Corporate Finance Book

INDEX
INDEX
PART II – CORPORATE FINANCE
NO. LESSON TITLE PAGE NO.
7 SOURCES OF CORPORATE FUNDING 7.1 – 7.3

RAISING OF FUNDS FROM EQUITY AND PROCEDURAL ASPECTS – PUBLIC
8 8.1 – 8.3
FUNDING
9 REAL ESTATE INVESTMENT TRUSTS 9.1 – 9.3
10 INFRASTRUCTURE INVESTMENT TRUSTS 10.1 – 10.7
11 RAISING OF FUNDS – PRIVATE FUNDING 11.1 – 11.1
12 RAISING OF FUNDS – NON FUND BASED 12.1 – 12.4

AN OVERVIEW ON LISTING AND ISSUANCE OF SECURITIES IN
13 13.1 – 13.2
INTERNATIONAL FINANCIAL SERVICES CENTRE
14 RAISING OF FUNDS FROM DEBT AND PROCEDURAL ASPECTS 14.1 – 14.3
15 FOREIGN FUNDING – INSTITUTIONS 15.1 – 15.1
16 FOREIGN FUNDING – INSTRUMENTS, LAWS AND PROCEDURES 16.1 – 16.3
17 ROLE OF INTERMEDIARIES IN FUND RAISING 17.1 – 17.4
18 PROJECT EVALUATION 18.1 – 18.3
SHUBHAMM SUKHLECHA (CA, CS, LLM)

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A
LESSON 7 - SOURCES OF CORPORATE FUNDING
1. What are the differences between Equity Shares and Preference Shares?
Answer:
Following are the differences between Equity Shares and Preference Shares:
Basis Preference capital Equity Share Capital
Meaning Preference share capital means that part of Equity capital is also known as “Common Stock”
the issued share capital of the company which or common share capital that represents
carries preferential right with respect to ownership in a company.
payment of dividend and repayment in the
case of a winding up.
Rate of Preference shares are entitled to a fixed rate The rate of dividend on equity shares depends
Dividend of dividend. upon the amount of profit available and the
funds requirements of the company for future
expansion etc.
Payment of Dividend on the preference shares is paid in The dividend on equity shares is paid only after
Dividend preference to the equity shares. Dividend on the preference dividend has been paid and it is
preference share may be cumulative. not cumulative.
Payment in In case of winding up, preference share holder In case of winding up, equity share holder get
case of Winding get preference over equity Shareholders with payment of capital after the payment of capital
up regard to the payment of capital. to preference shareholders.
Voting Rights The voting rights of preference shareholders An equity shareholder can vote on all matters
are restricted. A preference shareholder can affecting the company. Voting right of an Equity
vote only when his special rights as a Shareholders on a poll shall be in proportion to
preference shareholder are being varied, or his share in the paid-up equity share capital of
on any resolution for the winding up of the the company.
company or for the repayment or reduction of
its equity or preference share capital or their
dividend has not been paid for a period of two
years or more [section 47(2)]. Voting right of a
Preference Shareholders on a poll shall be in
proportion to his share in the paid-up
preference share capital of the company.
Entitlements No bonus shares/right shares are issued to A company may issue rights shares or bonus
preference shareholders. shares to the company’s existing equity
shareholders.
Redemption Redeemable preference shares may be Equity shares cannot be redeemed except
redeemed by the company. under a scheme involving reduction of capital
or buy back of its own shares.
2. The Company ABC Private Limited wants to issue shares with differential voting rights up to 40% of its share
capital? Can it do so?
Answer:
Rule 4 of the Companies (Share capital and Debentures) Rules, 2014 specifies a condition that the voting power in
respect of shares with differential rights of the company shall not exceed 74% of total voting power including voting
power in respect of equity shares with differential rights issued at any point of time.
Therefore, a company can issue shares with differential voting rights upto 40 percent of its share capital which is within
limit mentioned in Rule 4.
3. Who can Issue Redeemable Preference Shares?

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Answer:
The following can issue redeemable preference shares as under:
• Private Company • Banks
• Public Company
7.1
4. What is an Alternate Investment Fund (“AIF”)?

Answer:
Alternative Investment Fund or AIF means any fund established or incorporated in India which is a privately pooled
investment vehicle which collects funds from sophisticated investors, whether Indian or foreign, for investing it in
accordance with a defined investment policy for the benefit of its investors.
5. What is the Difference between American Depository Receipts (ADR) and Global Depository Receipts (GDR)?
Answer:
Following is the Difference between American Depository Receipts (ADR) and Global Depository:
• ADR are US $ denominated and traded only in US.

• GDRs are traded in various places such as New York Stock Exchange, London Stock Exchange, etc.
6. What is the difference between between Foreign Current Convertible Bonds (FCCBs) and Global Depository
Receipts (GDR)?
Answer:
Difference between Foreign Current Convertible Bonds (FCCBs) and Global Depository Receipts (GDR):
• FCCB is a type of Eurobond which can be exchanged for equity shares at some later date after issue of the
Bond.
• GDR is a negotiable instrument in the form of depository receipts or certificate created by the overseas
depository bank outside India and issued to non-resident investor against the issue of ordinary shares of
foreign currency convertible bonds of the issuing company.
7. Differentiate between-Normal Bonds vis-a-vis Masala Bonds.

Answer:
As against Normal Bonds, Masala Bonds are considered a safer way of raising funds from international investors by
Indian Corporates as they are rupee denominated bonds. Whereas the investor gets the benefit of a slightly high rate
of interest as against normal bonds, issuer enjoys safety in terms of decrement in the rupee value against foreign
currencies.
8. Write a short note on-Voting Rights of Members under Companies Act, 2013.
Answer:
According to section 47 of the Companies Act, 2013, subject to the provisions of section 43, section 50(2) and section
188(1) –
(a) every member of a company limited by shares and holding equity share capital therein, shall have a right to vote
on every resolution placed before the company; and
(b) his voting right on a poll shall be in proportion to his share in the paid-up equity share capital of the company.
Every member of a company limited by shares and holding any preference share capital therein shall, in respect of
such capital, have a right to vote only on resolutions placed before the company which directly affect the rights
attached to his preference shares and, any resolution for the winding up of the company or for the repayment or
reduction of its equity or preference share capital and his voting right on a poll shall be in proportion to his share in
the paid-up preference share capital of the company.
However, the proportion of the voting rights of equity shareholders to the voting rights of the preference shareholders
shall be in the same proportion as the paid-up capital in respect of the equity shares bears to the paid-up capital in
respect of the preference shares.
Further, where the dividend in respect of a class of preference shares has not been paid for a period of two years or
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more, such class of preference shareholders shall have a right to vote on all the resolutions placed before the company.
7.2
9. What is Loan against Properties?

Answer:
Similar to loans against securities, Loan against Properties is a loan, banks grant against property owned by the
prospective borrower. Banks take the property as security and based on the valuation of the property, they extend a
loan, net of the margin fixed by them.
The types of Property against which LAP can be availed can range from owned residential properties, self-occupied
property, owned and rented property, owned land, owned commercial property, owned but rented out commercial
property. The proceeds from these are used by borrowers for personal, business and consumption purposes. After
due appraisal Banks sanction generally anywhere between 50% to 65% of the value of borrower’s property. Banks
offer repayment period of 10 to 15 years at competitive interest rates. For sanctioning loans against properties banks
insist on creating a mortgage in their favour.
10. What are the Parties involved in Securitisation?

Answer:
Following are the parties involved in Securitisation:
Primary Parties
• The Originator (Banks/Fls who has lent loan against properties).
• The Originator (Banks/Fls who has lent loan against properties).
• Investors (To whom securities are issued, which is a participative interest against the pool of receivables which is
bought by the SPVs from the originator). Few examples of assets that can be securitized :
1) Residential mortgage loans
2) Commercial mortgage loans
3) Bank loans to businesses
4) Commercial debt
5) Student loans (Generally in US)
6) Credit-card debt
7) Automobile loans etc
Besides above parties the following are involved in the Process of securitizations.
• The obligator (i.e. original borrower of the loan)

• Rating agency
• Administrator etc.

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7.3
LESSON 8 - RAISING OF FUNDS FROM EQUITY AND PROCEDURAL ASPECTS – PUBLIC FUNDING
LESSON 8 - RAISING OF FUNDS FROM EQUITY AND PROCEDURAL

ASPECTS – PUBLIC FUNDING
1. Write a short note on Classification of Securities Market.

Answer:
The Securities Market is further classified in to following two Markets:
PRIMARY MARKET SECONDARY MARKET

• IP0s / FP0s and Rights Issues (Main Board/SME) • Trading of Equity share
• Reverse Book Building (RBBS) — Buyback, Tender • Equity Derivatives
Offer, Delisting • Currency Derivatives
• Offer For Sale (OFS) • Interest Rate Derivatives
• Mutual Funds(Open Ended) • Commodity Derivatives
• Securitized Debt Instruments • Debt — Corporate Bond and Government Securities
• REITs/InvITs • Mutual Funds(Close Ended)
• Debt Securities / NCRPS / Municipal Bonds
• Innovators Growth Platform(IGP)
2. Whether a book running lead manager, syndicate member, or underwriter can share the standalone or
aggregate bidding data available on the website of the stock exchange for IPO, Right Issue, and FPO of specified
securities and units with the investors, as and when requested by such investors, during the bidding period?
Answer:
SEBI stated that the standalone and aggregate bidding data is displayed on the website of the stock exchanges in the
accepted/standard format specified by SEBI and is publicly available information. This data being extraneous to the
information disclosed in the draft offer document or offer document is explicitly permitted to be shared for the
interests of investors by the Stock Exchanges. Further, SEBI Regulations prohibit entities associated with the public
issue of units from issuing advertisements which give any impression of status of subscription/oversubscription of the
issue during the issue period.
While publicly available information may not create information asymmetry among investors, any effort to selectively
present the standalone or aggregate bidding data on their own or on request by investors may create information
asymmetry and may cause prejudice to the mind of some investors which is not warranted and not the intent of SEBI
Regulations. Hence, a book running lead manager, syndicate member, or underwriter should not share the bidding
data (standalone and aggregate) with the investors or on request of investors during the bidding period.
3. Altas Limited is proposing to issue a 3 crore specified securities offered @ Rs.600 per share. The total specified
securities offered, also include offer made to:
• Qualified Institutional buyers - 2 crore specified securities.
• Retail individual investors’ category - 35 lakh specified securities Considering the above facts, comment on:
a) How many specified securities can Mr. A apply in the net offer category.
b) What is the maximum number of specified securities which non-institutional investors can apply in the
said issue.
Answer:
As per Regulation 47 of SEBI ICDR, ‘person shall not make an application in the net offer category for a number of
specified securities that exceeds the total number of specified securities offered to public.’ Accordingly, Mr. A cannot
apply for more than 35 Lakh specified securities, the total number of securities offered to the public.
Further the maximum number of specified securities which a non-institutional investor can apply are:
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Particulars No. of Specified Securities

Securities offered in the issue (A) 3 crore
Less: Securities offered to QIB (B) 2 crore
Net available to non-institutional investors (A-B) 1 crore
8.1
Thus, the number of specified securities which non-institutional investors can apply shall not exceed 1 crore specified
securities.
4. What are the General Obligations of the Issuer and the Intermediary in Case Of Public Issue And Rights Issue
Answer:
1. No person connected with the issue shall offer any incentive, whether direct or indirect, in any manner, whether
in cash or kind or services or otherwise to any person for making an application for allotment of specified
securities.
2. All public communications, publicity materials, advertisements and research reports shall comply with the
requirements as specified in ICDR Regulations, 2018.
3. The lead manager and the Issuer Company shall ensure that the contents of the offer document as hosted on their
web sites are the same as the printed versions filed with the Registrar of Companies and shall also ensure that the
copies of the same are available to the public.
4. The post-issue lead merchant banker shall actively associate himself with post-issue activities such as allotment,
refund, dispatch and giving instructions to syndicate members, Self Certified Syndicate Banks and other
intermediaries and shall regularly monitor redressal of investor grievances arising therefrom.
5. The Issuer company shall appoint a Compliance Officer, who shall be responsible for monitoring the compliance
of the securities laws and for redressal of investors’ grievances.
5. What are the Contents of the fund-raising document?

Answer:
The draft fund-raising document and the final fund-raising document shall contain all material disclosures which are
true and adequate to enable the applicants to take an informed decision.
The draft fund raising document and the final fund raising document shall contain disclosures as may be specified by
SEBI from time to time. However, the Social Stock Exchange may specify additional disclosures in respect of the draft
fund raising document and the final fund raising document.
6. Whether as per Regulation 168 of the SEBI (ICDR) Regulations, 2018, the specified securities of Shri Dinesh Mills
Limited (hereinafter referred as “SDM”) held by promoters / members of the promoter group of and locked-in
as per Regulation 167(1) of SEBI (ICDR) Regulations, 2018 can be transferred to Acquirer Trusts through its
trustees having control over the affairs of SDM?
Reply:
The specified securities i.e. shares of Shri Dinesh Mills Limited, held by promoters/ members of the promoter group
and locked-in as per Regulation 167 (1) of SEBI (ICDR) Regulations, 2018, may be transferred to the Acquirer Trusts
under Regulation 168 (1) of SEBI (ICDR) Regulations, 2018. However, the said transferability, is subject to the provisions
of SEBI (SAST) Regulations, 2011. In the instant case, pursuant to the proposed transfer of shares to the Trusts, the
Trusts {through its trustees) would have control over the affairs of SDM. Even otherwise, the Trusts shall fall within
the definition of “promoter group” under SEBI (ICDR) Regulations, 2018, as the trustees and ultimate beneficiaries of
the Trusts are promoters and members of the promoter group family of the SDM. Considering the above, the Trusts
shall be considered as part of ‘new promoter’ or ‘promoter group’ or ‘persons in control of the issuer’ and
consequently, there shall not be any contravention of provisions of SEBI (ICDR) Regulations, 2018, on transfer of locked
-in securities to the Trusts. However, the balance lock-in period shall continue in the hands of the Trusts.
7. What are the disclosures required to do to Shareholders as per regulations?

Answer:
Following are the disclosures required to do to Shareholders as per regulations:
(1) The issuer shall, in addition to the disclosures required under the Companies Act, 2013 or any other applicable
law, disclose the following in the explanatory statement to the notice for the general meeting proposed for passing
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special resolution:
1. the objects of the preferential issue;
2. Maximum number of specified securities to be issued;
3. intent of the promoters, directors or key managerial personnel or senior management of the issuer to
subscribe to the offer;
8.2
“Senior Management” shall mean the officers and personnel of the issuer who are members of its core management
team, excluding the Board of Directors, and shall also comprise all the members of the management one level below
the Chief Executive Officer or Managing Director or Whole Time Director or Manager (including Chief Executive
Officer and Manager, in case they are not part of the Board of Directors) and shall specifically include the functional
heads, by whatever name called and the Company Secretary and the Chief Financial Officer.
(a) the shareholding pattern of the issuer before and after the preferential issue;
(b) the time within which the preferential issue shall be completed;
(c) the identity of the natural persons who are the ultimate beneficial owners of the shares proposed to be allotted
and/or who ultimately control the proposed allottees, the percentage of post preferential issue capital that may
be held by them and change in control, if any, in the issuer consequent to the preferential issue. However, if there
is any listed company, mutual fund, bank or insurance company in the chain of ownership of the proposed allottee,
no further disclosure will be necessary.
It may be noted that, for the purpose of identification of the ultimate beneficial owners of the allottees, where
the allottees are institution/entities, the identification of such ultimate beneficial owners, shall be in accordance
with the guidelines prescribed by SEBI, if any
(d) the percentage of post preferential issue capital that may be held by the allottee(s) and change in control, if any,
in the issuer consequent to the preferential issue;
(e) an undertaking that the issuer shall re-compute the price of the specified securities in terms of the provision of
these regulations where it is required to do so;
a. an undertaking that if the amount payable on account of the re-computation of price is not paid within the
time stipulated in these regulations, the specified securities shall continue to be lockedin till the time such
amount is paid by the allottees.
b. disclosures, similar to disclosures specified in Schedule VI of the ICDR Regulations, 2018 if the issuer or any of
its promoters or directors is a wilful defaulter or a fraudulent borrower;
c. the current and proposed status of the allottee(s) post the preferential issues namely, promoter or non-
promoter.
(2) The issuer shall place a copy of the certificate of a practicing company secretary before the general meeting of the
shareholders, considering the proposed preferential issue, certifying that the issue is being made in accordance
with the requirements of these regulations. The issuer shall also host the certificate on its website and provide a
link for the same in the notice for the general meeting of the shareholders considering the proposed preferential
issue.
(3) Specified securities may be issued on a preferential basis for consideration other than cash. Provided that
consideration other than cash shall comprise only swap of shares pursuant to a valuation report by an independent
registered valuer, which shall be submitted to the stock exchange(s) where the equity shares of the issuer are
listed.
The special resolution shall specify the relevant date on the basis of which price of the equity shares to be allotted on
conversion or exchange of convertible securities shall be calculated.
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8.3
LESSON 9 - REAL ESTATE INVESTMENT TRUSTS
1. Which are the Registered REITs in India?

Answer:
Following are the Registered REITs in India
• Embassy Office Parks REIT
• Mindspace Business Parks REIT
• Brookfield India Real Estate Trust
• IIFL India Real Estate Investment Trust
• India Retail REIT
2. How does an REIT work ?

Answer:
REITs raise funds from a large number of investors and directly invest that sum in income-generating real estate
properties (which could be offices, residential apartments, shopping centres, hotels and warehouses). The trusts are
listed in stock exchanges so that investors can buy units in the trust. REITs are structured as trusts. Thus, the assets of
an REIT are held by an independent trustee on behalf of unit holders.
3. Define Independent Director.

Answer:
“Independent director” in case of a company means a director, other than a nominee director of the Manager:-
(i) who, in the opinion of the Board of Directors of the Manager, is a person of integrity and possesses relevant
expertise and experience;
(ii) who is not or was not a sponsor of the REIT, a promoter of parties to the REIT, their holding, subsidiary or
associate or a member of the sponsor group of the REIT;
(iii) who is not related to the REIT, its Holdco and/or SPV, parties to the REIT, its holding company or associate or
their promoters or directors;
(iv) who, apart from receiving a director’s remuneration, does not have or has had any material pecuniary
relationship with the REIT, its Holdco and/or SPV, parties to the REIT, its holding company, the subsidiary or
associate or their promoters or directors, during the three immediately preceding financial years or during the
current financial year;
(v) none of whose relatives –
• is holding securities of or interest in the REIT, its Holdco and/or SPV, parties to the REIT, their holding
Company, subsidiary or associate during the three immediately preceding financial years or during the
current financial year of face value in excess of fifty lakh rupees or two percent of the unit capital of the
REIT, two percent of the paid-up capital of the parties to the REIT, their holding Company, subsidiary or
associate or Holdco and/or SPV respectively or such higher sum as may be specified;
• is indebted to the REIT, its Holdco and/or SPV, parties to the REIT, its holding company, subsidiary or
associate or their promoters or directors, during the three immediately preceding financial years or during
the current financial year, in excess of such amount as may be specified;
• has given a guarantee or provided any security in connection with the indebtedness of any third person
to the REIT, its Holdco or SPV, parties to the REIT, its holding company, subsidiary or associate or their
promoters or directors, during the three immediately preceding financial years or during the current
financial year, for such amount as may be specified; or
• has any other pecuniary transaction or relationship with the REIT, its Holdco and/or SPV, parties to the
REIT, its holding company, subsidiary or associate amounting to two percent or more of its gross turnover
or total income.
However, the pecuniary relationship or transaction with the REIT, its Holdco and/or SPV, parties to the REIT, its holding
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company, subsidiary or associate or their promoters or directors shall not exceed two percent of its gross turnover or
total income or fifty lakh rupees or such higher amount as may be specified from time to time, whichever is lower.
(vi) who, neither himself or herself, nor whose relative(s) —
9.1
• holds or has held the position of a key managerial personnel or is or has been an employee of the Holdco and/or
SPV, parties to the REIT or its holding, subsidiary or associate or any company belonging to parties to the REIT, in
any of the three financial years immediately preceding the financial year in which he/she is proposed to be
appointed.
However, in case of a relative who is an employee other than a key managerial personnel, the restriction under this
clause shall not apply for his/her employment.
• is or has been an employee or proprietor or a partner, in any of the three financial years immediately preceding
the financial year in which he/she is proposed to be appointed, of-
1. a firm of auditors or company secretaries in practice or cost auditors of the REIT, its Holdco and/or SPV, parties
to the REIT, its holding company, subsidiary or associate; or
2. any legal or a consulting firm that has or had any transaction with the REIT, its Holdco and/ or SPV, parties to
the REIT, its holding company, subsidiary or associate amounting to ten per cent or more of the gross turnover
of such firm;
• holds together with his relatives two per cent or more of the total voting power of the REIT, its Holdco
and/or SPV, parties to the REIT;
• is a chief executive or director, by whatever name called, of any non-profit organisation that receives
twenty-five per cent or more of its receipts or corpus from the REIT, its Holdco and/or SPV, parties to the
REIT, its holding company, subsidiary or associate, any of its promoters, directors or that holds two per
cent or more of the total voting power of the REIT, its Holdco and/or SPV, parties to the REIT;
• is a material supplier, service provider or customer or a lessor or lessee of the REIT, its Holdco and/ or SPV,
parties to the REIT, its holding company, subsidiary or associate;
(vii) who is not less than 21 years of age; or
(viii) who possesses such other qualifications as may be specified by the SEBI.
4. What is the meaning of Associate.

Answer:
“Associate” of any person shall be as defined under the Companies Act, 2013 or under the applicable accounting
standards and shall also include following:
(i) any person controlled, directly or indirectly, by the said person;
(ii) any person who controls, directly or indirectly, the said person;
(iii) where the said person is a company or a body corporate, any person(s) who is designated as promoter(s)
of the company or body corporate and any other company or body corporate with the same promoter(s);
(iv) where the said person is an individual, any relative of the individual.
5. What is the meaning of “Change in control”

Answer:
“Change in control” means-
(i) in case of a body corporate, -

a) if its shares are listed on any recognized stock exchange, shall be construed with reference to the definition of
control in terms of regulations framed under clause (h) of sub-section (2) of section 11 of the Act.
b) if its shares are not listed on any recognized stock exchange, shall be construed with reference to the definition
of control as provided in sub-section (27) of section 2 of the Companies Act, 2013.
(ii) in a case other than a body corporate, shall be construed as any change in its legal formation or ownership or
change in controlling interest. Here, “controlling interest” means an interest, whether direct or indirect, to the
extent of not less than 50% of voting rights or interest.

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6. Write a short note on Offer Document and Advertisements of REIT.

Answer:
The Offer document of the REIT shall contain material, true, correct and adequate disclosures to enable the investors
to make an informed decision.
9.2
Any advertisement material relating to any issue of units of the REIT shall not be misleading and shall not contain any
thing extraneous to the contents of the offer document. If an advertisement contains positive highlights, it shall also
contain risk factors with equal importance in all aspects including print size.
The advertisements shall be in accordance with the offer document and any circulars or guidelines as may be specified
by the SEBI in this regard.
7. What is the power of SEBI to relax strict enforcement of the regulations?

Answer:
The SEBI may, exempt any person or class of persons from the operation of all or any of the provisions of these
regulations for a period as may be specified but not exceeding twelve months, for furthering innovation in
technological aspects relating to testing new products, processes, services, business models, etc. in live environment
of regulatory sandbox in the securities markets.
Any exemption granted by the SEBI as mentioned above shall be subject to the applicant satisfying such conditions as
may be specified by the SEBI including conditions to be complied with on a continuous basis.
“Regulatory Sandbox” means a live testing environment where new products, processes, services, business models,
etc. may be deployed on a limited set of eligible customers for a specified period of time, for furthering innovation in
the securities market, subject to such conditions as may be specified by the SEBI.

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9.3
LESSON 10 - INFRASTRUCTURE INVESTMENT TRUSTS
1. Which InvITs are registered with SEBI in India?

Answer:
following InvITs are registered with SEBI in India.
1. IRB InvIT Fund

2. India Infrastructure Trust
3. India Grid Trust
4. Digital Fibre Infrastructure Trust
5. Oriental Infra Trust
6. IndInfravit Trust
7. IRB Infrastructure Developers Limited
8. Indian Highway Concessions Trust
9. National Highways Infra Trust
10. Roadstar Infra Investment Trust
11. POWERGRID Infrastructure Investment Trust
12. Shrem InvIT
13. Virescent Renewable Energy Trust
14. Highways Infra Trust
15. Anzen India Energy Yield Plus Trust
16. Bharat Highway InvIT
17. Cube Highways Trust
18. School House InvIT
19. Data Infrastructure Trust
20. Intelligent supply chain infrastructure trust
2. How units of an InvIT are differ with Traditional Investments ?

Answer:
Following is the Comparative Analysis between InvITs vis-à-vis traditional investments:
InvIT Units Direct Investment in Infrastructure Company Equity

Infrastructure segment Shares
Investment • Minimum lot size of 1 unit • Nothing less than one • Minimum lot size of 1 share
Characteristics • Freely transferable listed crore (For strata units) • Freely transferable listed
securities • Illiquid & non- securities
• Professionally managed transparent market • No entry / exit load
• No entry / exit load • Hassles in managing
assets
• Transaction costs
involved
Return Profile • Returns driven by capital • Returns driven by a • Returns driven by capital
appreciation and regular timely and profitable appreciation and dividends
cash distribution (90% exit (Not mandatory)
mandatory)
Tax Efficiency • Dividends: Exempted# • Rent is taxable • Rent is taxable
• Interest: Taxable#
• Rent: Taxable#
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10.1
3. Distinguish between REITs and InvITs.

Answer:
Particulars REITs InvITs
Meaning REITs serves as an investment tool that helps InvITs is planned to pool money from investors
own and operate income- generating real to invest it in assets generating cash flow.
estate properties. Such properties serve as a Moreover, they invest in projects like
stream of annual revenue and mostly include roadways, highways and other highvalue
warehouses, healthcare centres, commercial infrastructural unit.
buildings, malls, etc.
Growth The growth prospects of REITs rely on the Their growth prospect depends mainly on the
prospect redevelopment or acquisition of assets, new success of acquisition and concession of assets.
construction, etc.
Income Stability REITs tend to provide a steady flow of income The stability of income for InvITs depends
mostly because their income yielding mainly on those factors that tend to affect the
properties come with extensive rental capacity of usage and also the scalability of
contracts. tariffs. Hence, in most cases, income is quite
uncertain.
Associated risks REITs are better insulated from regulatory/ The infrastructure sector is prone to react to
political risks. REITs tend to hold properties regulatory policies and political interference.
that are either leased or owned on a freehold Thus, parking funds in infrastructure
basis. investment trusts often prove risky.
4. What is the difference between Sponsor of InvIT and Promoter of a Company.

Answer:
Sponsor of InvIT- The Sponsor is the author of the InvIT and is responsible for transferring or undertaking to transfer
the initial portfolio of assets to the InvIT and is responsible for the formation transactions involved in setting-up and
establishing an InvIT. Sponsor is required to lock-in 15% or 25% (as the case may be) of the outstanding units of an
InvIT, held by it, for a period of three years and any additional unitholding for a period of one year.
However, ‘promoter’ shall include a person who has control over the affairs of the issuer, directly or indirectly whether
as a shareholder, director or otherwise; or in accordance with whose advice, directions or instructions the board of
directors of the issuer is accustomed to act: however, a person who is acting merely in a professional capacity shall
not be deemed as Promoter.
A financial institution, scheduled commercial bank, mutual fund, venture capital fund, alternative investment fund,
foreign venture capital investor, insurance company registered with the Insurance Regulatory and Development
Authority of India or any other category as specified by the SEBI, shall not be deemed to be a promoter merely by
virtue of the fact that twenty per cent or more of the equity share capital of the issuer is held by such person unless
such person satisfy other requirements prescribed under SEBI (ICDR) Regulations, 2018.
5. What are the SEBI Guidelines For Public Issue Of Units OF InvITs?
Answer:
On May 11, 2016, SEBI had issued detailed guidelines relating to the public issue and allotment of units by an InvIT,
and the advertisement relating to the offer. These guidelines are placed below:
➢ Filing of offer document

• The draft offer document has to be filed with SEBI and the designated stock exchanges (DSE).
• The lead merchant bankers (LMB) have to submit a certificate confirming that the agreement is entered
between the investment manager on behalf of the InvIT and LMB, and a due diligence certificate in the
prescribed form has to be filed with the draft offer document.

• The draft offer document shall be hosted on the websites of SEBI, DSEs, InvIT and merchant bankers, for
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comment within 21 days of filing.

• SEBI may specify changes or issue observations within the prescribed time, pursuant to which the draft offer
document has to be suitably modified and filed with SEBI as offer document.
10.2
• After filing offer document with SEBI, Merchant Banker shall issue pre-issue advertisement on the websites of
sponsor, investment manager and stock exchanges. Merchant Banker may also issue such advertisement in
newspapers.
➢ Allocation in public issue

• Institutional investors shall not be allocated more than 75% in a public offering of the InvIT units.
• Other investors, including retail investors, have to be allocated at least 25% of the InvIT units.
➢ Anchor Investors
Who is an Anchor Investor?

“Anchor Investor” means a qualified institutional buyer who makes an application for a value of at least ten crore
rupees in a public issue on the SEBI main board made through the book building process or makes an application
for a value of at least two crore rupees for an issue made in accordance with Chapter IX of the SEBI (ICDR)
Regulations, 2018.
• A strategic investor may participate in an offer as an anchor investor.

• The investment manager, on behalf of the InvIT, may allocate up to 60% of the portion available for allocation to
institutional investors to anchor investors.
• The anchor investors will have to make an application of a value of at least INR 10 crore in the public issue.
• Allocation to anchor investor shall be on a discretionary basis, and subject to the minimum of two investors for
allocations of upto Rs. 250 crore and minimum five investors for allocations exceeding Rs. 250 crore.
• The bidding for anchor before the issue opening date and the allocation must be completed on the same day.
• The number of units allocated and the allocation price must be disclosed on the websites of the stock exchange(s),
sponsor(s), investment manager and merchant banker(s).
• If the price fixed as a result of book building is higher than the price at which the allocation is made to Anchor
Investor, the Anchor Investor shall bring in the additional amount within 2 days of the date of closure of the issue.
• The lock-in period shall be thirty days for anchor investors other than a strategic investor. However, lock-in should
be one year for strategic investors investing as anchor investors.
• Neither the merchant bankers nor any person related to the merchant bankers in the concerned public issue can
apply under the anchor investor category, except mutual funds, insurance companies and pension funds.
➢ Security Deposit
The investment manager, on behalf of the InvIT, will have to deposit before the opening of subscription, and keep
deposited with the stock exchanges, an amount calculated at the rate of 0.5% of the amount of units offered for
subscription to the public or Rs. 5 crore, whichever is lower.
➢ Opening of an issue and subscription period

• The issue shall open after at least five working days from the date of filing of the final offer document with SEBI.
• The lead merchant banker shall submit a due diligence certificate in prescribed format, immediately before the
opening of the issue.
• The public issue shall remain open for at least three working days, but not more than thirty days. Further, in case
the price band in a public issue made through the book building process is revised, the bidding (issue) period
disclosed in the final offer document shall be extended for a minimum period of one day, provided that the total
bidding period shall not exceed thirty days.
• In case of a price band revision, the bidding period shall be extended for at least one day, provided that the total.
• bidding period does not exceed thirty days.
• The investment manager on behalf of the InvIT may issue advertisements for issue opening and issue closing.
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➢ Price and Price Band

• The floor price or the price band has to be announced at least two working days before the opening of the bid on
the website of the sponsor, investment manager, stock exchanges, InvIT and in all newspapers in which the pre-
issue advertisement was released.
10.3
• Differential pricing shall not be offered to any investor.

• The final price of the units (“cut-off price”) may be determined in consultation with the lead book runner.
➢ Bidding process
• The InvIT shall accept bids using only the Application Supported by Blocked Amount(ASBA) facility for making
payment. Further, the bidding process shall be done only through an electronic bidding platform provided by
recognised stock exchanges.
• An investor, intending to subscribe to a public issue, shall submit a completed bid-cum-application form to Self-
Certified Syndicate Banks (SCSBs), with whom the bank account to be blocked is maintained or with any
intermediaries as prescribed in the guidelines. Intermediaries accepting the application forms shall be responsible
for uploading the bid along with other relevant details in application forms on the electronic bidding system of
stock exchange(s) and submitting the form to SCSBs for blocking of funds (except in case of SCSBs, where blocking
of funds will be done by respective SCSBs only) Stock Exchanges to provide transparent electronic bidding facility.
• The lead merchant banker shall ensure that adequate infrastructure is available with syndicate members for data
entry of the bids in a timely manner.
• The bidding terminals shall contain an online graphical display of demand and bid prices updated at periodic
intervals, not exceeding thirty minutes.
• The Investment manager on behalf of the InviT may decide to close the bidding by qualified institutional buyers
one day prior to the closure of the issue subject to the condition that bidding shall be kept open for a minimum of
three days for all categories of applicants and suitable disclosures made in the draft offer document and offer
document.
• No investor shall either withdraw or lower the size of bids at any stage.
• The identity of Institutional Investors other than strategic investors making the bidding shall not be made public.
➢ Basis of allotment
• On receipt of the sum payable on application, the investment manager on behalf of the InvIT shall allot the units
in to the applicants.
• Allotment of units other than anchor investors shall be on proportionate basis within the specified investor
categories, subject to minimum allotment, as per InvIT regulations.
• In case of under-subscription in any investor category, the unsubscribed portion may be allotted to applicants in
the other categories.
➢ Public communications, publicity materials, advertisements and research materials

• Public communication shall not contain any matter extraneous to the offer document, and shall be truthful and
fair.
➢ Other conditions
• No InvIT can make a public issue of units if it or any of its sponsors, investment managers, or trustees is debarred
from accessing the capital market by SEBI, or is on the list of wilful defaulters published by the Reserve Bank of
India. Investment managers have to appoint a compliance officer for monitoring compliance of securities laws and
for redressal of investor grievances.
6. What is the provisions for Listing and trading of units of Infrastructure Investment Trusts (InvITs) and Real Estate
Investment Trusts (REITs) on recognized stock exchanges in International Financial Services Centers (IFSC)?
Answer:
The stock exchanges operating in IFSC may permit dealing in following types of securities and products in such
securities in any currency other than Indian rupee, with a specified trading lot size on their trading platform subject to
prior approval of the SEBI:
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i. Equity shares of a company incorporated outside India;

ii. Depository receipt(s);
iii. Debt securities issued by eligible issuers;
iv. Currency and interest rate derivatives;
10.4
v. Index based derivatives;

vi. Such other securities as may be specified by the SEBI.
SEBI vide its circular dated September 16, 2020 decided to permit ‘Units of InvITs and REITs by whatever name called
in the Permissible Jurisdictions’ as permissible security under sub- clause (vi) of Clause 7 of SEBI (IFSC) Guidelines, 2015
List of Permissible Jurisdictions and International Exchanges are mentioned below:
1. United States of America - NASDAQ, NYSE
2. Japan - Tokyo Stock Exchange
3. South Korea - Korea Exchange Inc.
4. United Kingdom excluding British Overseas TerritoriesLondon Stock Exchange
5. France - Euronext Paris
6. Germany - Frankfurt Stock Exchange
7. Canada - Toronto Stock Exchange.
7. Is there a mandatory listing requirement under the InvIT Regulations?

Answer:
Yes, an InvIT is required to list its units under the InvIT Regulations. Under the extant InvIT Regulations, if an InvIT fails
to offer its Units (either through a public offer or a private placement) within three years from the date of registration
of the InvIT with SEBI, it is required to surrender its certificate of registration and should cease to operate as an InvIT.
8. Which records shall be maintain by investment manager of InvIT?

Answer:
The investment manager shall maintain records pertaining to the activity of the InvIT, wherever applicable, including–
a) all investments or divestments of the InvIT and documents supporting the same including rationale for such
investments or divestments;
b) agreements entered into by the InvIT or on behalf of the InvIT;
c) documents relating to appointment of persons;
d) insurance policies for infrastructure assets;
e) investment management agreement;
f) documents pertaining to issue and listing of units including placement memorandum, draft and final offer
document, in-principle approval by designated stock exchanges, listing agreement with the designated stock
exchanges, details of subscriptions, allotment of units, etc;
g) distributions declared and made to the unit holders;
h) disclosures and periodical reporting made to the trustee, SEBI, unit holders and the designated stock exchanges
including annual reports, half yearly reports, etc.;
i) valuation reports including methodology of valuation;
j) books of accounts and financial statements;
k) audit reports;
l) reports relating to activities of the InvIT placed before the board of directors of the investment manager;
m) unit holders grievances and actions taken thereon including copies of correspondences made with the unit holder
and SEBI, if any;
n) any other material documents;
The trustee shall maintain records, wherever applicable, pertaining to–

(a) certificate of registration granted by SEBI;
(b) registered trust deed;
(c) documents pertaining to application made to the Board for registration as an InvIT;
(d) titles of the infrastructure assets;
However, where the original title documents are deposited with the lender or any other person in respect of any
loan or debt, the trustee shall maintain copies of such title documents;
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(e) notices and agenda send to unit holders for meetings held;
(f) minutes of meetings and resolutions passed therein;
(g) periodical reports and disclosures received by the trustee from the investment manager;
(h) disclosures, periodically or otherwise, made to SEBI, unit holders and the designated stock exchanges;
10.5
(i) any other material documents.

The aforesaid records may be maintained in physical or electronic form. However, where records are required to
be duly signed and are maintained in the electronic form, such records shall be digitally signed.
9. What are the Governance Norms for INVITs.

Answer:
➢ Applicability of SEBI (LODR) Regulations, 2015
The corporate governance norms applicable for listed companies shall be applicable to REITs as specified in Regulation
26G of SEBI InvITs Regulations.
For the purposes of this regulation, the interpretation of certain expression as mentioned in SEBI (LODR) Regulations,
2015 shall be read as under while reading with REITs Regulations:
Expression in SEBI (LODR) Regulations, 2015 To be read as, while reading with InvITs Regulations
promoters parties to the REIT
listed entity InvIT or investment manager of InvIT, as may be applicable
company secretary compliance officer
executive director non-independent director
non-executive director independent director
Board of Directors of the listed entity Board of Directors of Investment Manager
subsidiary of listed entity HoldCo and/or SPV of InvIT as applicable
➢ Additional Requirements
1. The Board of Directors of the Investment Manager shall comprise of not less than six directors and have not less
than one woman independent director.
2. The quorum for every meeting of the Board of Directors of the Investment Manager shall be one-third of its total
strength or three directors, whichever is higher, including at least one independent director.
Explanation - The participation of the directors by video conferencing or by other audio-visual means shall be
counted for the purpose of quorum and shall be recorded by the Investment Manager.
3. The Board of Directors of the Investment Manager shall review compliance reports every quarter pertaining to all
laws applicable to the InvIT as well as steps taken to rectify instances of non-compliances.
4. The minimum information as specified in SEBI InvITs Regulations shall be placed before the Board of Directors of
the Investment Manager.
5. The Chief Executive Officer, the Chief Financial Officer and the Compliance Officer, shall provide the compliance
certificate to the Board of Directors as specified in SEBI InvITs Regulations.
6. The Board of Directors of the Investment Manager shall set forth clearly the recommendation of the Manager in
the notice to the unit holders for each item as mentioned in point no. 5 under Rights and meetings of Unit holders.
➢ Vigil Mechanism
1. The Investment Manager shall formulate a vigil mechanism, including a whistle blower policy for directors and
employees to report genuine concerns.
2. The vigil mechanism shall provide for adequate safeguards against victimization of Director(s) or employee(s) or
any other person who avail the mechanism and also provide for direct access to the chairperson of the audit
committee in appropriate or exceptional cases.
3. An independent service provider may be engaged by the Investment Manager for providing or operating the vigil
mechanism who shall report to the audit committee.
4. The audit committee shall review the functioning of the vigil mechanism.
➢ Secretarial Compliance Report

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1. The Investment Manager shall submit a secretarial compliance report given by a practicing company secretary to
the stock exchanges, in such form as specified, within sixty days from end of each financial year.
2. The secretarial compliance report shall be annexed with the annual report of the REIT.
➢ Quarterly Compliance Report on Corporate Governance
10.6
1. The Investment Manager shall submit a quarterly compliance report on governance in the format as may be
specified by the SEBI to the recognized stock exchange(s) within twenty-one days from the end of each quarter.
2. The quarterly compliance report shall be signed either by the compliance officer or the chief executive officer of
the Investment Manager.
10. What is the power of SEBI to relax strict enforcement of the regulations?
Answer:
The SEBI may, exempt any person or class of persons from the operation of all or any of the provisions of these
regulations for a period as may be specified but not exceeding twelve months, for furthering innovation in
technological aspects relating to testing new products, processes, services, business models, etc. in live environment
of regulatory sandbox in the securities markets.
Any exemption granted by the SEBI under sub-regulation (1) shall be subject to the applicant satisfying such conditions
as may be specified including conditions to be complied with on a continuous basis.
“regulatory sandbox” means a live testing environment where new products, processes, services, business models,
etc. may be deployed on a limited set of eligible customers for a specified period of time, for furthering innovation in
the securities market, subject to such conditions as may be specified by the SEBI.

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10.7
LESSON 11 - RAISING OF FUNDS – PRIVATE FUNDING
LESSON 11 - RAISING OF FUNDS – PRIVATE FUNDING
1. What is an Alternate Investment Fund (“AIF”)?

Answer:
Alternative Investment Fund or AIF means any fund established or incorporated in India which is a privately pooled
investment vehicle which collects funds from sophisticated investors, whether Indian or foreign, for investing it in
accordance with a defined investment policy for the benefit of its investors.
2. Is an AIF permitted to make an invitation to the public to subscribe to its securities?

Answer:
No. AIFs are privately pooled investment vehicles. AIFs shall raise funds through private placement by issue of
information memorandum or placement memorandum, by whatever name called. As an eligibility criterion for
registration as an AIF, the applicant is required to be prohibited by its memorandum and articles of association/ trust
deed/ partnership deed from making an invitation or solicitation to the public to subscribe to its securities.
3. In which legal forms can an AIF be set up?

Answer:
An AIF under the SEBI (Alternative Investment Funds) Regulations, 2012 can be established or incorporated in the form
of a trust or a company or a limited liability partnership or a body corporate. Most of the AIFs registered with SEBI are
in trust form.
4. Can an AIF change its category pursuant to registration?

Answer:
Yes. As per Circular No. CIR/IMD/DF/12/2013 dated 07th August, 2013, only AIFs who have not made any investments
under the category in which they were registered earlier shall be allowed to make application for change in category.
5. Can an AIF launch schemes?

Answer:
Yes. An AIF may launch schemes subject to filing of placement memorandum with SEBI. Further, it may be noted that
prior to launch of scheme, an AIF is required to pay Rs. 1 lakh as scheme fees to SEBI while filing the placement
memorandum. Such fee shall be paid atleast 30 days prior to launch of scheme. However, payment of scheme fees
shall not apply in case of launch of first scheme by the AIF other than angel fund.
6. How can the investors redress their complaints against AIFs?

Answer:
SEBI has a web based centralized grievance redress system called SEBI Complaint Redress System (SCORES) at
http://scores.gov.in where investors can lodge their complaints against AIFs. Further, in terms of the AIF Regulations,
for dispute resolution, the AIF by itself or through the Manager or Sponsor, is required to lay down procedure for
resolution of disputes between the investors, AIF, Manager or Sponsor through arbitration or any such mechanism as
mutually decided between the investors and the AIF.
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11.1
LESSON 12 - RAISING OF FUNDS – NON FUND BASED
1. What are the Check Points for Issuance of Bonus Share?

Answer:
Before issuance of Bonus Shares, followings points must be ensured:
1. Check, if there is a provision in the Articles of Associations (AoA) permitting issue of bonus shares by capitalization
of reserves, etc. If there is no such provision, alter the AoA to permit the issuance of bonus shares. Passing a
resolution at the company’s general body meeting making provisions in the AoA for capitalization of reserve.
2. Check and ensure that the expanded capital after the issue is within the authorised share capital of the company.
Otherwise, complete the proceedings by increasing the Authorised Capital suitably.
3. Check that it has received approval from the stock exchange for listing.
4. Check that there is no default in payment of interest or principal in respect of: (i) fixed deposits or (ii) debt
securities issued by company.
5. Check and ensure that there is no default in respect of the payment of statutory dues of the employees such as
contribution to provident fund, gratuity, bonus etc.
6. In case the share capital of the company consists of any partly paid-up shares, to make it fully paid-
up before issue of bonus shares.
7. Ensure that none of the directors or promoters of the company is a fugitive economic offender.
8. Ensure that the Bonus issue is made out of free reserve built out of the genuine profits or share premium collected
in cash only.
9. Ensure that reserves created by revaluation of fixed assets are not capitalised and that bonus shares are not issued
in lieu of dividend.
10. Ensure that in case the company makes a bonus issue of equity shares if it has outstanding fully or partly
convertible debt instruments at the time of making the bonus issue, the company has made reservation of equity
shares of the same class in favour of the holders of such outstanding convertible debt instruments in proportion
to the convertible part thereof.
11. Ensure that the Company must implement the bonus issue within 15 days from the date of approval of the issue
by Board of Directors if the company announcing a bonus issue after the approval of Board of Directors and does
not require shareholders’ approval for capitalization of profits or reserves for making the bonus issue.
12. Ensure that the bonus issue must be implemented within 2 months from the date of the meeting of Board of
Directors wherein the decision to announce the bonus issue was taken subject to shareholders’ approval if the
company is required to seek shareholders’ approval for capitalization of profits or reserves for making the bonus
issue.
13. Once the decision to make a bonus issue is announced, the issue cannot be withdrawn.
2. What are the Documents required for granting in-principle approval for listing under Regulation 28(1) of the
SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, for the companies proposing Bonus
Issue?
Answer:
Following are the Documents required for granting in-principle approval for listing under Regulation 28(1) of the SEBI
(Listing Obligations and Disclosure Requirements) Regulations, 2015, for the companies proposing Bonus Issue:
1. Certified copy of the resolution passed by the Board of Directors of the Company approving the bonus issue.
2. Certified true copy of the notice convening the AGM/EGM of shareholders along with the explanatory statement
annexed thereto where the proposal for issue is to be put for approval.
3. Certified copy of the resolution passed by the shareholders at the AGM/EGM approving the Bonus issue; and/or
Increase in the authorised share capital, if applicable.

4. Certificate from Statutory Auditors / Practicing Chartered Accountant / Practicing Company Secretary confirming
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that the proposed bonus issue is being made in accordance with the requirements of Chapter XI of SEBI (Issue of
Capital & Disclosure Requirement) Regulations, 2018.
5. Statement of total bonus entitlement as per the existing capital, bonus shares to be allotted and shares kept in
abeyance, if any to be given by the Company Secretary.
12.1
6. Certified true copy of the amended copy of the Memorandum and Articles of Association of the Company. In case
the Memorandum and Articles of Association is not amended, confirmation from the company regarding the same.
7. Confirmation by the Managing Director/ Company Secretary.
8. Processing fee.
9. Copy of the latest audited annual report.
10. Name & Designation of the Contact Person of the Company. Telephone Nos. (landline & mobile) Email address.
3. What are the Documents required for listing approval for Bonus equity shares issued by the Companies?
Answer:
1. Letter of Application (i.e. by Listed companies applying for listing of further issue) duly completed.
2. Certified true copy of the Board resolution in which the equity shares were allotted.
3. Brief particular of the new securities issued.
4. Shareholding Pattern as per the format prescribed under Regulation 31 of the SEBI (Listing Obligations and
Disclosure Requirements), Regulations, 2015 giving details pre and post allotment of bonus shares.
5. Certificate from Statutory Auditors / Practicing Chartered Accountant / Practicing Company Secretary to the effect
that the SEBI (ICDR) Regulations, 2018 for bonus issue has been complied with.
6. The details such as date of Board of Directors meeting approving Bonus issue, date of approval of shareholders,
last date by which the bonus issue was to be completed as per Regulation295 and delay in number of days, to be
provided if Bonus issue has not been implemented within the time prescribed under Regulation 295 of SEBI (ICDR)
Regulations, 2018.
7. Confirmation by the Managing Director/ Company Secretary.
8. Details of further listing /processing fee remitted.
4. What are the check points for issuance of Sweat Equity Shares?
Answer:
Before issuance of Sweat Equity Shares, followings points must be ensured:
a) If the sweat equity shares are to be issued by a Listed Company to its promoters the approval of the shareholders
shall be obtained by way of a simple majority in the general meeting and through postal ballot. Further, the
promoters shall also not participate in the voting process of such a resolution. Each transaction shall be voted by
a separate resolution.
b) It should be noted that the company shall not issue sweat equity shares for more than fifteen percent of the
existing paid up equity share capital in a year. However, the issuance of sweat equity shares in the company shall
not exceed twenty five percent of the paid up equity share capital of the company at any time. However if the
Company is a startup Company, as defined in notification number GSR 127(E) dated 19.02.2019 issued by the
Department for Promotion of Industrial and Internal Trade, Ministry of Commerce and Industry, Government of
India, it may issue sweat equity shares not exceeding fifty percent of its paid up capital up to 10 years from the
date of its incorporation or registration.
c) The sweat equity shares to be issued to the directors and employees shall be locked in/non transferable for a
period of 3 years from the date of allotment.
d) The sweat equity shares to be issued shall be valued at a price determined by a registered valuer as the fair price
giving justification of such valuation. The valuation of intellectual property rights or of know how or value additions
for which sweat equity shares are to be issued shall be carried out by a registered valuer who shall provide a proper
report addressed to the Board of Directors with justification for such valuation. A copy of the gist along with critical
elements of the valuation report obtained under Clause 6 and Clause 7 of Rule 8 of the Companies (Share Capital
and Debentures) Rules, 2014 shall be sent to the shareholders with the notice of the general meeting.
5. What does the phrase “exclusively working in India or outside India” mean with respect to the definition of
“employee” under Regulation 2(1)(i) of SEBI (Share Based Employee Benefits and Sweat Equity) Regulations,
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2021
Answer:
The phrase “exclusively working in India or outside India” means any employee who is exclusively working with such
company, irrespective of whether such person is employed either in India or outside India.
12.2
6. Whether contractual employees are eligible to receive benefits under Share Based Employee Benefits schemes?
Answer:
Yes, contractual employees are also eligible to receive benefits under the Share Based Employee Benefits schemes
provided they are designated as employees by their employers and are exclusively working with such company or its
group company including subsidiary or its associate company or its holding company.
7. Whether any scheme established with the objective of employee welfare with no share-based benefits, but are
holding/dealing shares of the listed company or shares of listed holding company, covered under the scope of
SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021?
Answer:
General Employee Benefits scheme or GEBS has been defined as any scheme of a company framed in accordance with
these regulations, dealing in shares of the company or the shares of its listed holding company, for the purpose of
employee welfare including healthcare benefits, hospital care or benefits, or benefits in the event of sickness, accident,
disability, death or scholarship funds, or such other benefit as specified by such company. Therefore, any employee
welfare scheme holding / dealing in shares of the company or the shares of its listed holding company is covered under
the scope of SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021, including the timelines
prescribed thereunder.
8. What is the process to grant benefits to employees of group company including subsidiary or its associate
companies, joint ventures or holding company? Are shareholders required to approve the grant of option, SAR,
shares or other benefits, as the case may be, to employees of such companies?
Answer:
Yes, as per Regulation 6(3)(c) of the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021
regulations, shareholders are required to approve the grant of option, SAR, shares or other benefits, as the case may
be, to employees of group company including subsidiary or its associate companies, joint ventures or holding company.
9. Question: What is the treatment to the options, SAR or other benefits which are granted and not vested to the
directors who have vacated the office due to retirement?
Answer:
Subject to the terms of the company’s policies, all grants, SARs or other benefits would continue to vest in accordance
with the respective vesting schedules even after the cessation of directorship due to retirement.
10. Which companies can issue sweat equity shares?

Answer:
Any company can issue sweat equity shares like:
• One person Company
• Private Company
• Public Company
• Section 8 Company
• Listed/Unlisted Company
11. Whether Issue of sweat equity shares can be in the form of preferential Issue?
Answer:
Issue of Sweat Equity Shares is not a ‘preferential issue’. As per regulation 2(1)(nn) of SEBI (ICDR) Regulations, 2018
which gives the meaning of a preferential issue excludes an issue of sweat equity shares there from, which means
issue of sweat equity shares is not a preferential issue within the meaning of preferential issue. Further, Rule 8 (13) of
the Companies (Share Capital and Debentures) Rules, 2014, clearly excludes issue of sweat equity shares from the
definition of preferential offer.
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12. What are the General Obligations of the Company under the SEBI (Share Based Employee Benefits and Sweat
Equity) Regulations, 2021?
Answer:
The company shall ensure that –
12.3
a) the explanatory statement to the notice for general meeting contains the disclosures specified under section
54(1)(b) of the Companies Act, 2013 and regulation 32(1) of these regulations.
b) the secretarial auditor’s certificate required under regulation 36 is placed in the general meeting of the
shareholders.
c) the company, within seven days of the issue of sweat equity shares, sends a statement to the recognized stock
exchange, disclosing:
i. number of sweat equity shares issued;
ii. price at which the sweat equity shares are issued;
iii. total amount received towards sweat equity shares;
iv. details of the persons to whom sweat equity shares have been issued; and
v. the consequent changes in the capital structure and the shareholding pattern before and after the issue of
sweat equity shares.

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12.4
LESSON 13 - AN OVERVIEW ON LISTING AND ISSUANCE OF SECURITIES IN INTERNATIONAL FINANCIAL SERVICES CENTRE
LESSON 13 - AN OVERVIEW ON LISTING AND ISSUANCE OF

SECURITIES IN INTERNATIONAL FINANCIAL SERVICES CENTRE
1. Which are the Present Market Infrastructure Institutions in GIFT-IFSC ?

Answer:
To leverage the advantage of vast global potential of capital requirement a dedicated Market Infrastructure
Institutions (MII’s) are important. Presently in GIFT-IFSC the following MII’s are there: -
Market Infrastructure Institutions
Stock • India International exchange

Exchange • NSE IFSC Limited
Clearing • India International Clearing Corporation (IFSC) Limited

Corporation • NSE IFSC Clearing Corporation Limited
Depositories • CDSL
• NSDL
2. What is Sustainable Finance at IFSC?

Answer:
The Authority has developed a comprehensive strategy for the development of sustainable finance at IFSC across
capital markets, banking, insurance and fintech. IFSC has a well-functioning capital markets and banking ecosystem
with two international Stock Exchanges, Clearing Corporations and around 20 IBUs. The cost competitiveness of IFSC
and tax incentives for the entities operating from IFSC is an advantage for capital flows, through IFSC, into sustainable
projects.
During the FY 2021-22, total listing of ESG-labelled debt securities on IFSC exchanges amounts to USD 5234 million.
The framework for ESG-labelled debt securities, based on international standards, enabled the debut of social,
sustainable, and sustainability-linked debt securities at IFSC exchanges.
On January 24, 2022, Indian Railway Finance Corporation (IRFC) listed its USD 500 million green bonds exclusively on
IFSC exchanges. IRFC became the first Central Public Sector Enterprise (CPSE) to list its offshore bonds exclusively on
an IFSC exchange.
3. What is the meaning of “Foreign Jurisdiction”?

Answer:
“Foreign Jurisdiction” means a country, other than India, whose securities market regulator is a signatory to
International Organization of Securities Commission’s Multilateral Memorandum of Understanding (IOSCO’s MMOU)
(Appendix A signatories) or a signatory to bilateral Memorandum of Understanding with the IFSCA, and which is not
identified in the public statement of Financial Action Task Force as:
i. a jurisdiction having a strategic Anti-Money Laundering or Combating the Financing of Terrorism deficiencies
to which counter measures apply; or
ii. a jurisdiction that has not made sufficient progress in addressing the deficiencies or has not committed to an
action plan developed with the Financial Action Task Force to address the deficiencies.
4. What is the meaning of “Key Managerial Personnel”?

Answer:
“Key Managerial Personnel” means the officers or personnel of the issuer who are members of its core management
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team (excluding board of directors) and includes members of the management one level below the executive directors
of the issuer, functional heads and includes ‘key managerial personnel’ as defined under the Companies Act, 2013 or
any other person whom the issuer may declare as key managerial personnel.
13.1
LESSON 13 - AN OVERVIEW ON LISTING AND ISSUANCE OF SECURITIES IN INTERNATIONAL FINANCIAL SERVICES CENTRE
5. Give an overview of IFSCA (Fund Management) Regulations, 2022

Answer:
After the Authority was vested with the powers to develop and regulate IFSCs in India, it has notified various
regulations under the IFSCA Act, 2019 and, thereby, repealed the corresponding regulations which were drawn from
the domestic regulators so far as their applicability in IFSCs is concerned. The AIFs in IFSCs were previously governed
under the provisions of SEBI (AIF) Regulations, 2012. Over a period of time, the Government, IFSCA and other
regulators made certain changes with regard to AIF regime to benchmark a few key practices in line with those
prevalent in various global financial centres.
Further, IFSCA issued detailed framework for Real Estate Investment Trusts (REITs), Infrastructure Investment Trusts
(InvITs) and Portfolio Management Services (PMS) separately. An operational framework for investment funds meant
for non-institutional investors was yet to be specified. Thus, in line with other developed financial centres, there was
a need to have a unified approach concerning the various activities related to fund management.
In this backdrop, the Authority constituted an Expert Committee on Investment Funds to recommend the road map
for the funds industry in IFSCs. The Committee was constituted under the Chairmanship of Mr. Nilesh Shah, MD, Kotak
Mahindra Asset Management Co. Ltd. and Member, Economic Advisory Council to the Prime Minister. The Committee
comprised of leaders from the Fund Management ecosystem including from areas such as technology, distribution,
legal, and compliance.
The Committee submitted its report to the Authority on January 31, 2022. Subsequently, the draft IFSCA (Fund
Management) Regulations, 2022 have been approved by the Authority in its meeting held in March 2022.

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13.2
LESSON 14 - RAISING OF FUNDS FROM DEBT AND PROCEDURAL ASPECTS
LESSON 14 - RAISING OF FUNDS FROM DEBT AND PROCEDURAL

ASPECTS
1. What are the important policy measures taken by the Government and the Regulators to develop a vibrant
corporate bond market?
Answer:
Keeping in view the larger complementary role that corporate bonds have to play along-side bank credit for financing
economic activities and promoting ease of doing business in India, several policy measures have been taken by the
Government and the Regulators to develop a vibrant corporate bond market.
Some important measures include:
• Framework for allowing banks to provide Partial Credit Enhancement for enhancing creditworthiness;
• Information Repositories developed by Exchanges and Depositories to provide consolidated information on
primary issuance and secondary market trades in corporate bonds;
• Electronic Book Building mechanism for providing enhanced transparency in issuance of debt securities on private
placement basis;
• Enhanced standards for Credit Rating Agencies for timely monitoring of credit quality of bonds;
• Specifications related to International Securities Identification Number (ISlNs) for debt securities to encourage
liquidity and reduce fragmentation of issues;
• Tri-Party Repo trading on Exchanges to enhance liquidity and price discovery in corporate bonds;
• Doing away with the requirement of 1% security deposit for public issue of debt securities.
2. What is the Purpose of issuing Performance Bank Guarantee?

Answer:
Following is the Purpose of issuing Performance Bank Guarantee:
i. Due performance of a specific contract undertaken by a customer in favour of Govt. bodies / Others - for e.g.
supply of materials, Construction of Roads, Buildings Dams, Civil Work, etc.
ii. To secure any claims by the buyer on the seller arising from default in delivery or performance of the terms of the
contract (e.g. construction, assembly, execution).
iii. Due performance of an equipment/project after completion for a specific period due to possible defects appearing
after delivery during warranty period of the equipments.
iv. Execution of Long Term Infrastructure Projects such as Seaports, Airports, Road Construction, Bridges, Sanitation
and Sewerage Projects, Telecommunication Services, Construction of Educational Institutions and Hospitals,
Generation/ Transmission/ Distribution of Power, etc.
3. What is the Difference between Letter of Credit and Bank Guarantee?

Answer:
1. A bank guarantee and a letter of credit are similar in many ways but they’re two different things.
2. Letters of credit ensure a transaction proceeds as planned, while bank guarantees reduce the loss if transaction
does not go as planned.
3. A letter of credit, sometimes referred to as a documentary credit, acts as a promissory note from a bank. It
represents an obligation taken on by a bank to make a payment once certain criteria are met. Once these terms
are completed and confirmed, the bank will transfer the funds. The letter of credit ensures the payment will be
made as long as the services are performed.
4. Letters of credit are especially important in international trade due to the distance involved and potentially
differing laws in the countries of the businesses involved. In these transactions, it is not always possible for the
parties to meet in person. The bank issuing the letter of credit holds payment on behalf of the buyer until it
receives confirmation that the goods in the transaction have been shipped.
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5. While letters of credit are used mostly in international trade agreements, bank guarantees are often used in real
estate contracts and infrastructure projects.
6. Bank guarantees represent a more significant contractual obligation for banks than letters of credit do. A bank
guarantee, like a letter of credit, guarantees a sum of money to a beneficiary; however, unlike a letter of credit,
14.1
the sum is only paid if the opposing party does not fulfill the stipulated obligations under the contract. This can be
used to essentially insure a buyer or seller from loss or damage due to nonperformance by the other party in a
contract.
7. Bank guarantees insure both parties in a contractual agreement from credit risk. For instance, a construction
company and its cement supplier may enter into a new contract to build a mall. Both parties may have to issue
bank guarantees to prove their financial stance and capability. In a case where the supplier fails to deliver cement
within a specified time, the construction company would notify the bank, which then pays the company the
amount specified in the bank guarantee.
8. Both bank guarantees and letters of credit work to reduce financial risk. The seller takes on less risk when a letter
of credit or bank guarantee is active, and would be more likely to agree to the transaction. These agreements are
particularly important and useful in what would otherwise be risky transactions for the seller, such as certain real
estate and international trade contracts.
9. Banks, since they are agreeing to take on risk, thoroughly screen buyers interested in one of these transactions.
After the bank has determined that the buyer is a reasonable risk, a monetary limit is placed on the agreement.
The bank agrees to be obligated up to, but not exceeding, the limit. This protects the bank by providing a specific
threshold of risk.
4. What is the Difference between Forfaiting and Factoring:

Answer:
Following is the Difference between Forfaiting and Factoring:
• Factoring applies to domestic and international trade both, whereas forfaiting is limited to international trade.
• While factoring focuses on accounts receivables, forfaiting also covers negotiable instruments such as promissory
notes and bills of exchange.
• Factoring deals with short-term receivables, whereas forfaiting is for medium and long-term receivables.
• Factoring usually provides 80-90% of the accounts receivable, whereas forfaiting can in some cases provide up to
100%.
• Factoring is normally for ordinary products or services, whereas forfaiting is for capital goods.
• Factoring can be recourse or non-recourse, whereas forfaiting is almost always non-recourse.
• Factoring supports the seller, whereas forfaiting supports both the buyer (importer) and the seller (exporter).
5. What is the Difference between Hire-Purchase and Hypothecation

Answer:
For a long time, Hypothecation was not defined legally in India, until it was defined by SARFAESI Act in 2002. It is a
charge on any movable asset/property of a borrower for which bank has extended its finance. It is an equitable charge
on the assets in favour of the financing bank where the asset is owned by the borrower as well as possession is with
him on behalf of the bank. If a borrower fails to repay the finance extended for the movable asset the bank can
repossess the asset with the consent of the borrower. If the borrower surrenders the asset to the bank, bank has a
legal right to sell the asset without the intervention of the court and adjust the proceeds towards the loan dues. Under
SARFAESI Act bank also has got the right to sell the movable asset of a defaulted borrower without the intervention of
a court subject to following rules laid down in this regard.
Under Hire Purchase Agreement, as explained above the ownership of the financed assets remains with the lender till
it is purchased by the borrower at the end of the hire purchase period as per agreed terms between the financing
agency and the borrower. Under Hire Purchase the financing entity may get the benefit of depreciation as well as
ownership of the asset financed.
Banks cannot take advantage of Hire Purchase Arrangement, as ownership aspect of the asset will result in violating
permitted line of activity under the banking license granted by RBI.

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For example, if a bank finances a public transport vehicle under Hire Purchase, it implies that the bank as the owner
of the public transport vehicle, is involved in the business of public transportation which is against permitted activities
under the Banking license. Also, in a Hire Purchase arrangement, if an accident takes place, bank will be a party to the
claim suit filed by the injured passengers which will involve monetary loss and as well as damage to the image of the
bank.
14.2
6. Write short note on Growing Importance Of The Role Of Company Secretary In Entities That Have Listed
Corporate Bonds.
Answer:
Over the years, the role of a Company Secretary has developed and increased into much more than fulfilling the basic
statutory requirements like maintaining the company’s minute books, advising the board of directors relating to the
legal and financial risks of the company and ensuring that the company complies with statutory regulations. This in
turn has served to direct company’s focus on effectiveness.
A Company Secretary is a vital link between the company and its Board of Directors, shareholders, government and
regulatory authorities and all other stakeholders. A Company Secretary can play an important role in fulfilling the role
as a governance professional for companies with listed debt securities.
Given all the provisions above and other roles and responsibilities, it would be appropriate to say that company
secretaries acting as compliance officers are responsible for ensuring that the organisational processes comply with
needed laws and regulations. Any risk of violation of applicable laws and regulations can expose the company to
financial and reputational losses.
Hence, Company Secretaries can add real value to their role and increase their impact by bringing commercial acumen,
strategic understanding and softer people skills in addition to their already much sought after legal and governance
knowledge. Therefore, in nutshell, the Company Secretary monitors, manages the information updates and conducts
regular assessment to ensure that company remains abreast of the regulatory standards.
7. What is a Non-Banking Financial Company (NBFC)?

Answer:
A Non-Banking Financial Company (NBFC) is a company registered under the Companies Act engaged in the business
of loans and advances, acquisition of shares/stocks/bonds/debentures/ securities issued by Government or local
authority or other marketable securities of a like nature, leasing, hire-purchase, insurance business, chit business but
does not include any institution whose principal business is that of agriculture activity, industrial activity, purchase or
sale of any goods (other than securities) or providing any services and sale/purchase/construction of immovable
property. A non-banking institution which is a company and has principal business of receiving deposits under any
scheme or arrangement in one lump sum or in instalments by way of contributions or in any other manner, is also a
non-banking financial company (Residuary non-banking company).
8. What is Major Difference between Banks and NBFCs?

Answer:
NBFCs lend and make investments and hence their activities are akin to that of banks; however there are a few
differences as given below:
i. NBFC cannot accept demand deposits;
ii. NBFCs do not form part of the payment and settlement system and cannot issue cheques drawn on itself;
iii. deposit insurance facility of Deposit Insurance and Credit Guarantee Corporation is not available to depositors of
NBFCs, unlike in case of banks.
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14.3
LESSON 15 - FOREIGN FUNDING – INSTITUTIONS
LESSON 15 - FOREIGN FUNDING – INSTITUTIONS
1. Write a short note on: IFC’s Strategic Alignment with the SDGs
Answer:
IFC seeks to create markets through several ways: by demonstrating successful innovative business models that can
be replicated; by stimulating competitiveness through efficiency gains, cost and/or price reductions, and new market
entrants; by improving business regulatory frameworks to enable the development and growth of a vibrant private
sector in a sustainable manner; and by building capacity and skills that open new market opportunities. This will enable
IFC to achieve impact beyond what is obtained with the financing from IFC’s own balance sheet.
IFC is playing a key role in the World Bank Group’s Maximizing Finance for Development approach. To meet the
ambitious SDGs, there is a need to expand the role of the private sector and mobilize private capital while reserving
scarce public resources. Together with the World Bank and the Multilateral Investment Guarantee Agency (MIGA), IFC
is working on this initiative by focusing on mobilizing private sector solutions for development and by creating markets
that enable private investment to contribute to the achievement of the SDGs.
IFC contributes to the SDGs through two pathways, namely: project outcomes and market creation. IFC measures and
reports on project outcomes, including the direct impact on stakeholders (including customers, suppliers, government,
and the community), the indirect and induced effects on the economy (value added, employment, etc.), and
environment and social impacts.
In addition, IFC projects are assessed for the ability to create markets, defined as enabling the development of new
markets or contributing to systemic improvements in how markets function and deliver sustainable development
impact.

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15.1
LESSON 16- FOREIGN FUNDING – INSTRUMENTS, LAWS AND PROCEDURES
LESSON 16- FOREIGN FUNDING – INSTRUMENTS, LAWS AND

PROCEDURES
1. Whose responsibility is it to ensure compliance with ECB guidelines?

Answer:
The primary responsibility for ensuring that the borrowing is in compliance with the applicable ECB guidelines is that
of the borrower concerned. Structures which bypass/circumvent ECB guidelines in any manner and/or raising
borrowings in any other manner which is not permitted/ disguising borrowing under the wrap of other kind of
transactions and/ or contravening provisions of Foreign Exchange Management (Borrowing and Lending in Foreign
Exchange) Regulations, 2018 would also invite penal action under FEMA.
2. Can ECB raised under the earlier ECB framework be refinanced/ partially refinanced through an ECB raised under
extant ECB framework?
Answer:
Yes, provided that the borrower continues to be eligible to raise ECB under the extant ECB framework, all-in-cost is
lower than the all-in-cost of existing ECB, residual maturity is not reduced and the new ECB is in compliance with the
extant ECB framework as well.
3. When ECB is partially converted into equity, should the remaining ECB amount comply with all the ECB
guidelines?
Answer:
Yes. The part conversion of ECB into equity will be freely permitted only when the part amount remaining as ECB
complies with all the applicable ECB norms.
4. What are the rights and duties of foreign depository?

Answer:
The following are the rights and duties for the foreign depository:
1. The foreign depository shall be entitled to exercise voting rights, if any, associated with the permissible securities
whether pursuant to voting instruction from the holder of depository receipts or otherwise;
2. The shares of a company underlying the depository receipts shall form part of the public shareholding of the
company under Securities Contracts (Regulation) Rules, 1957, if:
a) the holder of such depository receipts has the right to issue voting instruction; and
b) such depository receipts are listed on an international exchange.
3. In the cases not covered under second point, shares of the company underlying depository receipts shall not be
included in the total shareholding and in the public shareholding for the purpose of computing the public
shareholding of the company;
A holder of depository receipts issued on the back of equity shares of a company shall have the same obligations as if
it is the holder of the underlying equity shares, if it has the right to issue voting instruction.
5. Explain in detail regarding Approvals Required for issue of ADRs/GDRs.

Answer:
The issue of ADRs/GDRs requires the approval of a Board of Directors, shareholders, “In principle and Final” approval
of Ministry of Finance, approval of Reserve Bank of India, In-principle consent of Stock Exchange for listing of
underlying shares and In-principle consent of Financial institutions.
a) Approval of Board of Directors

A meeting of Board of Directors is required to be held for approving the proposal to raise money from Euro Capital
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market. The resolution should indicate therein specific purposes for which funds are required, quantum of the issue,
country in which issue is to be launched, time of the issue etc. A director/Sub- Committee of Board of Directors is also
to be authorised for seeking Government approval in connection with Euro issue and signing agreements with
depository.
16.1
b) Approval of Shareholders
Proposal for making Euro issue, as proposed by Board of Directors require approval of shareholders. A special
resolution under Section 62 of the Companies Act, 2013 is required to be passed at a duly convened general meeting
of the shareholders of the company.
c) Approval of Ministry of Finance - “In Principle and Final”

With respect to ADR/GDR, guidelines issued on the subject dated 19-1-2000 brought ADR/GDR under the automatic
route and therefore the requirement of obtaining approval of Ministry of Finance, Department of Economic Affairs
has been dispersed with. Further, private placement of ADR/GDR will also not require prior approval provided the
issue is managed by investment banker.
d) In-Principle Consent of Stock Exchanges for Listing of Underlying Shares

The issuing company has to make a request to the domestic stock exchange for in-principle consent for listing of
underlying shares which shall be lying in the custody of domestic custodian. These shares, when released by the
custodian after cancellation of GDR, are traded on Indian stock exchanges like any other equity shares.
e) In-Principle Consent of Financial Institutions

Where term loans have been obtained by the company from the financial institutions, the agreement relating to the
loan contains a stipulation that the consent of the financial institution has to be obtained. The company must obtain
in-principle consent on the broad terms of the proposed issue.
6. What are the benefits of issuing FCCB to issuer company and Investors?
Answer:
Following are the benefits of issuing FCCB to issuer company and Investors:
Benefits to the Issuer Company:
➢ Being Hybrid instrument, the coupon rate on FCCB is particularly lower than pure debt instrument there by
reducing the debt financing cost.
➢ FCCBs are book value accretive on conversion. It saves risks of immediate equity dilution as in the case of public
shares. Unlike debt, FCCB does not require any rating nor any covenant like securities, cover etc.
➢ It can be raised within a month while pure debt takes a longer period to raise. Because the coupon is low and
usually payable at the time of redeeming the instrument, the cost of withholding tax is also lower for FCCBs
compared with other ECB instruments.
Benefits to the Investor:
➢ It has advantage of both equity and debt.

➢ It gives the investor much of the upside of investment in equity, and the debt portion protects the downside.
➢ Assured return on bond in the form of fixed coupon rate payments.
➢ Ability to take advantage of price appreciation in the stock by means of warrants attached to the bonds, which are
activated when price of a stock reaches a certain point.
➢ Significant Yield to maturity (YTM) is guaranteed at maturity.
➢ Lower tax liability as compared to pure debt instruments due to lower coupon rate.
7. Prepare a checklist for Pre-Issue Formalities for GDRs/ADRs/FCCBs.

Answer:
checklist for Pre-Issue Formalities:
Documents required for granting approval under Regulation 28(1) of the SEBI (Listing Obligations and Disclosure
Requirements), Regulations, 2015, for companies proposing to come out with issue of GDRs/ADRs/FCCBs:
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1. Certified true copy of the resolution passed by the Board of Directors of the Company approving the issue of the
GDRs/ADRs/FCCBs.
2. Copy of the notice sent to the shareholders of the company.
3. Certified true copy of the resolution passed by the shareholders of the Company in the general body meeting
approving the issue of the GDRs/ADRs/FCCBs.
16.2
4. Draft offering circular for issue of the GDRs/ADRs/FCCBs.

5. Confirmation by the Managing Director and/or Company Secretary as per prescribed format by Exchange.
6. Processing fee.
Note: All pages of the documents/details provided should be serially numbered, stamped and certified by the
authorized signatory of the company.
8. Prepare a checklist for Post-Issue Formalities for GDRs/ADRs/FCCBs.

Answer:
Documents required for listing approval for equity shares underlying GDRs/ ADRs/ or equity shares allotted upon
conversion of FCCBs issued by the Companies:
1. Letter of Application (i.e. by Listed companies applying for listing of further issue) duly completed. (In case of
conversion of FCCBs only post allotment distribution schedule is requited to submitted).
2. Brief particular of the new securities issued as per prescribed format.
3. Certified true copy of the Board resolution in which the equity shares were allotted.
4. List of allottees and the number of equity shares allotted.
In case of GDRs/ADRs, the list of GDR/ADR holders and the number of GDRs/ADRs allotted.
5. Shareholding Pattern as per the format prescribed under Regulation 31 of the SEBI (Listing Obligations and
Disclosure Requirements), Regulations, 2015 giving details pre and post allotment.
6. Processing Fee [Processing fee is not payable on the first conversion, where the company has paid the same at
the time of obtaining prior approval under Regulation 28(1) of the SEBI (LODR), Regulations, 2015. In case prior
approval obtained after 01/04/2017, the aforesaid Processing Fees is not applicable].
7. Additional Annual Listing Fee, if applicable, on enhanced capital.
8. Confirmation by the Managing Director/ Company Secretary as per enclosed format by Exchange.
9. Certified true copy of letter issued by the overseas Stock Exchange granting listing/ trading permission to the
GDRs/ADRs/FCCBs.
10. Certified true copy of the resolution in which the Board of the company or the Committee of Directors of the
company decided to open the proposed issue of GDRs/ADRs/FCCBs.
11. Auditor’s Certificate confirming the floor price for the proposed issue and receipt of funds against the said issue.
12. A copy of the final offering circular (printed copy as well as pdf file on CD), duly certified by the Managing Director/
Company Secretary.
13. Detailed valuation report with related workings/calculations on the basis of which company proposes to acquire
the foreign company.
Note: All pages of the documents/details provided should be serially numbered, stamped and certified by the
authorized signatory of the company.

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16.3
LESSON 17 - ROLE OF INTERMEDIARIES IN FUND RAISING
1. What are the Intermediaries associated with the Primary Market?

Answer:
The Intermediaries associated with the Primary Market are:
a) Registrar to issue and Share Transfer Agent
b) Merchant Banker
c) Bankers to an issue
d) Debenture Trustee
2. Whether insurance agent or insurance broker is exempted from obtaining registration under IA Regulations?
Answer:
Insurance Agents or Insurance Brokers registered with IRDA who provide advice in various insurance products across
manufacturers shall be regulated by IRDA only. If such Insurance Agents or Insurance Brokers expand their activities
to include investment advice on other financial products, then they may be registered and regulated under IA
Regulations for such other financial products other than insurance products.
3. Whether a person acting in multiple capacities such as insurance agent, pension advisor, mutual fund
distributor, etc. is exempted from obtaining registration under IA Regulations?
Answer:
A person acting in multiple capacities such as insurance agent, pension advisor, mutual fund distributor, etc. and
expand his scope of activities to include investment advice on other financial products or engaged in the financial
planning of the clients, then he may be registered and regulated under IA Regulations for advising on such other
financial products or financial planning of the clients.
4. What are the measures taken by SEBI on registered Investment Advisers for dealing in unregulated products?
Answer:
SEBI took note that some registered Investment Advisers are engaged in unregulated activity by providing platform
for buying/ selling/ dealing in unregulated products including digital gold.
Hence SEBI issued a caution on October 21, 2021, stating that undertaking such unregulated activity including dealing
(i.e., advisory, distribution and execution/ implementation services) in digital gold by Investment Advisers is not in
accordance with the provisions of Section 12(1) of the SEBI Act, 1992 read with the SEBI (Investment Advisers)
Regulations, 2013.
Investment Advisers were advised to refrain from undertaking such unregulated activities. SEBI has said that dealing
in any unregulated activity by Investment Advisers may entail action as deemed appropriate under the SEBI Act, 1992
and regulations framed thereunder.
5. What are the General Obligations and Responsibilities of Merchant Banker?

Answer:
Following are the General Obligations and Responsibilities of Merchant Banker:
• Every merchant banker shall abide by the Code of Conduct as specified in Schedule III.
• Merchant banker not to associate with any business other than that of the securities market.
• Every merchant banker shall keep and maintain books of account, records and documents namely copy of balance
sheet, profit and loss account, auditor’s report etc. and shall preserve the books of account and other records and
documents maintained for a minimum period of 5 years.

• Every merchant banker shall furnish to the SEBI half-yearly unaudited financial results when required by the SEBI
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with a view to monitor the capital adequacy of the merchant banker.

• Every merchant banker acting as an underwriter shall enter into an agreement with each body corporate on whose
behalf it is acting as an underwriter.
17.1
• A merchant banker acting as an underwriter shall not derive any direct or indirect benefit from underwriting the
issue other than the commission or brokerage payable under the agreement for underwriting entered with client.
• A merchant banker shall disclose to the SEBI his responsibilities, change in the information or particulars previously
furnished, names of the body corporate whose issues he has managed or has been associated with.
• The merchant banker shall submit a periodic report in such manner as may be specified by the SEBI from time to
time.
6. What are the General Responsibilities of a Portfolio Manager

Answer:
• Every portfolio manager shall abide by the Code of Conduct.
• The discretionary portfolio manager shall individually and independently manage the funds of each client in
accordance with the needs of the client, in a manner which does not partake character of a Mutual Fund, whereas
the non-discretionary portfolio manager shall manage the funds in accordance with the directions of the client.
• The portfolio manager shall act in a fiduciary capacity with regard to the client’s funds.
• The portfolio manager shall segregate each client’s holding in securities in separate accounts.
• The portfolio manager shall keep the funds of all clients in a separate account to be maintained by it in a Scheduled
Commercial Bank.
• The portfolio manager shall transact in securities within the limitation placed by the client himself with regard to
dealing in securities under the provisions of the Reserve Bank of India Act, 1934.
• The portfolio manager shall not derive any direct or indirect benefit out of the client’s funds or securities.
• The portfolio manager shall not borrow funds or securities on behalf of the client.
• The portfolio manager shall not lend securities held on behalf of the clients to a third person except as provided
under these regulations.
• The portfolio manager shall ensure proper and timely handling of complaints from his clients and take appropriate
action immediately.
• The portfolio manager shall ensure that any person or entity involved in the distribution of its services is carrying
out the distribution activities in compliance with these regulations.
7. Prepare a indicative list of activities with the necessary timeline for an IPO and the role of the Merchant banker
is as follows:
Answer:
A granular, indicative list of activities with the necessary timeline for an IPO and the role of the Merchant banker is as
follows:
Activity Indicative Merchant Banker to

Timeline co-ordinate with
Board Meeting approves IPO X Issuer
Appointment of Merchant Banker (MB) X Issuer
Commence preparation of information as per MBs request list X+1 Issuer
Commence work with Auditors on preparing information as per SEBI X+1 Issuer/Auditor/MB
requirements
Zero draft (rough skeleton) of the draft RHP circulated X+2 lawyers
Mail the notice of AGM to shareholders X+4 Issuer
Appointment of Registrar, Banker, Advertising Agency and Registrar X+5 Issuer
to the Issue
Submit copy of the memorandum and articles of association of the X+5 Issuer
company for stock exchange clearance
Commence work on descriptive information on business, operations X+7 Issuer

etc.
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Data Room ready for Due-diligence X+7 Issuer

Finalize business plans and outlook X+7 Issuer
Presentation from key business heads for Offer Document X+9 Issuer
preparation and due diligence interviews (2 days)
17.2
1st draft of draft Red Herring Prospectus circulated X+13 MB

Circulate the pending/additional information request list X+13 MB
Issuer to provide comments on draft Red Herring Prospectus X+20 Issuer
1st Drafting Session (2 days) X+22 Issuer / Lawyer
Additional information to be provided by Issuer X+23 Issuer
2nd draft of draft Red Herring Prospectus circulated X+26 Issuer, Lawyer
Issuer to provide comments on 2nd draft of the Red Herring X+28 Issuer
Prospectus
2nd Drafting Session (2 days) X+30 Issuer, Lawyer
AGM for shareholder approval of IPO and increase in authorised X+30 Issuer
capital
Stock exchange to provide comments, if any, on the Memorandum & X+30 Stock Exchanges
Articles
Complete Appointment of other Intermediaries X+31 Issuer
Any additional information for draft Red Herring Prospectus X+32 Issuer
File applications to FIPB and RBI X+32 Issuer/ Lawyer
Draft Red Herring Prospectus finalised X+35 Issuer / Lawyer
Issue of Comfort Letter by Auditors and Legal Counsel X+35 Auditor / Legal Counsel
Adoption and signing of Draft Red Herring by Issuer’s Board X+36 Issuer
Filing of Draft RHP with SEBI / Stock Exchanges X+37 Issuer
Commence type setting of the draft RHP X+38 MB/Printer
Complete first draft of Management Roadshow presentation and X+40 MB / Issuer
Q&A
Receive in-principle approval from the stock exchanges and submit to X+52 Stock Exchanges
SEBI
SEBI Comments on draft Red Herring Received X+58 SEBI
Pre-marketing commences X+60 Issuer
Obtain FIPB and RBI approvals X+65 Issuer
Pre-marketing ends X+67 Issuer
Finalise Bidding Centers X+67 Issuer
Communicate to SEBI of any updates to draft Red Herring X+72 MB / Issuer
Final SEBI Clearance Received X+75 SEBI
Draft Bid-cum application form X+75 Issuer
Discussion of Pre-Marketing feedback with company and finalizing X+76 MB / Issuer
floor price
Make arrangements with NSE/BSE for Book Building X+76 Stock Exchanges
Finalise Underwriting Agreement, Escrow Agreement and Syndicate X+76 Issuer
Agreement
Finalise Management Roadshow Presentation and Q&A X+77 Issuer
Filing of the Red Herring (including latest Results) with ROC and SEBI X+77 Issuer
ROC Acknowledgement X+79 Issuer
Commence Printing of Red Herrings & Application Forms X+80 Issuer
Commence dispatch of forms X+81 Printer
Management Roadshows Begins X+82 Issuer
Submit RHP and Forms to SEBI X+85 SEBI
Publish Statutory Advertisement X+87 Issuer/Ad Agency
Sign Syndicate agreement and Escrow Agreement and submit X+87 Issuer
Syndicate agreement with SEBI
Book Opens X+90 Issuer

Management Roadshows End X+95 Issuer
CORPORATE FINANCE
Finalise CAN form X+96 Lawyer

Book Closes X+97 Issuer
Submission of all forms to the Banker by Syndicate X+98 Banker
Final bid handed over to the Registrar X+98 Registrar
Pricing and allocation to QIBs; Underwriting Agreement Signed X+98 Issuer
17.3
Update the Prospectus and file with SEBI X+99 Issuer

Submit three-day report to SEBI X+101 Issuer/Registrar
Obtain SEBI approval if there are significant developments included in X+100 SEBI
Prospectus
File Prospectus with RoC along with Underwriting agreement after X+101 Issuer
signing by Board of Directors
Obtain RoC Approval X+102/3 Issuer
Distribution of CAN to QIB X+102/3 MB/Registrar
Publish Statutory Advertisement X+101 Issuer/Ad Agency
Bankers to hand over all the Bid forms to Registrar X+104 Bankers/Registrar
Registrar to complete Date entry X+108 Registrar
Bankers to submit final certificate along with cheque return summary X+106 Bankers
Registrar to complete reconcilliation X+108 Registrar/Bankers
Registrar draws the Basis of Allocation X+110 MB / Issuer
Submit basis of allocation to Stock Exchange for approval X+110 Registrar/Issuer/Stock
Exchanges
Request BSE for arranging draw of lots by public representative X+110 Registrar/Stock
Exchange
Basis of Allocation approved by the Stock Exchanges X+111 Issuer
Pay-in for QIBs X+111 Issuer
Committee approval/ BoD approval for adopting the basis of X+111 Issuer
allotment
Allotment of Shares / Corporate Action X+111 Bankers
Designated date X+112 Issuer
Transfer of funds for refunds - instructions from LMs/Registrar X+112 Issuer
Transfer of funds from Escrow to Public Offer Account X+112 Registrar/Banker
Corporate action for credit of allottees account (equity shares) X+113 Registrar
Closing Date - receive all the required certifications and opinions X+113 Legal counsel/
Auditors/Issuer
Confirm compliance with Corporate Governance code X+113 Issuer
Retail and Non-Institutional CANs and refunds dispatch completed X+113 Registrar
Submit the allotment details to BSE and NSE and complete all X+113 Issuer/Registrar
documentation
Basis of Allotment advertisement X+113
Receive listing approval X+115 Stock Exchanges
Receive notice of trading X+115 Stock Exchanges
Submit post issue report X+120 Registrar

CORPORATE FINANCE
17.4
LESSON 18 - PROJECT EVALUATION
1. Give examples of category wise legal issues involved in main project.

Answer:
Category Example of Legal Issues
Financial • Legal feasibility of the selected type of public support or guarantees where needed.
aspects • Approval process for public support and authorities involved.
• Legal restrictions and limitations for charging private sector end-users if applicable.
• Legal ability to develop collateral businesses (advertising, retail, leisure, and so on).
Commercial • Possibility of granting step-in rights to lenders.
feasibility • Possibility of taking security over assets, current and future income streams, shares, and
insurance policies under the current law.
• Possibility of being named on insurance policies as lender and beneficiary.
Foreign • Restrictions on foreign direct investment (FDI) and currency exchange controls.
investment and • Limitations on repatriation of dividends and capital invested.
currency • Limitations on foreign staff.
exchange
Employment • Consequences for public sector employees if existing assets are to be taken over by the
issues private sector.
Environmental • Are specific environmental clearances required by law for the particular site or project type,
issues or are there exemptions that are applicable to the site/project?
Taxation and • Regime applicable to the project.
accountancy • Regime applicable to imports (when significant equipment is included in the project Capex).
• Provision of tax exemptions and potential specific tax benefits for FDI.
• Other questions to be considered in the financial model.
Land and • Type of rights that can be assigned to the private sector.
property assets • The country specific issues surrounding land availability (which can take the form of right of
issues way or clearance for Transportation projects and/or site ownership for facilities).
• Rules regarding ownership of assets.
• Responsibility for relocating people living in the right of way.
1. Financial Viability Analysis of a Construction Project- An Illustration

• Project is expected to cost Rs. 5000 crores. It is planned to be financed by equity and borrowing.
• The net cash flow during the construction period (2016-2019) is negative as there will not be any inflow but fixed
interest on loan is to be paid. It is positive during the operation period (2019-2039).
• It is agreed that the SPV will be started with an equity of Rs. 2000 crores to be provided by the sponsors and rest
would be borrowed form a leading financial institutions. This arrangement will make debt equity ratio to be 3:2.
Interest on loan is expected to be 12% p.a. to be paid semi-annually at the end of September and March. Loan is
taken on 1st April 2016.
• The loan is to be repaid in five equal installments starting from 16th year of the project (reckoned from the date
of operation). It is expected that the project would generate enough cash flows in the latter phase so as to repay
lender from 16th year of the project.
• Annual Operation and Maintenance cost is expected to be 2.5% p.a. of project cost. In addition to this, there will
a periodic maintenance at the end of every five years starting from 5th year of operation. The annual operation
and maintenance cost is expected to increase 2% annually in next 5 years and thereafter it will increase by 1%.
• After the completion of construction on 31st march, 2019, revenue is generated from toll from vehicles during the
operation period, which is fixed based on technical viability of the project. Toll revenue is expected to be 8% of
project cost in first year i.e. by the end of March, 2020. It is also supposed to increase 10% annually over previous
CORPORATE FINANCE
year up to 2028 and thereafter it will increase by 5%.

• Depreciation means allocation of project cost over the life of the project. It only reduces taxable income and
provides an annual tax advantage equal to the product of depreciation and the (marginal) tax rate, but it does not
lead to a cash outflow from the company. The most common method for depreciation is straight-line depreciation.
18.1
Under this method, annual depreciation equals a constant proportion of the initial investment. It is assumed that
the project cost of Rs. 5000 crores is to be written off over the 20 years which is the life of the project.
• Corporate Tax rate is 34%.
A project can be considered as financially viable, if the following conditions are satisfied:
• The Net Present Value (NPV) for the project should be positive. The discount rate for financial analysis may
sometimes include a premium for risk over the current commercial lending rate.
• The financial IRR should have a value greater than the discount rate.
• The cash flow (liquidity position) in each year of the concession period should be satisfactory. That means the cash
balance at the end of every year should be positive.
• Payback period/Breakdown year should be less than the concession period.
Questions for discussion

1. Comment on the financial viability of the project by taking into account the following measures assuming a
discount rate of 12%:
a. NPV
b. Payback period
c. Discounted payback period
d. Profitability Index
e. Project IRR
f. Equity IRR
2. If the maintenance cost goes up by 50% from 1st year and expected revenue is 6%, how would these affect the
financial viability of the project?
Cash Flow of the Project from 2017-2024
2017 2018 2019 2020 2021 2022 2023 2024
Toll Revenue 400.00 440.00 484.00 532.40 585.64
Less : Operation & 125.00 127.50 130.05 132.65 135.30
Maintenance
Interest on Loan 360.00 360.00 360.00 360.00 360.00 360.00 360.00 360.00
Depreciation 250.00 250.00 250.00 250.00 250.00
PBT - -360.00 -360.00 -335.00 -297.50 -256.05 -210.25 -159.66
360.00
Less : Tax 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
PAT - -360.00 -360.00 -335.00 -297.50 -256.05 -210.25 -159.66
360.00
Repayment of loan
Project Cash Flow - -360.00 -360.00 -85.00 -47.50 -6.05 39.75 90.34
360.00
Equity Cash Flow - -597.60 -597.60 -322.60 -285.10 -243.65 -197.85 -147.26
597.60
Cash Flow of the Project from 2025-2033
2025 2026 2027 2028 2029 2030 2031 2032 2033
Toll Revenue 644.20 708.62 779.49 857.44 900.31 945.32 992.59 1042.22 1094.33
Less : Operation & 138.01 139.39 140.78 142.19 143.61 145.05 146.50 147.97 149.45
Maintenance
Interest on Loan 360.00 360.00 360.00 360.00 360.00 360.00 360.00 360.00 360.00
Depreciation 250.00 250.00 250.00 250.00 250.00 250.00 250.00 250.00 250.00
PBT - -40.77 28.70 105.24 146.69 180.51 200.31 234.38 270.19
103.81
Less : Tax 0.00 0.00 9.76 35.78 49.88 64.69 80.27 96.65 113.86
CORPORATE FINANCE
PAT - -40.77 28.70 105.24 146.69 180.51 200.31 234.38 270.19

103.81
Repayment of loan
Project Cash Flow 146.19 209.23 278.70 355.24 396.69 430.51 450.31 484.38 520.19
Equity Cash Flow -91.41 -28.37 41.10 117.64 159.09 192.91 212.71 246.78 282.59
18.2
Cash Flow of the Project from 2034 – 2039

2034 2035 2036 2037 2038 2039
Toll Revenue 1149.05 1206.50 1266.82 1330.16 1396.67 1466.51
Less : Operation & 150.95 152.45 153.97 155.51 157.07 158.64
Maintenance
Interest on Loan 360.00 360.00 288.00 216.00 144.00 72.00
Depreciation 250.00 250.00 250.00 250.00 250.00 250.00
PBT 388.11 444.05 574.85 708.65 845.60 985.87
Less: Tax 131.96 150.98 195.45 240.94 287.51 335.19
PAT 307.84 347.40 460.99 576.69 694.63 790.42
Repayment of Loan 960.00 888.00 816.00 744.00 672.00
Project Cash Flow 557.84 597.40 710.99 826.69 944.63 1040.42
Equity Cash Flow 320.24 -600.20 -367.09 -131.87 105.59 320.90
Solution to Question No. 1

a. Net Present Value (NPV) is the difference between present value of Future Cash Flow (FCF) and the initial cash
outlay. For this, we are considering project cash flow calculated in the previous page.
Present value of FCF (INR 1,519.25)
Initial Outlay INR 5,000.00
NPV (INR 6,519.25)
Net present value is negative. Hence, it can be said that the project will not be profitable for the company. Under the
present forecasts, the project does not look financially viable.
b. Payback period is the time taken to recover initial investment. For this, we need to calculate cumulative cash flow
and identify the time where the initial investment gets recovered. The project will recover the initial investment
between 2038 and 2039.
Payback period 21.87 Years
If we consider concession period only, then it will break even in between 18 and 19 years.
c. Discounted payback period considers time value of money. If we consider time value of money, then this project
will never be able to recover its initial investment of Rs. 2500 crores.
d.
Profitability index = Present value of cash inflows/ initial outlay
Present value of cash flow 130.09
Initial outlay 5000
Profitability Index 2.60%
So, the above calculation shows that for every 100 rupees investment in the project, cost recovered is only Rs. 2.6.
e.
Project IRR 1.53% IRR is calculated using IRR function in excel
f. Equity IRR is negative. It cannot be calculated.

Based on the above estimates, we can that the project is not very viable financially.
Solution to Question No. 2

If maintenance cost goes up by 20% and projected revenue is 6% instead of 8%, then project will not be financially
viable at all.
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18.3

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INDEX

PART II – CORPORATE FINANCE

NO. LESSON TITLE PAGE NO.

7 SOURCES OF CORPORATE FUNDING 7.1 – 7.3

10 INFRASTRUCTURE INVESTMENT TRUSTS 10.1 – 10.7

11 RAISING OF FUNDS – PRIVATE FUNDING 11.1 – 11.1

12 RAISING OF FUNDS – NON FUND BASED 12.1 – 12.4

15 FOREIGN FUNDING – INSTITUTIONS 15.1 – 15.1

16 FOREIGN FUNDING – INSTRUMENTS, LAWS AND PROCEDURES 16.1 – 16.3

17 ROLE OF INTERMEDIARIES IN FUND RAISING 17.1 – 17.4

18 PROJECT EVALUATION 18.1 – 18.3

SHUBHAMM SUKHLECHA (CA, CS, LLM)

LESSON 7 - SOURCES OF CORPORATE FUNDING

3. Who can Issue Redeemable Preference Shares?

4. What is an Alternate Investment Fund (“AIF”)?

• ADR are US $ denominated and traded only in US.

7. Differentiate between-Normal Bonds vis-a-vis Masala Bonds.

respect of the preference shares.

9. What is Loan against Properties?

10. What are the Parties involved in Securitisation?

• The obligator (i.e. original borrower of the loan)

SHUBHAMM SUKHLECHA (CA, CS, LLM)

LESSON 8 - RAISING OF FUNDS FROM EQUITY AND PROCEDURAL

1. Write a short note on Classification of Securities Market.

PRIMARY MARKET SECONDARY MARKET

Particulars No. of Specified Securities

5. What are the Contents of the fund-raising document?

7. What are the disclosures required to do to Shareholders as per regulations?

LESSON 9 - REAL ESTATE INVESTMENT TRUSTS

1. Which are the Registered REITs in India?

2. How does an REIT work ?

3. Define Independent Director.

4. What is the meaning of Associate.

5. What is the meaning of “Change in control”

(i) in case of a body corporate, -

extent of not less than 50% of voting rights or interest.

6. Write a short note on Offer Document and Advertisements of REIT.

7. What is the power of SEBI to relax strict enforcement of the regulations?

SHUBHAMM SUKHLECHA (CA, CS, LLM)

LESSON 10 - INFRASTRUCTURE INVESTMENT TRUSTS

1. Which InvITs are registered with SEBI in India?

1. IRB InvIT Fund

2. How units of an InvIT are differ with Traditional Investments ?

InvIT Units Direct Investment in Infrastructure Company Equity

3. Distinguish between REITs and InvITs.

4. What is the difference between Sponsor of InvIT and Promoter of a Company.

➢ Filing of offer document

prescribed form has to be filed with the draft offer document.

comment within 21 days of filing.

➢ Allocation in public issue

Who is an Anchor Investor?

• A strategic investor may participate in an offer as an anchor investor.

➢ Opening of an issue and subscription period

➢ Price and Price Band

• Differential pricing shall not be offered to any investor.

➢ Public communications, publicity materials, advertisements and research materials

i. Equity shares of a company incorporated outside India;

v. Index based derivatives;