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Friday, August 6, 2010

ASBA for all, Discounted price for employees, issuer can regulate bids, fti liberalised as to SCN, reservation for other employees also, lock-in preferential issue sica, IDR %: SEBI ICDR Amendments 2010

Download the Updated Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 as on date.  There are three amendments in SEBI ICDR Regulations in 2010 which are,

SEBI ICDR First Amendment January 2010

Regulation 58: Abridged prospectus, abridged letter of offer and ASBA.

(5) In all public issues and rights issues, where not more than one payment option is given, the issuer shall provide the facility of ASBA in accordance with the procedure and eligibility criteria specified by SEBI. [earlier it was available only to retail investors]

(6) An application through ASBA form may be made:
(a) in a public issue, by an applicant who:
(i) is a resident retail individual investor;
(ii) is bidding at cut-off, with single option as to the number of shares bid for;
(iii) is applying through blocking of funds in a bank account with the self certified
syndicate banks;
(iv) has agreed not to revise his bid;
(v) is not bidding under any of the reserved categories;
(b) in a rights issue, by an applicant who:
(i) holds the shares of the issuer in dematerialised form as on the record date and has
applied for entitlements and/or additional equity shares in dematerialised form;
(ii) has not renounced his entitlements in full or in part;
(iii) is not a renouncee;
(iv) who is applying through blocking of funds in a bank account with the Self Certified
Syndicate Bank.
[Omitted]

In schedule XI, in Part A, in para (12), in clause (i), the bracket and words “(except ASBA investors)” shall be omitted.

SEBI ICDR Second Amendment January 2010

 

Regulation 29: Differential Pricing

After clause (c), following clause shall be inserted , namely:-

“(d) In case the issuer opts for the alternate method of book building in terms of Part D of Schedule XI, the issuer may offer specified securities to its employees at a price lower than the floor price:
Provided that the difference between the floor price and the price at which specified securities are offered to employees shall not be more than 10% of the floor price.”

In schedule XI, in Part D, [alternate method of book building]-
“(b) The issuer shall disclose a floor price in the red herring prospectus. The issuer may mention the floor price in the red herring prospectus (RHP) or if the floor price is not mentioned in the red herring prospectus, the issuer shall announce the floor price at least one working day before opening of the bid in all the newspapers in which the pre-issue advertisement was released.”

“(c) Investors other than retail individual investors shall bid at any price above the floor price.   Qualified institutional buyers (QIB) shall bid at any price above the floor price.” [as discounted price is allowed to employees, retail investors, etc…]

“(e) Allotment shall be on price priority basis for investors other than retail individual investors.  Allotment shall be on price priority basis for qualified institutional buyers.”

“(f) Allotment to retail individual investors shall be made proportionately as illustrated in this Schedule.  Allotment to retail individual investors, non-institutional investors and
employees of the issuer shall be made proportionately as illustrated in this Schedule.”

“(h) Retail individual investors shall be allotted specified securities at the floor price. Retail individual investors, non-institutional investors and employees shall be allotted specified securities at the floor price subject to provisions of clause (d) of regulation 29.”

“(i)  The issuer may place a cap either in terms of number of specified securities or percentage of issued capital of the issuer that may be allotted to a single bidder.  The issuer may:-
(A) place a cap either in terms of number of specified securities or percentage of issued capital of the issuer that may be allotted to a single bidder;
(B) decide whether a bidder be allowed to revise the bid upwards or downwards in terms of price and/or quantity;
(C) decide whether a bidder be allowed single or multiple bids.”

SEBI ICDR Third Amendment April 2010

Regulation 2(1)

(c)“anchor investor" means a qualified institutional buyer [who makes] an application for a value of ten crore rupees or more in a public issue made through the book building process in accordance with these regulations;

(m) “employee” means a permanent and full-time employee of the issuer, working in India or abroad, [of the issuer or of the holding company or subsidiary company or of that material associate(s) of the issuer whose financial statements are consolidated with the issuer’s financial statements as per Accounting Standard 21], or a director of the issuer, whether whole time or part time and does not include promoters and an immediate relative of the promoter (i.e., any spouse of that
person, or any parent, brother, sister or child of the person or of the spouse);

(zf) “retail individual shareholder” means a shareholder of a listed issuer, who:
(i) as on the date fixed for the purpose of determining shareholders eligible for reservation in terms of [regulation 42] of these regulations, is holding equity shares which, on the basis of the closing price of the equity shares on the recognised stock exchange in which highest trading volume in respect of the equity shares of the issuer was recorded as on the previous day, are worth up to one lakh rupees; and (ii) applies or bids for specified securities for a value of not more than one lakh rupees;

Regulation 8: Documents to be submitted before opening of the issue by Lead Merchant Banker with Draft offer document

(1)(e): a certificate in the format specified in [Part C] of Schedule VII, confirming compliance of the conditions mentioned therein.

Regulation 10: Fast Track issue

(1)(g): no show-cause notices have been issued or prosecution proceedings initiated [by SEBI] or pending against the issuer or its promoters or whole time directors as on the reference date;

Regulation 13: Underwriting

(2) Where the issuer makes a public issue through the book building process, such issue shall be underwritten by book runners or syndicate members:
Provided that fifty per cent. [sixty per cent, if public issue is made with at least ten per cent. public offer under clause (b) of sub-rule (2) of rule 19 of the Securities Contracts (Regulation) Rules, 1957] of the net offer to public proposed to be compulsorily allotted to qualified institutional buyers for the purpose of compliance of the eligibility conditions specified in sub-regulation (2) of regulation 26 and [regulation 27] cannot be underwritten.

Regulation 26: Conditions for IPO

(5) No issuer shall make an initial public offer if [as on the date of registering the prospectus with the Registrar of Companies] there are any outstanding convertible securities or any other right which would entitle any person any option to receive equity shares after the initial public offer: Provided that…..

Regulation 29: Differential Pricing – [as the word “of the issuer” is removed as mentioned below, discounted price can be offered beyond the employees of issuer company also].

(a) retail individual investors or retail individual shareholders or employees[***] entitled for reservation made under regulation 42 making an application for specified securities of value not more than one lakh rupees, may be offered specified securities at a price lower than the price at which net offer is made to other categories of applicants: Provided…

Further, the same is also reiterated in Regulation 55A dealing with Reservation for [its] employees alongwith rights issue by removing the word “its”.

Regulation 42:  Reservations on competitive basis

“(1)(a) employees of the issuer including employees of the promoting companies in case of a new issuer; employees; and in case of a new issuer, persons who are in the permanent and full time employment of the promoting companies excluding the promoters and an immediate relative of the promoter of such companies;”

“(2)(a) employees of the issuer including employees of the promoting companies in case of a new issuer; employees; and in case of a new issuer, persons who are in the permanent and full time employment of the promoting companies excluding the promoters and an immediate relative of the promoter of such companies;”

Regulation 46: Period of Subscription

(1) [Except as otherwise provided in these regulations] a public issue shall be kept open for at least three working days but not more than ten working days including the days for which the issue is kept open in case of revision in price band.

Regulation 70. [Preferential issue to Company under SICA shall be subject to lock-in, though exempt from other preferential issue regulations.]

(1) The provisions of Preferential Issue shall not apply where the preferential issue of equity shares is made:
(a) pursuant to conversion of loan or option attached to convertible debt instruments in terms of sub-sections (3) and (4) of sections 81 of the Companies Act, 1956;
(b) pursuant to a scheme approved by a High Court under section 391 to 394 of the Companies Act, 1956;
(c) in terms of the rehabilitation scheme approved by the Board of Industrial and Financial Reconstruction under the Sick Industrial Companies (Special Provisions) Act, 1985:
[Provided that the lock-in provisions of this Chapter shall apply to preferential issue of equity shares mentioned in clause (c).]

Regulation 98: Conditions for issue of IDR

(e) the balance fifty per cent. may be allocated among the categories of non-institutional investors and retail individual investors including employees at the discretion of the issuer and the manner of allocation shall be disclosed in the prospectus. Allotment to investors within a category shall be on proportionate basis:
[Provided that at least thirty per cent. of the IDRs being offered in the public issue {erstwhile it was 30% of the 50%} shall be available for allocation to retail individual investors and in case of under subscription in retail individual investor category, spillover to other categories to the extent of under subscription may be permitted.
Explanation: For the purpose of this regulation, “employee” shall mean a person who,-
(a) is a resident of India, and
(b) is a permanent and full-time employee or a director, whether whole time or part time, of the issuer or of the holding company or subsidiary company or of the material associate(s) of the issuer, whose financial statements are
consolidated with the issuer’s financial statements, working in India and does not include promoters and an immediate relative of the promoter (i.e., any spouse of that person, or any parent, brother, sister or child of the person or of the spouse).]

In Schedule IV,

  • in Part A, for clause (b) with respect to Rights issue, the following shall be substituted, namely:-
    “(b) In case of a rights issue: An alteration as to fees is made.
  • in Part B, for the words “Para 3” , the words “Para 2” shall be substituted.

In Schedule VI,

  • in Form A, for reference title, the following shall be substituted, namely:-
    “[See regulations 8(1)(c), 10(3)(a) and 106C(2)]”
  • (b) in Form D, in the note, for the figure, bracket and word “2(b)”, the figure, bracket and word “1(b)” shall be substituted.

In Schedule VIII,

(a) in Part A, in Para (2), -
(A) in item (VI),-
(I) in sub-item (B), in clause (15), for sub-clause (e), the following shall be
substituted, namely:-
“(e) The underwriting agreement shall list out the role and obligations of each
syndicate member and inter-alia contain a clause stating that margin collected shall be uniform across all categories indicating the percentage to be paid as margin by the investor at the time of bidding.”
(II) in sub-item (D), in clause (2),-
(i) in sub-clause (i), in section (ii), after the words “regulation 2”, the bracket
“)”shall be inserted;
(ii) in sub-clause (j), in section (iv), after the words “regulation 32”, the words
“and regulation 33” shall be inserted;
(iii)in sub-clause (r), after section (xvii), the following shall be inserted,
namely:-
“(xviii) the details of the number of shares issued in ESPS, the price at which
such shares are issued, employee-wise details of the shares issued to
• senior managerial personnel;
• any other employee who is issued shares in any one year amounting to
5% or more shares issued during that year;
• identified employees who were issued shares during any one year equal
to or exceeding 1% of the issued capital of the company at the time of
issuance;
(xix) diluted Earning Per Share (EPS) pursuant to issuance of shares under
ESPS; and consideration received against the issuance of shares.”
(B) in item (VIII),-
(I) in sub-item (D), in clause (3), sub-clause (f) shall be omitted;
(II) in sub-item (E), in clause (8), in sub-clause (j), for the word
“discussed” appearing at the end, the word “disclosed” shall be
substituted;
(C) in item (IX),-
(I) in sub-item (B),-
(i) in clause (12), in sub-clause (a), in section (v), for the mark and
words “(c) or (d)”, the mark and words “(iii) or (iv)” shall be
substituted;
(ii) in clause (16), in sub-clause (b), after the words “loan taken
and before the words “by the promoters”, the words “from the
issuer
” shall be inserted;
(II) in sub-item(C), in clause (2), before the proviso the following
paragraph shall be inserted, namely:-

“In case there are no listed group companies, the financial information shall be given for the five largest unlisted group companies based on turnover.”
(D) in item (XI), in sub-item (I), for the words “letter of offer”, the words “offer document” shall be substituted;
(E) in item (XII), in sub-item (B), in clause (29), in sub-clause (a), for the words “thirty days” appearing after the words “from the date of the closure” the words “fifteen days” shall be substituted;
(b) in Part C, in para (2),-
(A) brackets and letter “(e)” shall be omitted;
(B) item (f) shall be renumbered as “(e)”;
(c) in Part E, in Para (5), in item (VI), in sub-item (C), in clause (6), the following proviso shall be inserted, namely:-
“Provided that such participation shall not result in breach of minimum public shareholding requirement stipulated in the equity listing agreement entered into between the issuer and the recognized stock exchanges where the specified securities of the issuer are listed.”
(d) in Part F, for para (2), the following shall be substituted, namely:-
“(2) However, if the conditions specified in clause (1) in Part E of this Schedule are satisfied, the disclosure requirements specified in the following clauses in Part D of this Schedule, shall not be applicable to such issuer:
(a) Sub-item (B) of item II ;
(b) Sub-item (D) of item III;
(c) Item V;
(d) Item VI;
(e) Item VII ;
(f) Item X;
(g) Item XI;
(h) Item XIV;
(i) Item XV;
(j) Item XVI.”

In Schedule XI,-
(a) in Part A,-
(A) in para 10, for clause (f), the following shall be substituted, namely:-

“(f) Anchor Investors shall pay on application the same margin which is payable by other categories of investors the balance, if any, shall be paid within 2 days of the date of closure of the issue.”
(B) in para 11, -
(I) for clause (a), the following shall be substituted, namely:-
“(a) The margin collected shall be uniform across all categories of investors.”
(II) clause (b) shall be omitted;
(C) in para 12, after clause (i), the following shall be inserted, namely:-
“(ia) The issuer may decide to close the bidding by qualified institutional buyers one day prior to the closure of the issue subject to the following conditions:
(i) bidding shall be kept open for a minimum of three days for all categories of
applicants;
(ii) disclosures are made in the red herring prospectus regarding the issuer’s
decision to close the bidding by qualified institutional buyers one day prior to closure of issue.”
(b) in Part C, in the heading, for the word “INSTUTIONAL”, the word “INSTITUTIONAL” shall be substituted.

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