Securities and Exchange Board of India (SEBI)
DIVISION CHIEF
SECONDARY MARKET DEPARTMENT
May 15, 1996
To,
The Presidents/EDs/MDs of all
Stock Exchanges
Dear Sir,
In the Board meeting held on April 16, 1996 the Securities and Exchange Board of India decided that it is necessary to specify norms for minimum number of shareholders as well as to make it incumbent for the companies to pay interest to the applicants in public issues in a shorter time frame. You are, therefore, requested to carry out the following amendments to the Listing Agreement, in order to give effect to the above decision.
1. Allotment within thirty days :
The body corporates will be required to complete as far as possible the allotments of securities in pursuance to the public issue within 30 days of the closure of the issue. Thereafter, body corporates will be required to pay interest @ 15% if refund of application money and allotment is not made within the aforesaid period. The listing agreement may be amended on the following lines :
“The company agrees that –
(a) as far as possible allotment of securities offered to the public shall be made within 30 days of the closure of the public issue.
(b) it shall pay interest @ 15% per annum if the allotment has not been made and or the refund orders have not been despatched to the investors within 30 days from the date of the closure of the issue”.
2. Minimum number of shareholders :
It will be necessary for a body corporate making a public issue to have at least 5 public shareholders for every Rs.1 lakh of net capital offer made to the public. The requirement in the case of offer for sale would be 10 shareholders for every Rs 1 lakh of equity offered. The requirement of minimum holder of shareholders will not be applicable for an offer for sale made on the OTCEI. In the case of existing companies listed on the stock exchanges which do not satisfy this norms, a time period of six months may be given to the companies for attaining the norms. The above requirement will be a continuous listing requirement.
The listing agreement may be amended on the following lines :
” The company agrees that –
there will be at least 5 public shareholders for every Rs 1 lakh on net capital offer made to the public. In case of offer for sale there will be at least 10 public shareholders for every Rs 1 lakh of equity offered to the public.
Explanation : for the purpose of this clause a public shareholder shall mean a person who is neither a promoter nor does he hold more than 1% equity capital of the company”.
You are advised to keep us informed about the steps taken to implement the above guidelines.
Yours faithfully,
sd/-
R.C. GUPTA
cc : Shri P Kar, ED ]
Ms D N Raval, ED ] For kind information
Shri V Ranjan, ED ] please.
Shri A Kackaer, ED ]
Shri K Sivaraman, ED ]
Shri S T Gerela, DC ]
Shri A Alam, DC ]
