SEBI : Submission of B/S & details of utilisation of funds, etc.

Securities and Exchange Board of India (SEBI)

SR.EXECUTIVE DIRECTOR

To,

The Presidents/Executive Directors
of all the Stock Exchanges.

Dear Sir,

Submission of B/S & details of utilisation of funds, etc.

It has been noticed that companies make certain projections and statements of profitability in their offer documents at the time of issue of capital but subsequently the investor is not informed about the actual performance vis-à-vis the projections. It has also been found that the companies provide only an abridged balance sheet and profit and loss account to the shareholders and thereby the availability of full information in the market about the company’s performance is restricted. These questions were taken up by the BSE and they have proposed that the listing agreement be suitably amended to correct these deficiencies. It is also considered desirable that the acknowledgement card issued by SEBI should be made part of the requirement for the listing.

It is therefore considered necessary to amend the listing agreement by inserting a new clause being Clause 43 and amending clauses 32 and 24 as indicated hereunder:-

1) A new clause 43 be added after the existing clause 42 as under :

Clause 43 The company agrees that it will furnish on a yearly basis a statement to the Exchange showing the variations between projected utilisation of funds and/or projected profitability statement made by it in its prospectus or letter of offer and the actual utilisation of funds and/or actual profitability. Such statements will be required to be given for each of the years for which projections are provided in its prospectus/letter of offer and should be published in newspapers simultaneously with the unaudited/audited financial results as required under clause 41. If there are material variations between the actual and projections, the company shall furnish an explanation therefor in the advertisement. This comparison must also be provided in the Director’s Report.

2) Clause 32 be substituted by the following:

Clause 32 The company will supply a copy of the complete and full Balance Sheet, Profit and Loss Account and the Director’s Report, to each shareholder and upon application to any member of the Exchange.

3) (a) The following sub-clauses may be inserted as sub-clauses (b) to (e) after the existing clause 24 of the Listing Agreement, which shall be renumbered as sub-clause (a) of clause 24:

(b) The company agrees to make true, fair and adequate disclosure in the offer documents/draft prospectus/letter of offer in respect of any new or further issue of shares/securities.

(c) The company agrees that it shall not issue any prospectus/offer document/letter of offer for public subscription of any securities unless the said prospectus/offer document/letter of offer has been vetted by SEBI and Acknowledgement Card obtained from SEBI through the Lead Manager.

(d) The company further agrees that the company shall submit to the Exchange the following documents to enable it to admit/list the said securities for dealing in Exchange such as –

i) A copy of the Acknowledgement Card or letter indicating the observation on draft prospectus/letter of offer/offer documents by SEBI:

and

ii) A certificate from a Merchant Banker acting as a Lead manager to the issue reporting positive compliance by the company of the guidelines on disclosure and investor protection issued by SEBI.

(e) In the event of non-submission of the documents as mentioned in sub-clause (d) above by the company to the Exchange or withdrawal of the Acknowledgement Card by SEBI at any time before grant of permission for listing/admission to dealing of the securities, the securities shall not be eligible for listing/dealing, as the case may be and the company shall be liable to refund the subscription monies to the respective investors immediately.

As regards, issue of securities by companies not listed on the exchange, necessary changes be made in the LETTER OF APPLICATION (the application which a company makes to the Stock Exchange for initial listing) as indicated in the draft letter of application (enclosed herewith).

It is requested that these amendments may be put up before your Governing Board for approving the changes suggested therein and we may be intimated of the resolution passed by your Board.

Yours faithfully,
sd/-

C.B.BHAVE

Encl: As stated above.

Annexure

LETTER OF APPLICATION

(By Companies not Listed on the Exchange)

To,

The Secretary,
THE STOCK EXCHANGE,

Dear Sir,

In conformity with the listing requirements of the Stock Exchange, we hereby apply for admission of the following securities of the Company to dealings on the Exchange :

(1)

(3)

** The securities mentioned at ( ) above are proposed to be issued by Prospectus/Offer for Sale/Circular after vetting of the same by SEBI ( conversion, exchange, rights, open offer, capitalisation of reserves) / Placing, full particulars of which are given in the statement sent herewith ( together with the reasons for the procedure proposed when a Placing is intended).

** It is intended to make an Offer for Sale/a Placing of the securities mentioned at ( ) above which have been already issued. We enclose a statement giving full particulars of when, how and to whom the securities were issued and full details of the proposed Offer for Sale/Placing (together with the reasons for the procedure proposed when a Placing is intended).

We send herewith the Listing Application and undertake to send ***

Agreement Forms and the Distribution Schedules, duly completed. We also forward the documents (or drafts thereof) as per list attached and undertake to furnish such additional information and documents as may be required.

We further undertake to submit to the Exchange a copy of the Acknowledgement Card or letter indicating the observation on draft prospectus/letter of offer/offer documents by SEBI; and a certificate from a Merchant Banker acting as a lead manager to the issue reporting positive compliance by our company of the requirements on disclosure and investor protection issued by SEBI.

We understand that in the event of our failure to submit the above documents or withdrawal of Acknowledgement Card by SEBI, we shall forfeit the right of listing of the securities and shall be liable to refund the subscription money to the investors immediately.

Yours faithfully,

(Signature of Managing Director)

* Please enumerate separately shares which are not identical in all respects. Share are identical in all respects only if –

i) they are of the same nominal value and the same amount per share has been called up;

ii) they are entitled to dividend at the same rate and for the same period, so that at the next ensuing distribution the dividend payable on each share will amount to exactly the same sum net and gross; and

iii) they carry the same rights in all other respects.

** Applicable only when securities for which application for admission to dealings is made are proposed to be issued or having already been issued it is intended to make a placing or an offer for sale. Please strike out where not applicable.

*** Applicable to new companies only. Please strike out where not applicable.