Академический Документы
Профессиональный Документы
Культура Документы
Domestic
Stock Exchanges
Initial Public Offering (IPO) Offer for Sale Public Issue by Listed Companies
Companies Act, 1956 Securities and Exchange Board of India Act, 1992 SEBI (Disclosures and Investor Protection) Guidelines , 2000 (DIP Guidelines) Securities Contracts (Regulation) Act, 1956 Listing Agreements with the Stock Exchanges The Depositories Act, 1996 Foreign Exchange Management Act, 1999
Eligibility
i.
Book
Building Method
50% net offer to QIBs ;OR Project has 15% participation from
AND
10 Crores minimum post issue face
Exemptions
apply)
Project must be appraised Not less than 5% of the project cost must be from appraisers
Pricing
Free pricing of shares Issuer company free to fix face value of
Fast
Issue of shares or of convertible securities by a company to a select group of persons under Section 81(IA) of the Companies Act, 1956. Conditions of preferential issue (Chapter XIII of DIP Guidelines) Pricing as per the DIP guidelines Continuous listing (Minimum public shareholding) Existing shares of proposed allottee(s) in demat form Lock in of pre-preferential allotment shareholding
Issue of shares or of convertible securities by a company to Qualified Institutional Buyers (QIBs) (Chapter XIIIA of DIP Guidelines) Eligibility: Equity shares listed for one year preceding the date of notice to shareholders Minimum public shareholding to be maintained Note: No placement to QIB who is promoter or related to promoter Pricing as per the DIP guidelines Non applicability of Chapter XIII of DIP guidelines
Conditions: Minimum Number of allottees: 2, where the issue size is less than or equal to Rs. 250 Crores 5, where the issue size is greater than Rs. 250 Crores No single allottee shall be allotted more than 50% of the issue size. Transfer restriction for 1 year (except on a stock exchange) Minimum 10% allotment to mutual funds
Credit rating required Debenture trustee must be appointed Debentures not to be issued for acquisition of shares or providing loan to any company belonging to the same group. (Not to apply to FCDs converting within 18 months) Company to create Debenture Redemption Reserve (DRR) Debentures to be redeemed as per offer document Offer document to specify the assets on which security is created and ranking of the charge Premium amount and time of conversion to be determined by issuer company and disclosed
SEBI (Substantial Acquisition of Shares and Takeovers) Regulations 1997 (Takeover Code) SEBI (Prohibition of Insider Trading) Regulations 1992 SEBI (Bankers to an Issue) Regulations, 1994 SEBI (Merchant Bankers) Regulations, 1992 SEBI (Underwriters) Regulations, 1993 SEBI (Registrars to an Issue and Share Transfer Agents)Regulations, 1993 SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003
Note: Indian companies listing overseas must either before or simultaneously list on the Indian
Companies Act, 1956 SEBI DIP Guidelines Issue of Foreign Currency Convertible Bonds and
Ordinary Shares (Through Depository Receipt Mechanism) Scheme 1993 (FCCB Scheme) Issue of Foreign Currency Exchangeable Bonds Scheme,2008 Foreign Exchange Management Act, 1999 (FEMA) Foreign Exchange Management (Transfer or Issue of any Foreign Security) Regulations, 2004 External Commercial Borrowing Policy (ECB Policy)
DRs represent shares of an Indian company trading on a foreign stock exchange The DR holders are part of foreign holding in a company but unlike FDI, investors in DRs do not enjoy voting rights DRs of most Indian companies experienced a sharp fall due to market meltdown. However, recently the DRs have recovered and trading turnovers have improved. DRs have become popular because of two-way fungibility No prior approval of SEBI, RBI or government is required for issue of DRs No restrictions on the use of proceeds except
Foreign currency convertible bonds are debt instruments which are convertible into equity of the company at a later point of time Both FDI and ECB policies are applicable Coupon rate must not exceed 300 basis points over SBI PLR RBI approval required for companies other than companies who can access ECB under automatic route and for all companies raising more than US$ 500 million Restriction on use of proceeds US$ 20 million can be raised for rupee expenditure Proceeds to be parked abroad till required in
FCEB Scheme was notified on February 15, 2008 A security offered by an issuing company and
subscribed to by investors living outside India and exchangeable into equity shares of another company, which is called the offered company. The issuing company must be a part of the promoter group and must hold the equity shares being offered at the time of issuing FCEBs. The offered company has to be a listed company, which is engaged in a sector eligible to receive FDI and eligible for ECB.
RBI is still considering the instrument No guidelines for FCEBs issued by RBI yet RBI is unsure how FCEBs would work within
existing framework of ECB Policy Lack of transparency regarding use of the funds according to RBI Issues on monitoring of the FDI cap on companies when bonds raised by one company gets converted into equity of another company.
Availability of Funds
Regulatory Requirements
NASDAQ
Listing is expensive 3 Indian companies listed
London
Stock
Exchange
(LSE)
(Main
Market)
Caters to large companies Has been a favorite with large Indian companies Regulatory requirements are stringent
is
lower,
GDP growth in India: 200708 8.7% GDP growth forecast for India: 2008-09
IMF 7.9%
CMIE 9.5%
CMIE 5.5%
RBI comfor t level (Feb 08)
5%
Exchange Rs./$ Year 2006-07 45.28 2007-08 Qtr 1 41.25 Qtr 2 40.54 Qtr 3
Rate Rs./$
Representing a Y Bank Lending on Y increase of Rates 21% (2007-08) Total foreign 12.75% to 13.25% funds inflow in 2006-07 : US$ Repo Rate: 7.75% 29.1 billion Reverse Repo Rate: 6% Total foreign funds inflow is 2007-08 (till RBI purchased US$ Feb 08) : 75.4 billion from US$ 56.4 billion currency market in 2007-08 till Feb 08
Although there are negative factors like the gloomy global markets, pressure on the export market due to rupee appreciation, rising inflation rate on one hand, on the other hand India has a strong growth story Lets hope good times are ahead!