Securities and Exchange Broad of India
Neelam Bhardwaj
Deputy General Manager
Division of Issues and Listing
Phone: +91 22 2285 0451-56, 2288 0962-70 (Extn: 367)
Fax: +91 22 2204 5633. Email: neelamb@sebi.gov.in
SEBI/CFD/DIL/DIP/16/2005/19/9
September 19, 2005
To All Registered Merchant Bankers/Stock exchanges
Dear Sirs,
Sub.: Amendments to the SEBI (Disclosure and Investor Protection) {DIP} Guidelines, 2000
1.0 This circular is being issued under Section 11(1) of SEBI Act amending SEBI (DIP) Guidelines, 2000; (hereinafter referred as “the guidelines”), modifying the provisions pertaining to the book building process.
2.0 The amendments are detailed in the Annexure and are summarized as under:
2.1 Provision for specific allocation for mutual funds within the QIB category :
2.1.1 Presently, mutual funds registered with SEBI in terms of SEBI (Mutual Funds) Regulations, are not given any specific allocation within the QIB category in book-built issues. It has now been decided to provide 5% of the 50% or 60% {in case of issues in terms of Rule 19(2)(b) of SCRR} of net offer to public available for allocation to QIBs, for mutual funds.
2.1.2 Effectively, out of the portion available for allocation to QIBs, 5% will be available for allocation to mutual funds. All eligible bids by mutual funds will be considered for allocation in the afore mentioned 5% as well as in the balance available for QIBs. An illustration explaining the method of allocation to mutual funds has also been incorporated in the guidelines. In the event of inadequate response from the mutual funds, the shares may be made available to QIBs other than mutual funds.
2.2 Proportionate allotment to QIBs
2.2.1 Presently, the allotment to QIBs is decided by Issuer Company in consultation with Book Running Lead Managers (BRLMs). It has been decided to extend the existing provisions of proportionate allotment as applicable for Retail individual investors (RIIs) and Non Institutional Investors (NIIs) to the QIB category. It has also been decided that where BRLMs have reasons not to accept a QIB bid, the same should be done at the time of receipt of the bids and the reasons therefor should be disclosed to the bidders. Necessary disclosures in this regard shall also be made in the offer document.
2.3 Margin requirements for QIBs
2.3.1 The guidelines have not mandated any specific margin for any of the categories eligible for applying in public issues, whether RIIs, NIIs or QIBs. However, it has been observed that in practice, in all the book built issues, there has invariably been 100% margin for RIIs and NIIs, but no margin for QIBs. It has now been decided to bring in margin of 10% in QIB category.
3.0 Applicability
3.1 The amendments made vide this circular shall be applicable to the public issues (through book building mechanism), draft offer documents in respect of which are filed with SEBI on or after the date 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
Encl.: a/a
