SEBI : Amendments to SEBI (Disclosure and Investor Protection) IDIP) Guidelines, 2000

SEBI/CFD/DIL/DIP/15 / 2005/29/3
March 29, 2005

To All Registered Merchant Bankers/Stock exchanges

Dear Sirs,

Sub.: Amendments to the SEBI (Disclosure and Investor Protection) IDIP) Guidelines, 2000

1.0 SEBI, under the provision of Section 11(1) of SEBI Act, is hereby issuing the amendments to SEBI (DIP) Guidelines, 2000; (hereinafter referred as “the guidelines”) for modifying the provisions mainly pertaining to the book building process.

2.0 The amendments are detailed in the Annexure and are categorized and summarized as follows:

2.1 Enhancing the allocation category for retail individual investors

At present, in a book built issue allocation to Retail Individual Investors (RIIs), Non Institutional Investors (NIIs) and Qualified Institutional Buyers (QIBs) is in the ratio of 25: 25: 50 respectively. SEBI has decided to increase the allocation to RIIs from the existing 25% to 35% and correspondingly reduce the allocation to NIIs from the existing 25% to 15%.

Further, in case the book built issues are made pursuant to the requirement of mandatory allocation of 60% to QIBs in terms of Rule 19(2)(b) of SCRR , the respective figures shall be 30% for RIIs and 10% for NIIs. This is a transitory provision pending harmonization of the QIB allocation in terms of the aforesaid Rule with that specified in the guidelines.

2.2 Redefining “Retail Individual Investors” (RII)

The RII, at present, is defined in value terms as one who can apply for shares upto a maximum amount of Rs.50,000/-. SEBI has decided to redefine the RII as one who can apply up to Rs. 1,00,000/-.

2.3 Reducing the bidding period.

The existing guidelines provide a maximum bidding period of 10 days extendable by three more days, if there is a revision in price band. SEBI has decided to reduce the bidding period from current 5 – 10 days (including holidays) to 3-7 working days.

2.4 Timing of disclosure of Price Band! Floor Price in case of listed companies.

The existing guidelines require all issuers (whether listed or unlisted), making a public issue through book building process to disclose the price band/ floor price in the Red Herring Prospectus (RHP)/application form. SEBI has decided to give an option to listed issuers to either (a) disclose price band in RHP /application form/abridged prospectus (current practice) or (b) to disclose the price band /floor price atleast one day before bid opening.

2.5 Data reporting at website of stock exchanges.

In order to ensure dissemination of relevant information in public domain, it is proposed to amend the guidelines inter alia to (i) improve the contents of and to ensure uniformity in data display on the websites of the concerned stock exchanges and (ii) to ensure availability of data for a further period of 3 days after the closure of the bids/issue.

3.0 Applicability

3.1 All the amendments made vide this circular, except the one at sr.no 2.5 above, shall be applicable to those public issues whose draft offer documents are filed with SEBI on or after April 4, 2005.

3.2 The concerned stock exchanges are requested to put adequate systems in place to ensure compliance with the amendments at sr.no.2.5 above. The same may be done at the earliest and in any case not later than 90 days from the date of issuance of this circular.

4.0  This circular along with the annexure is available in SEBI website at www.sebi.gov.in. Full text of SEBI (DIP) guidelines 2000 including the amendments issued vide this circular is also available in SEBI’s web site under

Issues and Listing.

Yours faithfully,

Neelam Bhardwaj