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Monday, September 8, 2008

SEBI DIP Guidelines Current & Earlier Provision as on 28th Aug 2008- An Overview

Credits to Mr. CS Pradeep & Mr. R. Anand

Rights Issue

N Particulars Earlier Provision Current Provision
1 Advertisement An advertisement giving the date of completion of despatch of letters of offer, shall be released in Newspapers ATLEAST 7 days BEFORE date of opening of issue 7 days reduced to 3 days
2 Issue of Shares / Refunds Details of Issue of Allotment letters/Refunds to be made WITHIN a period of 7 weeks and Interest in case of delay in refund at the prescribed rate under section 73(2)/(2A) 7 weeks reduced to 15 days
3 Non-receipt of Minimum subscription If the Company does NOT receive the Minimum Subscription of 90% of the issue, the entire subscription shall be REFUNDED to the applicants WITHIN 42 days from the date of closure of the issue. 42 days reduced to 15 days
4 Issue Period Rights issues shall be kept OPEN for ATLEAST 30 days and not more than 60 days Rights issues shall be kept OPEN for ATLEAST 15 days and not more than 30 days
5 Book-closure period Minimum Notice period was 15 days (demat shares with no derivative trading), 21 days (physical shares with no derivative trading) and 30 days (with derivative trading) The minimum notice period has been made as 7 working days for ALL categories (only for Rights issue)
6 Notice to Stock Exchange Company has to give PRIOR intimation to the Exchange about the Board Meeting at which proposal for Rights issue or issue of Convertible Debentures or of Debentures carrying a right to subscribe to Equity shares or the passing over of dividend is due to be considered at least 7 days in advance. 7 days reduced to 2 working days (only for Rights issue)


QIB / QIP related (Chapter XIIIA)
Erstwhile "Qualified Institutional Buyers" [QIB]

Hereon "Qualified Institutional Buyers" [QIB], defined in the Definition Section itself of the SEBI (DIP) Guidelines, 2000,

1.2.1 (xxiva) The same Definition has been brought in, with an amendment in sub-clause (d) as to Foreign Institutional Investors (FII):
"a foreign institutional investor and sub-account registered with SEBI, OTHER THAN a sub-account which is a foreign corporate or foreign individual".


2. QIP Pricing guidelines amended - pricing to be 2 weeks average high and low OR more [Floor Price], of the closing prices of the related shares quoted on the stock exchange during the TWO WEEKS preceding the 'relevant date'.


3. Meaning of 'Relevant Date' amended -  means Date of Board or Committee meeting (previously it was Shareholders Meeting) decided to open the proposed issue.


4. Companies which have been listed during the preceding one year pursuant to approved scheme(s) of merger/ demerger/ arrangement they are now allowed to raise funds by QIP route. Such companies are said to have taken into account the listing history of the listed companies with which they have entered into the approved scheme(s) of merger/ demerger/ arrangement.


Preferential Allotment (Chapter XIII)
1. In case of preferential allotment to QIB, pricing to be at 2 weeks average for allotment to QIBs, provided that the number of QIB allottees in such preferential allotment does NOT exceed five.

2. Warrants and Shares BOTH will be subject to lock-in period of one year or three years from the date of allotment of such shares.
(No set-off of lock-in period allowed against the period during which Warrants where already locked-in)


Debt Securities

The SEBI (Issue and Listing of Debt Securities) Regulations, 2008 were notified on June 6, 2008 and are applicable to public issue of debt securities and listing of debt securities issued through public issue or on private placement basis on a recognised stock exchange. As per regulation 33(1) of these regulations, the
provisions of the SEBI (DIP) Guidelines, in so far as these relate to issue and listing of debt securities, shall stand rescinded on the commencement of these regulations. Consequential amendments have accordingly been made in the SEBI (DIP) Guidelines.



1. Filing of offer documents at SEBI Regional Offices, the LIMIT has been increased from 20 Crores to 50 Crores.


2. Even, "Offer for sale" and INCLUSION in the "Promoters' Contribution" of those shares which have been acquired pursuant to a restructuring exercise approved by High Court(s), in lieu of business and invested capital which had been in existence for a period of MORE than one year prior to the restructuring exercise.



The amendments made vide this circular shall be applicable as under:
(a) Amendments to clause 1.2.1(xxiva) shall be applicable after the date of this circular to :
(i) all notices for general meeting sent to shareholders for approval of the issue, in case of preferential allotment and QIP; and
(ii) all prospectuses (in case of a fixed price issue) and Red Herring
Prospectuses (in case of a book built issue) filed with the Registrar of Companies or letters of offer filed with Designated Stock Exchange, as the case may be.
(b) Amendments to clauses,,, 13.3.1, 13A.1.1, clause 13A.3.1, and 13A.3.2.2 shall be applicable to all notices for general meeting sent to shareholders for approval of the preferential allotment or QIP, as the case may be; after the date of this circular.
(c) Amendments to clauses 4.6.2, 16.1.1 and 4.14.2(ii) shall be applicable to all draft offer documents filed with SEBI after the date of the circular;
(d) All amendments other than those specified in sub-paras (a) to (c) above shall come into force with immediate effect.

SEBI/CFD/DIL/DIP/32/2008/28/08 dated August 28, 2008

DOWNLOAD DIP Guidelines amended upto August 28, 2008


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