Neelam Bhardwaj

Deputy General Manager

Corporation Finance Department

Division of Issues and Listing

Phone: +91 22 2284 2826 (D), +91 22 2285 0451-56, 2288 0962-70 (Extn: 367)

Fax: +91 22 2204 5633. Email: neelamb@sebi.gov.in

SEBI/CFD/DIL/DIP/19/2006/31/3

March 31, 2006

To All Registered Merchant Bankers / Stock Exchanges

Dear Sirs,

Sub.: Amendments to SEBI (Disclosure and Investor Protection) {DIP} Guidelines, 2000.

1. In order to make Indian primary market more efficient and transparent, it has been decided to adopt the following policies:

(a) Rationalization of disclosure requirements for listed companies

A listed company is required to make disclosures under the continuous disclosure requirements of listing agreement and as such, information pertaining to such a company is already available in public domain. However, presently, all companies, irrespective of whether they are listed or are approaching the markets for the first time with an initial public offering, are required to make the same disclosures in offer documents / prospectuses. In view of this, it has now been decided to rationalize the disclosure requirements for rights issues and public issues by listed companies and to make the benefit of such rationalization available to those listed companies which are regular in filing periodic returns with Stock Exchanges and have a comprehensive investor grievance mechanism in place to redress investor’s complaints satisfactorily.

(b) Abridged letter of offer

Presently, in public issues, applicants receive abridged prospectus (and not the entire prospectus) along with the application form. However, in case of rights issues, an issuer company is required to dispatch the letter of offer to all the shareholders, along with the application form. In order to bring uniformity in the practice of making available abridged offer documents, it has now been decided to permit an issuer company making a rights issue to dispatch an abridged letter of offer which shall contain disclosures as required to be given in the case of an abridged prospectus. The issuer company shall provide the detailed letter of offer to any shareholder upon request.

(c) Disclosure of issue price

Presently, a listed company making a rights issue or a public issue is required to disclose the issue price or the price band in the draft offer document filed with SEBI, except in the case of a public issue through the Book Building route. It has now been decided to henceforth allow a listed company to fix and disclose the issue price in case of a rights issue any time prior to fixing of the record date, in consultation with the Designated Stock Exchange and in case of a public issue through fixed price route, at any time prior to filing of the prospectus with the Registrar of Companies (ROC). The prospectus filed with ROC shall have one issue price.

(d) Further issue of shares

Presently, a company is prohibited to make further issue of capital after filing a draft offer document with SEBI till the listing of the shares referred to in the offer document. It has now been decided to permit a company to issue further shares, provided full disclosures in regard to the total capital to be raised from such further issues is given in the draft offer document.

(e) Lock-in Provisions

It is clarified that lock-in period of one year in terms of clause 4.14.1 of SEBI (DIP) Guidelines, 2000 shall be reckoned from the date of allotment of shares issued in a public issue.

2. The SEBI (DIP) Guidelines, 2000 are being amended to give effect to the above policies and a copy of the amendments is enclosed at Annexure .

3. Applicability

(a) The amendments made vide this circular shall come into force with immediate effect.

(b) The amendments made vide this circular shall be applicable to all offer documents, including those already filed with SEBI in respect of which observations in terms of clause 2.1.1 or 2.1.2 of SEBI (DIP) Guidelines, 2000 are yet to be issued.

4. This circular is being issued in exercise of the powers conferred under sub-section (1) of Section 11 of the Securities and Exchange Board of India Act, 1992.

5. This circular, along with the annexure, is available on SEBI website at www.sebi.gov.in. The entire text of SEBI (DIP) Guidelines, 2000, including the amendments issued vide this circular, is also available on SEBI website under the category “Issues and Listing”.

Yours faithfully,

Neelam Bhardwaj

Encl.: a/a

ANNEXURE I

AMENDMENTS TO SEBI (DISCLOSURE AND INVESTOR PROTECTION) GUIDELINES, 2000

CHAPTER I

PRELIMINARY

1. In clause 1.2.1, sub-clause (i) pertaining to “Abridged Prospectus” shall be renumbered as sub-clause (ib) and the following shall be inserted as sub-clause (ia):

“ia) “Abridged Letter of Offer” in relation to a rights issue means the abridged form of a letter of offer which satisfies the minimum requirements laid down in Section IV of Chapter VI of the Guidelines.”

CHAPTER III

PRICING BY COMPANIES ISSUING SECURITIES

2. Clause 3.5.4 shall be renumbered as clause 3.5.6 and clauses 3.5.4 and 3.5.5 shall be inserted after clause 3.5.3 as under:

“3.5.4  In case of public issue by listed issuer company, issue price or price band may not be disclosed in the draft prospectus filed with the Board.

3.5.5 In case of a rights issue, issue price or price band may not be disclosed in the draft letter of offer filed with the Board. The issue price may be determined anytime before fixation of the record date, in consultation with the Designated Stock Exchange.”

CHAPTER IV

PROMOTERS’ CONTRIBUTION AND LOCK-IN REQUIREMENTS

3. Clause 4.14.1 shall be substituted by the following:

“4.14.1 The entire pre-issue capital, other than that locked-in as minimum promoters’ contribution, shall be locked-in for a period of one year from the date of allotment.

Provided that where shares held by promoter(s) are lent to the SA under clause 8A.7, they shall be exempted from the lock in requirements specified above for the period starting from the date of such lending and ending on the date on which they are returned to the same lender(s) under clause 8A.13 or under clause 8A.15, as the case may be.”

CHAPTER V

PRE-ISSUE OBLIGATIONS

4. In clause 5.3.3.2, sub-clause (i) shall be renumbered as sub-clause (ib) and the following shall be inserted as sub-clause (ia):

“(ia)  where provisos to clause 6.3 or clause 6.39 are applicable, certify that the issuer company is complying with conditions (a) and (b) laid down in 1st proviso to clause 6.3 or with conditions (a) and (b) laid down in 1st proviso to clause 6.39, as the case may be.”

5. The following words shall be inserted at the end of clause 5.6.2 (ii):

“Further, where the issuer company is complying with provisos to clause 6.3 or clause 6.39, as the case may be, the offer document of the immediately preceding public or rights issue shall also be displayed on the websites in a similar manner.”

6. In Clause 5.7.2, the words “letters of offer” shall be substituted for the words “abridged letters of offer”.

7.  The following proviso shall be inserted in clause 5.7.2:

“Provided that where a specific request for letter of offer is received from any shareholder, the Lead Merchant Banker shall ensure that the letter of offer is made available to such shareholder.”

8.  The sub-clause (iv) of clause 5.13.1, shall be substituted by the following:

“The Abridged prospectus shall be printed in a font size as specified in clause 6.16.1”.

CHAPTER VI

CONTENTS OF THE OFFER DOCUMENT

SECTION I – CONTENTS OF THE PROSPECTUS

7. In clause 6.3, the following provisos shall be inserted:

“Provided that in case of public issue by listed company, information in terms of clauses 6.8.3.2 (a) and (j) and clause 6.9.5.8 and information in terms of clause 6.10.3.1 in respect of entities not covered under section 370 (1)(B) of the Companies Act 1956 may not be disclosed in the prospectus, if the following conditions are fulfilled:

(a) The issuer company has been filing periodic statements in regard to financial results and shareholding pattern with the Designated Stock Exchange and Registrar of Companies for the last three years and such statements are available on websites of the Designated Stock Exchange/ on a common e- filing platform.

(b) The issuer company has in place an investor grievance handling mechanism which includes meeting of ‘Shareholders’ / Investors’ Grievance Committee’ at frequent intervals, appropriate delegation of power by the board of directors of the issuer company with regard to share transfer and clearly laid out systems and procedures for timely and satisfactory redressal of investor grievances.

(c) The Lead Merchant Banker has certified compliance of (a) and (b) above.

Provided further that where the issuer company is complying with the aforesaid proviso, it shall –

(a furnish to the Board the following undertaking along with the draft prospectus, which shall also be incorporated in the prospectus:

“We confirm that other than the disclosures made in the instant prospectus, nothing material has changed in respect of disclosures made by us at the time of our previous issue made on …………. , “

(b) make a copy of the offer document of the immediately preceding public or rights issue, available to the public as specified under clause 5.6.2(ii) and also as a document for public inspection.”

8. Under clause 6.12 pertaining to “Other Regulatory and Statutory Disclosures”, clause 6.12.3A shall be inserted after clause 6.12.3 as under:

“6.12.3A Compliance with provisos to clause 6.3 or 6.39, as the case may be, if applicable.”

SECTION II – CONTENTS OF ABRIDGED PROSPECTUS

9.  In clause 6.16, the word and figure ““Part I” shall be substituted with the letters and figure “Section I”.

SECTION III – CONTENTS OF LETTER OF OFFER

10.  Clause 6.39 shall be substituted by the following:

“The letter of offer shall fulfill the requirements and shall contain the disclosures as specified under Section of this Chapter.

Provided that information in terms of clauses 6.8.2.2, 6.8.2.3, sub-clauses (a), (b), (c), (d) and (e) of clause 6.8.3.2, clauses 6.8.4.12, 6.9.2.1, 6.9.2.2, 6.9.2.3, 6.9.2.4, 6.9.4 6.9.6 ,6.10.3, 6.12.16, 6.12.17, 6.12.18, 6.12.20 and 6.12.21 may not be disclosed in the letter of offer, if the following conditions are fulfilled:

(a) The issuer company has been filing periodic statements in regard to financial results and shareholding pattern with the Designated Stock Exchange and Registrar of Companies for the last three years and such statements are available on websites of the Designated Stock Exchange/ on a common e- filing platform.

(b) The issuer company has in place an investor grievance handling mechanism which includes meeting of ‘Shareholders’ / Investors’ Grievance Committee’ at frequent intervals, appropriate delegation of power by the board of directors of the issuer company with regard to share transfer and clearly laid out systems and procedures for timely and satisfactory redressal of investor grievances.

(c)  The Lead Merchant Banker has certified compliance of (a) and (b) above.

Provided further that where the issuer company is complying with the aforesaid proviso, it shall –

(a) furnish to the Board the following undertaking along with the draft letter of offer, which shall also be incorporated in the letter of offer:

“We confirm that other than the disclosures made in the instant letter of offer, nothing material has changed in respect of disclosures made by us at the time of our previous issue made on …………. , “

(b) make a copy of the offer document of the immediately preceding public or rights issue, available to the public as specified under clause 5.6.2(ii) and also as a document for public inspection.

Explanation:

For the purpose of rights issue –

(a) wherever the word “RoC” appears, the same shall be deemed to refer to “Designated Stock Exchange.

(b) wherever the word “ prospectus” appears, the same shall be deemed to refer to “letter of offer”.”

11. Section IV shall be inserted after clause 6.54 of Chapter VI as under:

“SECTION IV – CONTENTS OF THE ABRIDGED LETTER OF OFFER

6.55 The abridged letter of offer shall contain disclosures as specified in Section II of this Chapter.

Provided that where the conditions laid down in 1st proviso to clause 6.39 are satisfied, clauses 6.18.2, 6.19.3, 6.21, 6.22, 6.30 and 6.31 specified under Section II of this Chapter shall not apply to the abridged letter of offer.

6.56 The order in which items shall appear in the abridged letter of offer shall correspond, wherever applicable, to the order in which items appear in the letter of offer.

6.57 The abridged letter of offer shall also include the following disclosures:

(a) Provisions pertaining to applications referred to in clause 5.11;

(b) Rights entitlement ratio;

(c) Fractional entitlements;

(d) Renunciation;

(e) Application for Additional equity shares;

(f) Intention of promoters to subscribe to their rights entitlement;

(g) Statement that a copy of the offer document of the immediately preceding public or rights issue is made available to the public as specified under clause 5.6.2(ii) and also as a document for public inspection.”

CHAPTER VIII

OTHER ISSUE REQUIREMENTS

12.  In clause 8.7.1, the following shall be inserted at the end of the clause:

“unless full disclosures regarding the total capital to be raised from such further issues are made in the draft offer

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