SEBI Guidelines for IPOs 1.

IPOs of small companies Public issue of less than five crores has to be through OTCEI and separate guidelines apply for floating and listing of these issues. 2. Size of the Public Issue Issue of shares to general public cannot be less than 25% of the total issue, in case of information technology, media and telecommunication sectors this stipulation is reduced subject to the conditions that: Offer to the public is not less than 10% of the securities issued. A minimum number of 20 lakh securities is offered to the public and Size of the net offer to the public is not less than Rs. 30 crores.

3. Promoter Contribution Promoters should bring in their contribution including premium fully before the issue Minimum Promoters contribution is 20-25% of the public issue. Minimum Lock in period for promoters contribution is five years Minimum lock in period for firm allotments is three years.

4. Collection centers for receiving applications There should be at least 30 mandatory collection centers, which should include invariably the places where stock exchanges have been established. For issues not exceeding Rs.10 crores (including premium, if any), the collection centers shall be situated at:-

o the four metropolitan centres viz. Bombay, Delhi, Calcutta, Madras; and o at all such centres where stock exchanges are located in the region in which the registered office of the company is situated. 5. Regarding allotment of shares Net Offer to the General Public has to be at least 25% of the Total Issue Size for listing on a Stock exchange. It is mandatory for a company to get its shares listed at the regional stock exchange where the registered office of the issuer is located. In an Issue of more than Rs. 25 crores the issuer is allowed to place the whole issue by book-building Minimum of 50% of the Net offer to the Public has to be reserved for Investors applying for less than 1000 shares. There should be at least 5 investors for every 1 lakh of equity offered (not applicable to infrastructure companies).

Quoting of Permanent Account Number or GIR No. in application for allotment of securities is compulsory where monetary value of Investment is Rs.50,000/- or above. Indian development financial institutions and Mutual Fund can be allotted securities up to 75% of the Issue Amount. A Venture Capital Fund shall not be entitled to get its securities listed on any stock exchange till the expiry of 3 years from the date of issuance of securities. Allotment to categories of FIIs and NRIs/OCBs is up to a maximum of 24%, which can be further extended to 30% by an application to the RBI - supported by a resolution passed in the General Meeting.

6. Timeframes for the Issue and Post- Issue formalities The minimum period for which a public issue has to be kept open is 3 working days and the maximum for which it can be kept open is 10 working days. The minimum period for a rights issue is 15 working days and the maximum is 60 working days. A public issue is effected if the issue is able to procure 90% of the Total issue size within 60 days from the date of earliest closure of the Public Issue. In case of oversubscription the company may have the right to retain the excess application money and allot shares more than the proposed issue, which is referred to as the greenshoe option. A rights issue has to procure 90% subscription in 60 days of the opening of the issue. Allotment has to be made within 30 days of the closure of the Public Issue and 42 days in case of a Rights issue. All the listing formalities for a public Issue has to be completed within 70 days from the date of closure of the subscription list.

7. Dispatch of Refund Orders Refund orders have to be dispatched within 30 days of the closure of the Public Issue. Refunds of excess application money i.e. for un-allotted shares have to be made within 30 days of the closure of the Public Issue.

8. Other regulations pertaining to IPO Underwriting is not mandatory but 90% subscription is mandatory for each issue of capital to public unless it is disinvestment in which case it is not applicable. If the issue is undersubscribed then the collected amount should be returned back (not valid for disinvestment issues). If the issue size is more than Rs. 500 crores voluntary disclosures should be made regarding the deployment of the funds and an adequate monitoring mechanism to be put in place to ensure compliance. There should not be any outstanding warrants or financial instruments of any other nature, at the time of initial public offer. In the event of the initial public offer being at a premium, and if the rights under warrants or other instruments have been exercised within the twelve months prior to such offer, the resultant shares will not be taken into account for reckoning the minimum promoter's contribution and further, the same will also be subject to lockin. Code of advertisement specified by SEBI should be adhered to.

Draft prospectus submitted to SEBI should also be submitted simultaneously to all stock exchanges where it is proposed to be listed.

9. Restrictions on other allotments Firm allotments to mutual funds, FIIs and employees not subject to any lock-in period. Within twelve months of the public/rights issue no bonus issue should be made. Maximum percentage of shares, which can be distributed to employees, cannot be more than 5% and maximum shares to be allotted to each employee cannot be more than 200.

10. Relaxations to public issues by infrastructure companies. These relaxations would be applicable to Infrastructure Companies as defined under Section 10(23G) of the Income Tax Act, 1961, provided their projects are appraised by any Developmental Financial Institution (DFI) or IDFC or IL&FS. The projects must also have a participation of at least 5% of the project cost (in debt and/or equity) by the appraising institution.

The infrastructure companies will be exempted from the requirement of making a minimum public offer of 25 per cent of its securities. The requirement of 5 shareholders per Rs. 1 lakh of offer is also waived in case of offerings by infrastructure companies. For public issues by infrastructure companies, minimum subscription of 90% would no longer be mandatory provided disclosure is made about the alternate source of funding which the company has considered, in the event of under subscription in the public issue. Infrastructure companies are permitted to freely price the offerings in the domestic market provided that the promoter companies along with Equipment Suppliers and other strategic investors subscribe to 50% of the equity at the same or a higher price than what is being offered to the public. Adequate disclosures about the justification for the pricing will be required to be made in the offer documents. The Infrastructure Companies would be allowed to keep their issues open for 21 days. The relaxation would give infrastructure companies sufficient time to mobilise funds for their issues. Infrastructure Companies would not be required to create and maintain a Debenture Redemption Reserve (DRR) in case of Debenture Issues.

Issue Guidelines for raising equity SEBI has defined a set of detailed guidelines to be adhered to by all the parties involved in the process of a public issue with the aim of ensuring investor protection. The guidelines can be classified under various heads as follows: 1. Initial Public Offer 1. First issue by new companies 2. First issue by new companies promoted by existing companies 3. First issue by existing privately/closely held companies 4. Disinvestment

A. Initial Public Offer 1. First issue by New companies: SEBI defines a new company as one which has not completed 12 months of commercial operations and whose audited operative results i.e. Balance Sheet and Profit and Loss Statement are not available, and is set up by entrepreneurs without a track record. Can issue capital to public only at par Draft prospectus to be vetted by SEBI before the issue The shares can be listed on OTCEI or any other exchange A public financial institution or a scheduled commercial bank should appraise the project The appraising agency should participate in the financing of the project to the extent of atleast 10% of the project cost

2. First issue of new companies promoted by existing companies If the existing companies have a five year track record of consistent profitability, and are ready to hold 50% of the equity of the new company, it is free to price its issue and the price has to be applied to all investors uniformly. In the above case Prospectus and offer documents should contain justification for issue price Draft prospectus to be vetted by SEBI before the issue The shares can be listed on OTCEI or any other exchange

3. First issue by existing private/closely held companies Should have three year track record of consistent profitability for freely pricing the issue. Can be listed on any stock exchange Equity offered should not be less than 20% Draft prospectus to be vetted by SEBI Pricing to be determined by the issuer and the lead manager subject to adequate disclosures as specified by SEBI such as

o Disclosure of the net asset value of the company as per the last audited balance sheet. o Justification for the issue price. 4. Disinvestment Free pricing if the company has a three year track record of consistent profitability Promoters stake after disinvestment should be 25% Lock in period for Promoters contribution is five years Minimum subscription of 90% not applicable Draft prospectus to be vetted by SEBI

Qualifications for Listing initial public offerings (IPOs) 1) Paid up Capital: The Paid up equity capital of the applicant shall not be less than Rs. 10 crores* and The capitalisation of the applicants equity shall not be less than Rs. 25 crores** * For this purpose, post issue paid up equity capital for which listing is sought shall be taken into account. ** For this purpose, capitalisation will be the product of issue price & post issue number of equity shares.

2) Atleast three years track record of either: the applicant seeking listing; or the promoting company, incorporated in or outside India

For this purpose, the applicant or the promoting company shall submit audited balance sheet of three preceding financial years of the company to the NSE. General criteria 1) Conditions Precedent to Listing: The Issuer shall have adhered to conditions precedent to listing as emerging inter-alia from Securities Contracts (Regulations) Act 1956, Companies Act 1956, Securities and Exchange Board of India Act 1992, any rules and/or regulations framed under foregoing statutes, as also any circular, clarifications, guidelines issued by the appropriate authority under foregoing statutes. 2) The Project/ Activity plan of the applicant must have been appraised by a financial institution u/s 4A of the Companies Act, 1956 or a state finance corporation or a scheduled commercial bank with a paid up capital exceeding Rs.50 crores or a category I Merchant Banker with a net worth of atleast Rs.10 crores or a venture capital fund with a net worth of atleast Rs. 50 crores. or In the case of an existing company the applicant should have been listed on any other recognised stock exchange for atleast last three years This clause shall however not be applicable to listing of securities issued by Government Companies, Public Sector Undertakings, Financial Institutions, Nationalised Banks, Statutory Corporations Banking Companies and subsidiaries of scheduled commercial bank who are otherwise bound to adhere to all the relevant statutes, guidelines, circulars, clarifications etc. that may be issued by various regulatory authorities from time to time and in case of an Offer for Sale. 3) The applicant desirous of listing its securities should satisfy the exchange on the following: No Disciplinary action has been taken by other stock exchanges and regulatory authorities in the past three years: The promoting company (if any) has not been in default in payment of listing fees to any stock exchange in the last three years or has not been delisted or suspended in the past and has not been proceeded against by

SEBI or other regulatory authorities in connection with investor related issues or otherwise. Redressal mechanism of Investor grievance: The points of consideration are: promoting companys (if any) track record in redressal of investor grievances promoting companys arrangements envisaged are in place for servicing its investor promoting companys general approach and philosophy to the issue of investor service and protection Distribution of shareholding: The promoting companys (if any) shareholding pattern on March 31 of preceding three years separately showing promoters and other groups shareholding pattern should be as per the regulatory requirements Details of Litigation: The promoting companys (if any) litigation record, the nature of litigation, status of litigation during the preceding three years need to be clarified to the exchange.

Qualifications for Listing Initial Public offerings (IPOs) by Knowledge based Companies Knowledge based companies are companies in the field of Information technology, Internet Commerce, Telecommunication, Pharmaceuticals etc. 1) Paid up Capital: The Paid up equity capital of the applicant shall not be less than Rs. 5 crores* and The capitalisation of the applicants equity shall not be less than Rs. 50 crores**

* For this purpose, the existing paid up equity capital and the proposed issue for which listing is sought shall be taken into account. ** For this purpose, capitalisation will be the product of the issue price and the post issue number of equity shares. 2) Atleast three years track record of either: the applicant seeking listing or the promoting company, incorporated in or outside India

For this purpose, the applicant or the promoting company shall submit audited balance sheet of three preceding financial years of the company to the NSE. 3) The revenue from the core activity undertaken (knowledge based) as stated in the prospectus shall not be less than 75% of the total income during the two immediately preceding years. The Listing Advisory Committee (LAC) of the Exchange shall approve and recommend the listing.

Qualifications for Listing Securities of Existing Companies 1) Paid up Capital & Market Capitalisation: The paid-up equity capital of the applicant shall not be less than Rs. 10 crores * and the market capitalisation of the applicants equity shall not be less than Rs. 25 crores* or The paid-up equity capital of the applicant shall not be less than Rs. 25 crores * or The market capitalisation of the applicants equity shall not be less than Rs. 50 crores. **

* For this purpose the existing Paid up equity capital as well as the Paid up equity capital after the proposed issue for which listing is sought shall be taken into account. ** The average of the weekly high and low of the closing prices of the shares as quoted on the National Stock Exchange during the last twelve months preceding the date of submission of application by the company and if the shares are not traded on the National Stock Exchange such average price on any of the recognised Stock Exchanges where those shares are frequently traded should be taken into account while determining market capitalisation after making necessary adjustments for Rights / Bonus Issues. Unless the market capitalisation is more than Rs. 25 crores the securities of the company should be traded for at least 25% of the trading days during the last twelve months preceding the date of submission of application by the company on atleast one of the Stock Exchanges where it is traded.

The requirement of Rs. 25 crores market capitalisation mentioned above is not applicable to listing of securities issued by Government Companies, Public Sector Undertakings, Financial Institutions, Nationalised Banks, Statutory Corporations and Banking Companies who are otherwise bound to adhere to all the relevant statutes, guidelines, circulars, clarifications etc. that may be issued by various regulatory authorities from time to time. 2) Atleast three years track record of either: the applicant seeking listing; or the promoting company, incorporated in or outside India

For this purpose, the applicant or the promoting company shall submit audited balance sheet of three preceding financial years of the company to NSE and also provide a certificate to the Exchange in respect of the following: The company has not been referred to the Board for Industrial and Financial Reconstruction (BIFR). The networth of the company has not been wiped out by the accumulated losses resulting in a negative networth. The company has not received any winding up petition accepted by a court.

3) The applicant has paid dividend in atleast two out of the last three financial years immediately Preceding the year in which listing application has been made OR The networth of the applicant is atleast Rs. 50 crores***

*** Networth means: o Paid up equity capital o Reserves excluding revaluation reserve o Miscellaneous Expenses not written off o Negative balance in profit and loss account to the extent not set off The above Clauses are not applicable to listing of securities issued by Government Companies, Public Sector Undertakings, Financial Institutions, Nationalised Banks, Statutory Corporations, Banking Companies and subsidiaries of scheduled commercial bank who are otherwise bound to adhere to all the relevant statutes, guidelines, circulars, clarifications etc. that may be issued by various regulatory authorities from time to time and in case of an Offer for Sale.

Listing fees for National Stock Exchange

S.NO PARTICULARS 1. 2 Initial Listing Fees Annual Listing Fees a) Companies with paid up Share and /or debenture capital of Rs. 1 crore b) Above Rs. 1 crore and upto Rs.5 crores c) Above Rs. 5 crore and upto Rs.10 crores d) Above Rs. 10 crore and upto Rs.20 crores e) Above Rs. 20 crore and upto Rs.50 crores f) Above Rs. 50 crores

AMOUNT (Rs.) 7,500 4,200 8,400 14,000 28,000 42,000 70,000

Companies having a paid up capital of more than Rs. 50 crores would pay additional listing fees of Rs. 1400 for every increase of Rs. 5 crores or part there of in the paid-up share/debenture capital. In case, of annual listing fee, they will be reduced by 50% for the companies, which are nonregional for the exchange. The payment can be done through Cheques/ Demand Drafts favouring National Stock Exchange of India Limited on Mumbai.