I.

ICDR REGULATIONS
 11 Sept, 2018

 Kinds of investors that subscribe to shares and securities:

1. Anchor Investors
- Qualified Institutional Buyer
- This is not an individual
- Value of appl at least 10cr (min investment)
- For anchor investors the subscription opens one day before
- If high level investors invest in the securities one day prior

2. Institutional Investor
- QIB
- Net worth >500cr as per latest audited balance sheets
- Not an individual (QIB, family trusts)
- Institutional Trading Platform: platform for start ups. They can list and try to raise
money. Only have to lock in for 6 months not 1 year like a normal IPU. Less disclosure
requirements as well

3. Non-institutional investors
-
4. Retail inst investor are those investors who have invested not more than 2 lakh in the
specified security
- lot of safety net arrangements made to protect these retail institutional investors

QIB: Reg 2(a)(ff)

HNI/UHNWI: Ultra High Net Worth Individuals

- not defined anywhere
[missing some parts here]
II. ISSUE OF SHARES: PROCESS
Three methods of subscribing to the shares of a co:
1. Public Issue
- given to the public at large
a. IPO and FPO
 IPO happens when there is a co not listed yet and is a public co. The public co wants to
get itself listed. Once listed it can issue its securities to the public. IPO happens when an
issuer for the first time has gotten listed and is issuing securities [Initial Public Offering].
 FPO is once the issuer has gotten listed and then is further issuing securities [Further
Public Offering]. All rules and regs will be the same
 When the shares come in the mkt, 20% is for promoters

b.Offer for Sale

 Done in order to dilute the shares of the promoter
  in every public listed co, there has to be a min 25% public shareholding: ICDR
Regulations
 Suppose 80% holding with promoters, within a year attempt to reduce it down to 75%
holding to meet the above regulation
 It becomes too technical and taxing and expensive to conduct an IPO. So they use the
method of Offer for Sale.

7.10.19
2. Rights Issue
- Pre emptive rights of existing shareholders
- If any further share has to be offered, wants more money doesn’t want to compromise w
the shareholding, any further issue will be offered to the shareholders first

3. Private Placement
- When you issue securities to more than 200 persons in a financial year it becomes a pvt
placement
a. Pvt Placement (Unlisted Co)
- no drafting of prospectus and draft an offer letter
- Pvt co doing pvt placement

b. Preferential Issue (for Listed Co)

- Listed co do not need to take out money from public holding
- May decide that they don’t want securities offered in a financial year, need 4-5 people
from whom they can raise money
- Not the case that a Listed Co will always release a public issue, they do not need to issue
securities every now and then
- If a Listed Co wants to issue shares to pvt persons whom they want to contract then it is
preferential issue for a listed co
- Listed Co is a co listed on a stock exchange. Public co doesn’t become listed
automatically, has to list themselves in the stock exchange
- (otherwise only pvt cos do pvt placement)

c. QIP (for QIBs-Listed Co)

- QIBs are institutions like MFs, AIFs, Venture Capitals, Scheduled Commercial banks,
etc
- Whenever listed cos are only going to make an issue to only QIBs then it is called QI
Placement
- Only for bidding by QIBs
- Qualifying this placement of share by the condition that it is only open for QIBs.

[Sometimes, in the terms of issue of debenture, it might state that on default, the debenture may
be converted into an equity share.]
 III. PUBLIC ISSUE OF SHARES

1. Initial Public Offering

- specific securities (do not mention it as shares, debentures, etc., it is securities, ma’am
will cut marks)
- unlisted issuer
- to the public
- for subscription and includes an offer foe sale of specified securities to the public
- by existing holder of such specified securities
- in an unlisted issuer
[no need to produce it word by word]
 An IPO is a risky investment
- It is because it is a first time investment. Don’t have historical data to analyse the
investment
1. Conditions [IMP]
- reg 6 in ICDR, 2018

6(1)a
- Net tangible assets of at least 3 cr rupees calculated on restated and consolidated basis
- In each of the preceding three full yearsof 12 months each
- Of which not more than 50% are held in monetary assets
Proviso
- If more than 50% of NTA held in monetary asset (MA)
- Issuer has utilised or made firm commitments to utilise excess MA in its business or
project
- Further provided that this 50% thing ill not be applicable in case IPO is made entirely
through an offer for sale

 Net tangible asset is tangible asset subtracted from the liability of the co [100 tangible
asset and 50 liability]
 Suppose there is value Rs 20 goodwill and IPR (these are intangible assets). Subtract this
too. So now NTA is 30
NTA = A – (L +ITA)

 Restatement: in financial terms, it means an inaccuracy that has been corrected (suppose
calculation of depn was wrong in previous year and corrected this year)
 Consolidated means taking into consideration all your subsidies as well
 2017, 16 and 15 if it is issued in 2018
 The assets cannot be in liquid form. So that there can be inappropriate use of it. Cannot
easily sell as not liquid, so the chance of manipulation isn’t less.
 Do not rely on an issuer’s worth that is relying on liquid cash

Proviso:
 Do not utilise the liquid cash for any other activity or project than for which you are
investing in