X X X X X X X Extracts X X X X
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