ROLE OF SEBI IN ISSUE OF

SHARES
M. AMUDHA & P.SRIJA

Introduction
The Securities and Exchange Board of India (SEBI) is the regulatory
authority in India established under Section 3 of SEBI Act, 1992 which
provides for establishment of Securities and Exchange Board of India
(SEBI) with statutory powers for
(a) protecting the interests of investors in securities
(b) promoting the development of the securities market
(c) regulating the securities market.

Different kinds of share issues

TYPES OF OFFER DOCUMENTS

Requirements in Issue of Shares

Entry requirements for an issuer to make an issue /
offer to public
An unlisted issuer making a public issue i.e (making an
IPO) is required to satisfy the following provisions:
Entry Norm I (Profitability Route)
Entry Norm II (QIB Route)
Entry Norm III (Appraisal Route)
A listed issuer making a public issue (FPO)
Certain category of entities which are exempted

OTHER PROVISIONS

Minimum Promoters
contribution and lockin
IPO Grading

SEBIs ROLE IN AN ISSUE

Draft
observation to
be filed

SEBI Value
more than
Rs. 50 lakhs
Observation
letter validity
3 months

no
requirement of
filing any offer
document /
notice to SEBI

In case of
preferential
allotment
and
Qualified
Institution
Placement
(QIP).

In QIP,

Merchant
Banker
handling the
issue
Has to file the
placement
document with
Stock
exchanges for
making the
same available
on their
websites.

DIP GUIDELINES

Eligibility Norms for issuing

Securities:
Companies
Exemption from

Conditions for
issue of
securities

Filing of offer
document

barred not to
issue security

the eligibility
norms

How does SEBI ensure compliance

with DIP?

Sahara v/s SEBI

Issues to be discussed:
Whether the issue of OFCDS to millions
of persons is a private placement and
not covered by SEBI regulations ?
Whether listing provisions is mandatory
for public issues or depends on
intention of the company ?

LOCK-IN REQURIMENTS
20% of stake from IPO
AIFs
(PE, SMR, Infrastructure, VCF)
AIFs contribution is only 10%

Proposal approved by SEBI

Recommendation is given by (PMAC)

PRICING IN ISSUE

ISSUER

MERCHA
NT
BANKER

SEBI
APPROVA
L

Book building
Workin
g of
BB

Cancelli
ng my
bid

Price
band

Revise
my bid

Cut-off
option

Firm allotment
Allotment on firm basis
Allotment is for investors
Price fixed in allotment is different from
public offer

Intitutional investing

Institutional Investing.mp4

Institutional Investing.mp4

Classification of investors
Retail individual
investors
Bids not more
than Rs
1,00,000
Purchase
securities for
his or her
personal
account

Qualified
institutional
investors
Bids more than
1,00,000
Purchased for
large
institutions like
bank,
insurance
companies, etc

Non-institutional
investors
Bids more than
1,00,000
Purchase
securities for
NRIs, trusts
etc

Allotment to various investors

In case of
book built
issue

In case of
fixed price
issue

Intermediaries involved in the issue

process
Merchant banker

Banker to the issue

Registrars to the issue

Underwiters