(1) An issuer making a public issue of specified securities may provide green shoe option for stabilising the post listing price of its specified securities, subject to the following:
(a) the issuer has been authorized, by a resolution passed in the general meeting of shareholders approving the public issue, to allot specified securities to the stabilising agent, if required, on the expiry of the stabilisation period;
(b) the issuer has appointed a merchant banker or book runner, as the case may be, from amongst the merchant bankers appointed by the issuer as a stabilising agent, who shall be responsible for the price stabilisation process;
(c) prior to filing the draft offer document with the Board, the issuer and the stabilising agent have entered into an agreement, stating all the terms and conditions relating to the green shoe option including fees charged and expenses to be incurred by the stabilising agent for discharging his responsibilities;
(d) prior to filing the offer document with the Board, the stabilising agent has entered into an agreement with the promoters or pre-issue shareholders or both for borrowing specified securities from them in accordance with clause (g) of this sub-regulation, specifying therein the maximum number of specified securities that may be borrowed for the purpose of allotment or allocation of specified securities in excess of the issue size (hereinafter referred to as the “over- allotment”), which shall not be in excess of fifteen per cent. of the issue size;
(e) subject to clause (d), the lead merchant banker or lead book runner, in consultation with the stabilising agent, shall determine the amount of specified securities to be over-allotted in the public issue;
(f) the draft and final offer documents shall contain all material disclosures about the green shoe option specified in this regard in ;
(g) in case of an initial public offer pre-issue shareholders and promoters and in case of a further public offer pre-issue shareholders holding more than five per cent. specified securities and promoters, may lend specified securities to the extent of the proposed over-allotment;
(h) the specified securities borrowed shall be in dematerialised form and allocation of these securities shall be made pro-rata to all successful applicants.
(2) For the purpose of stabilisation of post-listing price of the specified securities, the stabilising agent shall determine the relevant aspects including the timing of buying such securities, quantity to be bought and the price at which such securities are to be bought from the market.
(3) The stabilisation process shall be available for a period not exceeding thirty days from the date on which trading permission is given by the recognised stock exchanges in respect of the specified securities allotted in the public issue.
(4) The stabilising agent shall open a special account, distinct from the issue account, with a bank for crediting the monies received from the applicants against the over-allotment and a special account with a depository participant for crediting specified securities to be bought from the market during the stabilisation period out of the monies credited in the special bank account.
(5) The specified securities bought from the market and credited in the special account with the depository participant shall be returned to the promoters or pre-issue shareholders immediately, in any case not later than two working days after the end of the stabilization period.
(6) On expiry of the stabilisation period, if the stabilising agent has not been able to buy specified securities from the market to the extent of such securities over-allotted, the issuer shall allot specified securities at issue price in dematerialised form to the extent of the shortfall to the special account with the depository participant, within five days of the closure of the stabilisation period and such specified securities shall be returned to the promoters or pre-issue shareholders by the stabilising agent in lieu of the specified securities borrowed from them and the account with the depository participant shall be
closed thereafter.
(7) The issuer shall make a listing application in respect of the further specified securities allotted under sub-regulation (6), to all the recognised stock exchanges where the specified securities allotted in the public issue are listed and the provisions of Chapter VII shall not be applicable to such allotment.
(8) The stabilising agent shall remit the monies with respect to the specified securities allotted under sub-regulation (6) to the issuer from the special bank account.
(9) Any monies left in the special bank account after remittance of monies to the issuer under subregulation(8) and deduction of expenses incurred by the stabilising agent for the stabilisation process shall be transferred to the Investor Protection and Education Fund established by the Board and the special bank account shall be closed soon thereafter.
(10) The stabilising agent shall submit a report to the stock exchange on a daily basis during the stabilisation period and a final report to the Board in the format specified in .
(11) The stabilising agent shall maintain a register for a period of at least three years from the date of the end of the stabilisation period and such register shall contain the following particulars:
(a) The names of the promoters or pre-issue shareholders from whom the specified securities were borrowed and the number of specified securities borrowed from each of them;
(b) The price, date and time in respect of each transaction effected in the course of the
stabilisation process; and
(c) The details of allotment made by the issuer on expiry of the stabilisation process.
ICDR – SCHEDULE VIII
[See regulations 14(3), 37(a), 44, 45(1)(f), 57(2)(a), 57(2)(b), 58(1) and 58(2)]
DISCLOSURES IN OFFER DOCUMENT, ABRIDGED PROSPECTUS AND ABRIDGED
LETTER OF OFFER
(i) The words “group companies”, wherever they occur, shall include such companies as covered under the applicable accounting standards and also other companies as considered material by the board of the issuer.(ii) The policy on materiality shall be disclosed in the offer document.
The words “group companies”, wherever they occur, shall mean companies, firms, ventures, etc. promoted by the promoters of the issuer, irrespective of whether such entities are covered under section 370(1)(B) of the Companies Act, 1956 or not.
PART A
DISCLOSURES IN RED HERRING PROSPECTUS, SHELF PROSPECTUS AND
PROSPECTUS
(1) Instructions:
(a) Only relevant and updated information and statistics shall be disclosed in the offer
document. Further, the source and basis of all statements or claims made shall be
disclosed. Terms such as ―market leader, ―leading player, etc. shall not be used
unless they can be substantiated by proper source of information which shall be
disclosed.
(b) All blank spaces in the draft offer document shall be filled up with appropriate data
before registering the offer document with the Registrar of Companies or filing the
same with the recognised stock exchanges.
(c) Simple English for easy understanding of the contents of the offer document may be
used. The technical terms used in explaining the business of the issuer may be clarified
using simple terms to ensure better understanding by investors.
(d) Wherever it is mentioned in the offer document that details are given elsewhere in the
document, the same shall be adequately cross-referenced by indicating the page and
paragraph numbers.
(e) The offer document should not make any forward looking statements that cannot be
substantiated.
(f) Consistency may be ensured in the style of disclosures. If first person is used, the same
may be used through out. Sentences that contain a combination of first and third
persons may be avoided.
(g) The issuer shall ensure that all material matters informed or reports circulated prior to
the issue or thereafter by the issuer or any person on its behalf or attributed or
attributable to the issuer having a material bearing in taking an informed decision shall
also be covered in the offer document, except to the extent specifically disallowed
under the regulations.
The issuer shall ensure that in the document of the Red Herring Prospectus, the
document shall only be referred to as ‘Red Herring Prospectus‘ or ‘RHP‘.
(2) An issuer making a public issue of specified securities shall make the following disclosures in the offer document. However, an issuer making a fast track issue of specified securities may not make the disclosures specified in Part B of this Schedule in the offer document. Further, an issuer making a further public offer of specified securities may not make the disclosures specified in Part C of this Schedule, in the offer document, if it satisfies the conditions specified in para 2 of that Part:
(I) Cover Pages: The cover page shall be of adequate thickness (preferably minimum hundred gcm. quality).
(A) Front Cover Pages:
(1) The front outside and inside cover pages of the offer document shall be white and
no patterns or pictures shall be printed on these pages.
(2) The front outside cover page of the offer document shall contain only the
following issue details:
(a) The type of offer document (“Red Herring Prospectus” / “Shelf Prospectus”
/ “Prospectus”).
The following clause shall be incorporated in a prominent manner, below the title of the offer document:
“Please read Section 60B of the Companies Act, 1956.”
(b) The name of the issuer, date and place of its incorporation, its logo, address
of its registered office, its telephone number, fax number, contact person,
website address, e-mail address and where there has been any change in the
address of the registered office or the name of the issuer, reference to the
page of the offer document where details thereof are given.
(c) The names of the promoters of the issuer.
(d) The nature, number, price and amount of specified securities offered and
issue size, as may be applicable.
(e) The aggregate amount proposed to be raised through all the stages of offers
of specified securities made through the shelf prospectus.
(f) The following clause on ‘Risks in relation to the First Issue‘ (wherever
applicable) shall be incorporated in a box format in case of an initial public
offer:
“This being the first issue of the issuer, there has been no formal market for
the securities of the issuer. The face value of the equity shares is (—–) and
the issue price / floor price / price band is ‘X-times‘ of the face value. The
issue price / floor price / price band (has been determined and justified by
the lead merchant banker and the issuer as stated under the paragraph on
‘Basis for Issue Price’) should not be taken to be indicative of the market
price of the specified securities after the specified securities are listed. No
assurance can be given regarding an active or sustained trading in the equity
shares of the issuer nor regarding the price at which the equity shares will
be traded after listing.”
(g) The following clause on General Risk’ shall be incorporated in a box
format:
“Investment in equity and equity related securities involve a degree of risk
and investors should not invest any funds in this offer unless they can afford
to take the risk of losing their investment. Investors are advised to read the
risk factors carefully before taking an investment decision in this offering.
For taking an investment decision, investors must rely on their own
examination of the issuer and the offer including the risks involved. The
securities have not been recommended or approved by the Securities and
Exchange Board of India (SEBI) nor does SEBI guarantee the accuracy or
adequacy of this document. Specific attention of investors is invited to the
statement of ‘Risk factors‘ given on page number(s) ….. under the section
“General Risks”
(h) The following clause on ‘Issuer‘s Absolute Responsibility‘ clause shall be
incorporated in a box format:
“The issuer, having made all reasonable inquiries, accepts responsibility for
and confirms that this offer document contains all information with regard
to the issuer and the issue which is material in the context of the issue, that
the information contained in the offer document is true and correct in all
material aspects and is not misleading in any material respect, that the
opinions and intentions expressed herein are honestly held and that there are
no other facts, the omission of which make this document as a whole or any
of such information or the expression of any such opinions or intentions
misleading in any material respect.”
(i) The names, logos and addresses of all the lead merchant bankers with their titles who have signed the due diligence certificate and filed the offer
document with the Board, along with their telephone numbers, fax numbers,
website addresses and e-mail addresses.
(j) The name, logo and address of the registrar to the issue, along with its
telephone number, fax number, website address and e-mail address.
(k) Issue schedule:
(i) Date of opening of the issue.
(ii) Date of closing of the issue.
(iii) Date of earliest closing of the issue, if any.
(l) Credit rating, if applicable.
(m) The following details under the heading ―IPO Grading shall be
incorporated in case of an initial public offer : All the
grades obtained for the initial public offer and reference to the page
number(s) on which the details of IPO grading are given.
(n) The name(s) of the recognised stock exchanges where the specified
securities are proposed to be listed and the details of in-principle approval
for listing obtained from these stock exchanges.
(B) Back Cover Pages: The back inside cover page and back outside cover page shall be in white.
(II) Table of Contents: The table of contents shall appear immediately after the front inside cover page.
(III) Definitions and Abbreviations:
(A) Conventional or general terms.
(B) Issue related terms.
(C) Issuer and industry related terms.
(D) Abbreviations.
(IV) Risk Factors:
(A) The risk factors, other than those specified in sub-paras. (f), (g) and (h) of para. (2) of sub-item (A) of Item (I) above, shall be printed in clear readable font (preferably of
minimum point ten size).
(B) The risk factors shall be classified as those which are specific to the project and internal
to the issuer and those which are external and beyond the control of the issuer.
(C) The risk factors shall be determined on the basis of their materiality. In determining the
materiality of risk factors, the following shall be considered :
(1) Some risks may not be material individually but may be material when considered
collectively.
(2) Some risks may have an impact which is qualitative though not quantitative.
(3) Some risks may not be material at present but may have a material impact in the
future.
(D) The risk factors shall appear in the offer document in the following manner:
(1) The risks envisaged by the management.
(2) The proposals, if any, to address the risks and the manner in which the same are
proposed to be addressed.
(E) The proposals to address risks shall not contain any speculative statement on the
positive outcome of any litigation, etc.
(F) The proposals to address risks shall not be given for any matter that is sub-judice before
any Court / Tribunal.
(G) The risk factors shall be disclosed in the descending order of materiality. Wherever risks
about material impact are stated, the financial and other implications of the same shall
be disclosed. If it cannot be quantified, a distinct statement about the fact that the
implications cannot be quantified shall be made.
(H) The disclosures of Risk factors shall include, where applicable, the following:
(1) The criminal charges under Indian Penal Code and violations of securities law;
(2) All statutory clearances and approval that are yet to be received by the issuer;
(3) The seasonality of the business of the issuer;
(4) The issue of specified securities by the issuer within the last twelve months at a
price lower than the issue price;
(5) The non-identification of acquisition targets, where any object of the issue is to finance acquisitions, along with the details of interim use of funds and the probable date of completing the acquisitions;
(6) If the industry segment for which the issue is proposed by the issuer has
contributed to less than twenty five per cent. of the revenues of the issuer in the
last three fiscal years.
(7) The dependence of the issuer or any of its business segments, upon a single
customer or a few customers, the loss of any one or more of which would have a
material adverse effect on the issuer.
(8) The refusal of listing of any securities of the issuer or any of its subsidiaries or
associates at any time by any of the recognised stock exchanges in India or
abroad.
(9) The failure of the issuer or any of its subsidiary or group companies to meet the
listing requirements of any recognised stock exchange(s) in India or abroad and the details of penalty, if any including suspension of trading, imposed by such exchange(s).
(10) The trading of any securities of the issuer on stock exchanges or in OTC market, if limited or sporadic.
(11) In case of outstanding debt instruments issued to public or to any person on
private placement basis by the issuer, the default in compliance with the material
covenants such as in creation of full security as per terms of issue, default in payment of interest, default in redemption, non-creation of debenture redemption reserve, default in payment of penal interest wherever applicable, non-availability or non-maintenance of asset cover, interest cover, debt-service cover, etc.
(12) The fact that the unsecured loans taken by the issuer, promoter, group companies
or associates can be recalled by the lenders at any time.
(13) The default in repayment of deposits or payment of interest thereon. The roll over
of liability, if any.
(14) The potential conflict of interest, if the promoters or directors of the issuer are
involved with one or more ventures which are in the same line of activity or
business as that of the issuer.
(15) The shortfall in performance vis-à-vis objects stated in the previous issues of the
issuer and group companies, as disclosed under the heading “Performance vis-àvis
Objects” in the section “Other Regulatory and Statutory Disclosures”, quantifying such shortfall or delays.
(16) The interests of the promoters, directors or key management personnel of the
issuer, other than reimbursement of expenses incurred or normal remuneration or
benefits.
(17) The portion of the issue proceeds, if proposed to be paid to the promoters,
directors or key management personnel of the issuer or the group companies.
(18) The relationship, if any, of the entities from whom the issuer has acquired the land
or proposes to acquire land, with any of the promoters or directors of the issuer,
along with the relevant details.
(19) The lack of adequate background and experience of the promoters of the issuer in
the activities for which the issue is proposed.
(20) The excessive dependence on key management personnel for the project for which
the issue is proposed
(21) The loss making group companies of the issuer.
(22) Any investment in debt instruments which are unsecured or which carry interest
rate lower than the market rate.
(23) The non-provision for decline in the value of investments.
(24) A summary of the outstanding litigations, disputes, non-payment of statutory dues, overdues to banks or financial institutions, defaults against banks or financial institutions, contingent liabilities not provided for, the details of proceedings initiated for economic offences or civil offences (including the past cases, if found guilty), any disciplinary action taken by the Board or recognised stock exchanges, etc., pertaining to the issuer, promoter and wholetime directors of the issuer and group companies, along with the nature of the litigation, quantum of funds involved, with a cross reference to the page where the detailed disclosures have been made in the offer document. If any the above mentioned
litigations, etc., arise after the filing the draft offer document, the facts shall be
incorporated appropriately in the offer document.
(25) The delay, if any, in the schedule of the implementation of the project for which
the funds are being raised in the public issue.
(26) The fact that the deployment of the issue proceeds is entirely at the discretion of
the issuer and is not subject to any monitoring by any independent agency.
(27) Negative cash flow, if any.
(28) The fact that the land is not registered in the name of the issuer.
(29) Any lack of arrangements in place for borrowings, bank finance or institutional
finance in respect of working capital requirements.
(30) Any restrictive covenants, as regards interests of equity shareholders, in a
shareholders’ agreement, promoters’ agreement or any agreement for short term
(secured and unsecured) and long term borrowings.
(31) All disputed or contested tax demands and other government claims, along with
the disclosures of amount, period for which such demands or claims are
outstanding, financial implications and the status of the case.
(32) The existence of large number of pending investor grievances against the issuer
and other listed companies under the same management within the meaning of
section 370 (1B) of the Companies Act, 1956.
(33) The risks associated with second or residual charge or subordinated obligation
created on the asset cover, in case of issue of secured convertible debt
instruments.
(34) The risk associated with orders not having been placed for plant and machinery
indicating the percentage and value terms of the plant and machinery for which
orders are yet to be placed
(V) Prominent Notes: This section shall contain notes which are required to be given
prominence and shall also include the following:
(A) A disclosure to the effect that “the investors may contact any of the merchant bankers
who have submitted the due diligence certificate to the Board, for any complaint
pertaining to the issue”.
(B) The net worth before the issue (as per latest audited financial statement disclosed in the offer document) and issue size.
(C) The cost per share to the promoters and book value per share.
(D) The details of the group companies having business interests or other interests in the
issuer.
(E) The details of transaction by the issuer with group or subsidiary companies during the
last year, the nature of transactions and the cumulative value of transactions.
(F) If there is a change in the name of the issuer at any time during the last three years
immediately preceding the date of filing draft offer document with the Board, the
reasons for the change and whether and when the objects clause of Memorandum of
Association was amended to carry on activities as reflected by the new name.
(G) The details of all financing arrangements whereby the promoter group, the directors of
the company which is a promoter of the issuer, the directors of the issuer and their
relatives have financed the purchase by any other person of securities of the issuer other
than in the normal course of the business of the financing entity during the period of six
months immediately preceding the date of filing draft offer document with the Board.
(VI) Introduction:
(A) Summary:
(1) The summary of the industry and business of the issuer. The summary shall not be
one-sided to disclose the highlights of the issuer or issue.
(2) Issue details in brief.
(3) Summary consolidated financial, operating and other data.
(B) General Information:
(1) The name and address of the registered office and the registration number of the
issuer, along with the address of the Registrar of Companies where the issuer is
registered.
(2) The board of directors of the issuer.
(3) The brief details of the chairman, managing director, whole time directors, etc. of
the issuer.
(4) The names, addresses, telephone numbers, fax numbers and e-mail addresses of
the Company Secretary, legal advisor and bankers to the issuer.
(5) The name, address, telephone number, fax number and e-mail address of the
compliance officer.
(6) The names, addresses, telephone numbers, fax numbers, contact person, website
addresses and e-mail addresses of the merchant bankers, co-managers, etc.
(7) The names, addresses, telephone numbers, fax numbers and e-mail addresses of
the auditors of the issuer.
(8) The statement of inter-se allocation of responsibilities among lead merchant
bankers, where more than one merchant banker is associated with the issue.
(9) The following details of credit rating, in case of a public issue of convertible debt instruments:
(a) The names of all the credit rating agencies from which credit ratingincluding unaccepted rating has been obtained for the issue of convertible
debt instruments.
(b) The details of all the credit ratings including unaccepted rating obtained for
the issue of convertible debt instruments.
(c) All the credit ratings obtained during three years prior to the filing the offer
document for any of the issuer‘s listed convertible debt instruments at the
time of accessing the market through a convertible debt instrument.
(10) The following details of IPO Grading, :
(a) The names of all the credit rating agencies from which grading has been
obtained for the initial public offer of specified securities.
(b) The details of all the grades obtained from such credit rating agencies.
(c) The rationale or description of the grading(s) so obtained, as furnished by
the credit rating agency(ies).
(11) The names, addresses, telephone numbers, fax numbers, website addresses and email
addresses of the trustees under debenture trust deed, in case of a public issue
of convertible debt instruments.
(12) The name of the monitoring agency, if appointed and the disclosure as to whether
the appointment is pursuant to regulation 16 of these regulations.
(13) The name, address, telephone number and e-mail address of the appraising entity,
in case the project has been appraised.
(14) Where the issue is being made through the book building process, the details in
brief explaining the book building process.
(15) The details of underwriting, if any:
(a) The names, addresses, telephone numbers, fax numbers and e-mail
addresses of the underwriters and the amount underwritten by them.
(b) Declaration by the board of directors of the issuer that the underwriters have
sufficient resources to discharge their respective obligations.
(c) In case of partial underwriting of the issue, the extent of underwriting.
(d) The details of final underwriting arrangement indicating actual number of
specified securities underwritten, in the prospectus or red herring prospectus
before it is registered with Registrar of Companies.
(e) The underwriting agreement shall list out the role and obligations of each syndicate member and inter-alia contain a clause stating that margin collected shall be uniform across all categories indicating the percentage to be paid as margin by the investor at the time of bidding.
(e) The underwriting agreement shall list out the role and obligations of each syndicate member and inter-alia contain a clause stating that margin collected from categories other than qualified institutional buyers shall be uniform across
the book runner(s) or syndicate members for each such category, indicating the percentage to be paid as margin by the investor at the time of bidding.
(C) Green Shoe Option, if applicable:
(1) The name of the stabilising agent.
(2) The maximum number of equity shares, in number and as a percentage of the
proposed issue size, proposed to be over-allotted by the issuer.
(3) The period for which the issuer proposes to avail of the stabilisation mechanism.
(4) The maximum increase in the equity share capital of the issuer and the
shareholding pattern, post-issue, in case the issuer is required to allot further
equity shares to the extent of over-allotment in the issue.
(5) The maximum amount of funds to be received by the issuer in case of further
allotment and the use of these additional funds shall be disclosed in the offer
document.
(6) The details of the agreement or arrangement entered into by the stabilising agent
with the promoters or shareholders to borrow equity shares from the latter. The
details shall, inter-alia, include the name of the promoters or shareholders, their
existing shareholding in the issuer, the number and percentage of equity shares to
be lent by them and other important terms and conditions including rights and
obligations of each party.
(7) The exact number of equity shares to be allotted pursuant to the public issue,
stating separately the number of equity shares to be borrowed from the promoters
or shareholders and over-allotted by the stabilising agent and the percentage of
such equity shares in relation to the total issue size.
(D) Capital Structure:
(1) The capital structure shall be presented in the following manner in a tabular form:
(a) The authorised, issued, subscribed and paid up capital (number of securities,
description and aggregate nominal value).
(b) Size of the present issue, giving separately the promoters‘ contribution,
reservation for specified categories and net offer to public (number of
securities, description, aggregate nominal value and issue amount (to be
disclosed in that order), names of the group companies if reservation has
been made for shareholders of the group companies and applicable
percentages may be given in case of a book built issue).
(c) Paid up capital:
(i) After the issue.
(ii) After conversion of convertible instruments (if applicable).
(d) Share premium account (before and after the issue).
(2) The following notes shall be incorporated after the details of capital structure:
(a) The details of the existing share capital of the issuer in a tabular form,
indicating therein with regard to each allotment, the date of allotment, the
number of shares allotted, the face value of the shares allotted and the form
of consideration.
(b) Where shares have been issued for consideration other than cash or out of
revaluation reserves at any point of time, the details shall be furnished in a
separate table, indicating the date of issue, persons to whom issued, price,
reasons for the issue and whether any benefits have accrued to the issuer out
of the issue.
(c) Where shares have been allotted in terms of any scheme approved under
sections 391-394 of the Companies Act, 1956, the fact shall be distinctly
stated and the details of such shares allotted shall be given, along with the
page numbers of the offer document where extensive details of such scheme
is given.
(d) In case of bonus shares made out of revaluation reserves, the same shall be
separately mentioned indicating the date of issue and the date of revaluation
of assets.
(e) The disclosures specified at paras (a) to (d) above shall be subject to the
following:
(i) Where the issuer has issued equity shares under one or more
employee stock option schemes, particulars of equity shares issued
under the employee stock option schemes may be aggregated
quarter-wise, indicating the aggregate number of equity shares
issued and the price range within which equity shares have been
issued in each quarter.
(ii) Where item (i) is applicable, a document giving date-wise details of
equity shares issued under employee stock option schemes,
including the price at which such equity shares were issued, shall be
made available as a material document for inspection.
(f) If the issuer has made any issue of specified securities at a price lower than
the issue price during the preceding one year, specific details of the names
of the persons to whom such specified securities have been issued, whether
they are part of promoters group, reasons for such issue and the price shall
be given.
(g) The proposal or intention, negotiations and consideration of the issuer to
alter the capital structure by way of split or consolidation of the denomination of the shares, or issue of specified securities on a preferential basis or issue of bonus or rights or further public issue of specified securities or qualified institutions placement, within a period of six months from the date of opening of the present issue.
(h) The total shareholding of the promoters in a tabular form, clearly stating the
name of the promoter, nature of issue, date of allotment, number of shares,
face value, issue price/ consideration, date when the shares were made fully
paid up, percentage of the total pre and post issue capital, the lock in period, if
any and the number and percentage of pledged shares, if any, held by each
promoter.
(i) The details of:
(i) the aggregate shareholding of the promoter group and of the
directors of the promoters, where the promoter is a body corporate.
(ii) the aggregate number of specified securities purchased or sold by the
promoter group and/or by the directors of the company which is a promoter of the issuer and/or by the directors of the issuer and their immediate relatives (as defined in sub-clause (ii) of clause (zc) of sub-regulation (1) of regulation 2) within six months immediately preceding the date of filing draft offer document with the Board.
(iii) all financing arrangements whereby the promoter group, the
directors of the company which is a promoter of the issuer, the
directors of the issuer and their relatives have financed the purchase
by any other person of securities of the issuer other than in the
normal course of the business of the financing entity during the
period of six months immediately preceding the date of filing draft
offer document with the Board.
(iv) the maximum and minimum price at which purchases and sales
referred to in clause (ii) were made, along with the relevant dates.
(j) Promoters‘ contribution:
(i) The details of promoters‘ contribution and lock-in period in a tabular
form, separately in respect of each promoter, stating the date of
allotment of specified securities, the date when fully paid up, the
nature of allotment (rights, bonus, preferential etc.), the number, face
value and issue price, the percentage of promoters‘ contribution to
total issued capital and the date upto which the specified securities
are subject to lock-in.
(ii) In the case of an initial public offer, the details regarding individual
allotments shall be given from the date of incorporation of the issuer.
In the case of a listed issuer, the details shall be given for five years
immediately preceding the date of filing the draft offer document.
(iii) The shares acquired by promoters through public issue, rights issue,
preferential issue, bonus issue, conversion of depository receipts or
under any employee stock option scheme or employee stock
purchase scheme shall be shown separately from the shares acquired
in the secondary market. The aggregate cost of shares acquired in the
secondary market, if available.
(iv) The details of compliance with regulation 32 has been complied with.
(v) If the issuer is exempt from the requirements of promoters‘ contribution, the relevant provisions under which it is exempt.
(vi) A statement that promoters‘ contribution has been brought in to the
extent of not less than the specified minimum lot and from persons
defined as promoters under these regulations.
(vii) A statement that the promoters undertake to accept full conversion, if the promoters‘ contribution is in terms of the same optionally convertible debt instrument as is being offered to the public.
(k) A statement that the issuer, its directors or the lead merchant bankers have not entered into any buy back arrangements for purchase of the specified securities of the issuer, other than the arrangements, if any, entered for safety net facility as permitted in the Regulations. In case any safety net is provided in the issue, the lead merchant banker shall certify that the person offering the safety net has the ability to honour the commitments and disclose the same in the offer document. Further, complete details shall be given regarding safety net arrangements such as number of specified
securities covered, duration, price, complete terms of guarantee, if any,
given by any person, including conditions subject to which the guarantee
may be invoked.
(l) A statement that an over-subscription to the extent of ten per cent. of the net
offer to public can be retained for the purpose of rounding off to the nearer
multiple of minimum allotment lot.
(m) A disclosure to the effect that all securities offered through the issue shall be
made fully paid-up or may be forfeited for non-payment of calls within
twelve months from the date of allotment of securities
(n) A disclosure stating that:
(i) The unsubscribed portion in any reserved category may be added to
any other reserved category.
(ii) The unsubscribed portion, if any, after such inter se adjustments
among the reserved categories shall be added back to the net offer to
the public portion.
(iii) In case of under-subscription in the net offer to the public portion,
spill-over to the extent of under subscription shall be permitted from
the reserved category to the net offer to public portion.
(o) The following details regarding major shareholders:
(i) The names of the ten largest shareholders of the issuer as on the date
of registering the offer document with the Registrar of Companies.
(ii) The number of equity shares held by the shareholders specified in
clause (i) including number of equity shares which they would be
entitled to upon exercise of warrant, option or right to convert a
debenture, loan or other instrument.
(iii) The particulars specified in items (i) and (ii) as on a date two years
prior to the date of registering the offer document with the Registrar
of Companies.
(iv) The particulars specified in items (i) and (ii) as on a date ten days
prior to the date of registering the offer document with the Registrar
of Companies.
(v) If the issuer has made an initial public offer of specified securities
within the immediately preceding two years prior to filing draft offer
document with the Board, the particulars specified in items (i), (ii),
(iii) and (iv) shall be disclosed to indicate separately the names of
the persons who acquired equity shares by subscription to the public
issue and those who acquired the equity shares by allotment on a
firm basis or by private placement.
(p) The details of shareholding, if any, of the lead merchant bankers and their
associates in the issuer.
(q) In case it is not possible to obtain information regarding sales and purchases
of specified securities by any relative of the promoters, the information shall
be disclosed on the basis of the transfers as recorded in the books of the
issuer and/or the depository, as applicable and a statement to such effect
shall be made in the offer document.
(r) The details of options granted or equity shares issued under any scheme of
employee stock option or employee stock purchase of issuer, in last three
years (separately for each year) and on a cumulative basis for all options or
equity shares issued prior to the date of the offer document, including the
following details in cases where options granted to employees in pursuance of any employee stock option scheme existing prior to the initial public
offer, are outstanding at the time of the initial public offer:
(i) options granted;
(ii) the pricing formula;
(iii) options vested;
(iv) options exercised;
(v) the total number of shares arising as a result of exercise of option;
(vi) options lapsed;
(vii) variation of terms of options;
(viii) money realised by exercise of options;
(ix) total number of options in force;
(x) employee-wise details of options granted to:
(a) senior managerial personnel;
(b) any other employee who receives a grant in any one year of
options amounting to five per cent or more of options granted
during that year;
(c) identified employees who were granted options, during any one
year, equal to or exceeding one per cent. of the issued capital
(excluding outstanding warrants and conversions) of the issuer at
the time of grant;
(xi) diluted Earnings Per Share pursuant to issue of equity shares on
exercise of options calculated in accordance with Accounting
Standard (AS) 20 ‘Earnings Per Share‘.
(xii) where the issuer has calculated the employee compensation cost
using the intrinsic value of the stock options, the difference between
the employee compensation cost so computed and the employee
compensation cost that shall have been recognised if it had used the
fair value of the options and the impact of this difference on profits
and on the Earnings Per Share of the issuer.
(xiii) weighted average exercise prices and weighted average fair values of
options whose exercise price either equals or exceeds or is less than
the market price of the stock.
(xiv) a description of the method and significant assumptions used during
the year to estimate the fair values of options, including weightedaverage
information, namely, risk-free interest rate, expected life,
expected volatility, expected dividends, and the price of the
underlying share in market at the time of grant of the option.
(xv) the impact on the profits and on the Earnings Per Share of the last
three years if the issuer had followed the accounting policies
specified in clause 13 of the Securities and Exchange Board of India
(Employee Stock Option Scheme and Employee Stock Purchase
Scheme) Guidelines, 1999 in respect of options granted in the last
three years.
(xvi) the intention of the holders of the equity shares allotted on exercise of options granted under an employee stock option scheme or allotted under an employee stock purchase scheme, to sell their equity shares within three months after the date of listing of the equity shares in the initial public offer (aggregate number of equity shares intended to be sold by the holders of options), if any. In case of an employee stock option scheme, this information same shall be disclosed regardless of whether equity shares arise out of options exercised before or after the initial public offer.
(xvii) specific disclosures about the intention to sell equity shares arising
out of an employee stock option scheme or allotted under an employee stock purchase scheme within three months after the date of listing, by directors, senior managerial personnel and employees having equity shares issued under an employee stock option scheme or employee stock purchase scheme amounting to more than one per cent. of the issued capital (excluding outstanding warrants and conversions), which inter-alia shall include name, designation and quantum of the equity shares issued under an employee stock option scheme or employee stock purchase scheme and the quantum they intend to sell within three months.
the details of the number of shares issued in ESPS, the price at which such shares are issued, employee-wise details of the shares issued to
• senior managerial personnel;
• any other employee who is issued shares in any one year
amounting to 5% or more shares issued during that year;
• identified employees who were issued shares during any one
year equal to or exceeding 1% of the issued capital of the
company at the time of issuance;
(xix) diluted Earning Per Share (EPS) pursuant to issuance of shares under
ESPS; and consideration received against the issuance of shares.
(s) In case of a listed issuer, which has earlier (after being a listed issuer) made any preferential allotment or bonus issue of specified securities or qualified institutions placement of eligible securities, a confirmation that the relevant provisions of the regulations have been complied with.
(VII) Particulars of the Issue:
(A) Objects of the Issue:
(1) The objects of the issue shall be disclosed.
(2) If one of the objects is investment in a joint venture or a subsidiary or an
acquisition, the following additional disclosures shall be made:
(a) Details of the form of investment, i.e., equity, debt or any other instrument
(b) If the form of investment has not been decided, a statement to that effect;
(c) If the investment is in debt instruments, complete details regarding rate of
interest, nature of security, terms of repayment, subordination, etc.
(d) If the investment is in equity, whether any dividends are assured;
(e) The nature of benefit expected to accrue to the issuer as a result of the
investment;
(3) If one of the objects of the issue is the grant of a loan to any entity, details of the
loan agreements, including the rate of interest, whether secured or unsecured,
duration, nature of security, terms of repayment, subordination etc. and the nature
of benefit expected to accrue to the issuer as a result of the investment. If such
loan is to be granted to a subsidiary, group or associate company, details of the
same.
(4) If one of the objects of the issue is utilisation of the issue proceeds for long term
working capital, the following additional disclosures shall be made.
(a) Basis of estimation of working capital requirement along with the relevant
assumptions.
(b) Reasons for raising additional working capital substantiating the same with
relevant facts and figures.
(c) Details of the projected working capital requirement, including detailed
assessment of working capital after implementation of the project or
achievement of objects of the issue, as the case may be, capacity utilisation
assumptions, break up of expected current assets into raw materials, finished
goods, work in progress, sundry debtors etc., with assumption about the
holding norms for each type of current asset, total current liabilities, net
current assets and envisaged sources of finance for net current assets, i.e.,
bank finance, institutional finance, own funds ,etc..
(d) The total envisaged working capital requirement in a tabular form, the
margin money thereof and the portion to be financed by any bank(s) or
otherwise.
(e) A complete perspective on the present working capital position vis-à-vis the
projected one based on which the money is proposed to be raised in the
public issue.
(f) Details of the existing working capital available to the issuer with a break up
for total current assets into raw materials, finished goods, work in progress,
sundry debtors, etc., total current liabilities, net current assets and sources of
finance for net current assets i.e. bank finance, institutional finance, own
funds etc..
(g) If no working capital is shown a part of project, the reasons therefor.
(5) Disclosure of asset cover etc. in case of public issue of secured convertible debt
instruments: The details of the assets on which security/ asset cover, if required,
shall be created, the basis for computation of the security/asset cover, the
valuation methods, the periodicity of such valuation and the ranking of the
charge(s).
Full disclosures in the draft offer document or offer document as the case may be, shall be made for warrants issued along with public issue or rights issue, regarding the objects towards which the funds from conversions of warrants are proposed to be used. In such cases, the provisions of this Part dealing with Objects of the Issue shall apply, mutatis mutandis.
(B) Requirement of Funds:
(1) The requirement for funds proposed to be raised through the issue.
(2) Where the issuer proposes to undertake more than one activity, such as
diversification, modernisation, expansion, etc., the total project cost shall be given
activity-wise or project wise, as the case may be.
(3) Where the issuer is implementing the project in a phased manner, the cost of each
phase, including the phase, if any, which has already been implemented, shall be
separately given.
(4) The details of all material existing or anticipated transactions in relation to
utlisation of the issue proceeds or project cost with promoters, directors, key
management personnel, associates and group companies. The relevant documents
shall be included in the list of material documents for inspection.
(C) Funding Plan (Means of Finance):
(1) An undertaking shall be given in the offer document by the issuer confirming firm
arrangements of finance through verifiable means towards seventy five per cent.
of the stated means of finance, excluding the amount to be raised through
proposed issue and existing identifiable internal accruals, have been made.
(2) The balance portion of the means of finance for which no firm arrangement has
been made shall be mentioned without specification.
(3) The details of funds tied up and the avenues for deployment of excess proceeds, if
any.
(D) Appraisal:
(1) The scope and purpose of the appraisal, if any, along with the date of appraisal.
(2) The cost of the project and means of finance shall be as per the appraisal report.
(3) The revision, if any, in the project cost and the means of finance after the date of
issue of the appraisal report shall be explained and disclosed.
(4) The weaknesses and threats, if any, given in the appraisal report, shall be
disclosed by way of risk factors.
(E) Schedule of Implementation:
(1) The schedule of implementation of the project in a tabular form and the progress
made so far, giving details of land acquisition, civil works, installation of plant
and machinery, trial production, date of commercial production and reasons for
delay, if any.
(F) Deployment of Funds:
(1) The details of the sources of funds and the deployment of these funds on the
project (where the issuer is raising capital for a project), up to a date not earlier
than two months from the date of registering the offer document with the
Registrar of Companies, as certified by a Chartered Accountant, along with the
name of the chartered accountant and the date of the certificate.
(2) Where the promoters‘ contribution has been brought prior to the public issue and
has already been deployed by the issuer, the issuer shall give the cash flow
statement in the offer document disclosing the use of such funds received as
promoters‘ contribution.
(G) Sources of Financing of Funds Already Deployed: The means and source of
financing, including details of bridge loan or other financial arrangement, which may be
repaid from the proceeds of the issue.
(H) Deployment of Balance Funds: Year-wise break up of the expenditure proposed to be
incurred on the project.
Interim Use of Funds: Net issue proceeds pending utilization (for the stated objects)shall be deposited only in the scheduled commercial banks included in the Second
Schedule of Reserve Bank of India Act, 1934.
(I) Interim Use of Funds : Investment avenues in which the management proposes to deploy issue proceeds, pending its utilisation in the proposed project.
(J) Basic Terms of Issue
(K) Basis for Issue Price:
(1) The basis for issue price, floor price or price band, as the case may be, shall be
disclosed and justified by the issuer in consultation with the lead merchant banker
on the basis of the following information, which shall be also disclosed separately:
(a) Earnings Per Share and Diluted Earnings Per Share, pre-issue, for the last
three years (as adjusted for changes in capital).
(b) Price Earning ratio pre-issue.
(c) Average Return on Net Worth in the last three years.
(d) Minimum Return on Increased Net Worth required to maintain pre-issue
Earnings Per Share.
(e) Net Asset Value per share based on last balance sheet.
(f) Net Asset Value per share after issue and comparison thereof with the issue
price.
(g) An illustrative format of disclosure in respect of basis for issue price is
given hereunder:
| (1) | Adjusted Earning Per Share (EPS) and Adjusted Diluted EPS | |
| (a) 1992-93 | Rs. 0.41 | |
| (b) 1993-94 | Rs. 8.39 | |
| (c) 1994-95 | Rs. 13.82 | |
| (d) Weighted Average | Rs. 10.94 | |
| (2) | Price/ Earning Ration (P/E) in relation to Issue Price | |
| (a) Based on 94/95 EPS | 37.63 | |
| (b) Industry P/E | ||
| (i) Highest | 61.2 | |
| (ii) Lowest | 0.8 | |
| (iii ) Average | 25.3 | |
| (*Based on Economic Times of 26/6/95) | ||
| (3) | Return on Net Worth | |
| (a) 1992-93 | 27.36% | |
| (b) 1993-94 | 28.77% | |
| (c) 1994-95 | 33.45% | |
| (d) Weighted Average | 30.88% | |
| (4) | Minimum Return on Total Net Worth after Issue needed to maintain EPS at Rs.13.82 | 14.65% |
| (5) | Net Asset Value | |
| (a) As at 31-3-1995 | Rs. 46.40 | |
| (b) After issue | Rs. 94.29 | |
| (c) Issue price | Rs. 520.00 |
Comparison of accounting ratios of the issuer as mentioned in items(a) to (g) above with the industry average and with the accounting ratios of the peer group (i.e. companies of comparable size in the same industry). The
source from which industry average and accounting ratios of the peer group
has been taken shall be indicated. In this regard, the following shall be
ensured:
(a) Consistency in comparison of financial ratios of issuer with
companies in the peer group, i.e., ratios on standalone/ consolidated
basis of issuer shall be compared with ratios on
standalone/consolidated basis of peer group, respectively.
(b) Explicit statement as to whether the financial ratios (of issuer as well
as its peer group) are either on standalone or consolidated basis.
Financial information relating to companies in the peer group shall be
extracted from regulatory filings made by such companies to compute
corresponding financial ratios.
(h) Comparison of all the accounting ratios of the issuer as mentioned in items (a) to (g) above with the industry average and with the accounting ratios of the peer group (i.e., companies of comparable size in the same industry the source from which industry average and accounting ratios of the peer group has been taken shall be indicated).
(i) The fact of dilution of financial ratios consequent upon issue of bonus
shares, if any, and justification of the issue price after taking into account the
diluted ratios with reference to expanded capital.
(j) In case of a book built issue, the following statement shall be disclosed in the
red herring prospectus:
“The issue price has been determined by the issuer in consultation with
the book runner(s), on the basis of assessment of market demand for
the offered securities by way of book-building.”
(k) The face value of equity shares and the statement that the issue price, floor
price or price band, as the case may be, is “X” times of the face value.
(l) The accounting ratios disclosed in the offer document in support of basis of
the issue price shall be calculated after giving effect to the consequent
increase in capital on account of compulsory conversions outstanding, as
well as on the assumption that the options outstanding, if any, to subscribe
for additional capital will be exercised.
(2) The issuer shall not proceed with the issue in case the accounting ratios mentioned
in items (a) to (g) above do not justify the issue price.
(3) In case the option of differential pricing under regulation 29 has been availed,
justification for the price difference shall be given in the offer document.
(4) Issue of debt instruments bearing interest less than bank rate: Whenever fully
convertible debt instruments are issued bearing interest at a rate less than the Bank
Rate, the offer document shall contain disclosures about the price that would work
out to the investor, taking into account the notional interest loss on the investment
from the date of allotment of FCDs to the date(s) of conversions).
(L) Tax Benefits: Any special tax benefits for the issuer and its shareholders.
(VIII) About the Issuer:
(A) Industry Overview
(B) Business Overview
(1) Details of the business of the issuer:
(a) Location of the project;
(b) Plant, machinery, technology, process, etc.:
(i) Details shall be given in a tabular form, which shall include the
details of the machines required to be bought by the issuer, cost of
the machines, name of the suppliers, date of placement of order and
the date or expected date of supply, etc..
(ii) In case machines are yet to be delivered, the date of quotations relied
upon for the cost estimates given shall also be mentioned.
(iii) The percentage and value terms of the plant and machinery for
which orders are yet to be placed shall be stated.
(iv) The details of the second hand machinery bought or proposed to be
bought, if any, including the age of the machines, balance estimated
life, etc. shall also be given.
(c) Collaborations, any performance guarantee or assistance in marketing by the
collaborators: The following information regarding persons or entities with
whom technical and financial agreements have been entered into shall be
given:
(i) place of registration and year of incorporation.
(ii) paid up share capital.
(iii) turnover of the last financial year of operation.
(iv) general information regarding such persons relevant to the issuer.
(d) Infrastructure facilities for raw materials and utilities like water, electricity,
etc.
(e) Products or services of the issuer:
(i) The nature of the product(s), that is, consumer or industrial and end
users.
(ii) The details about the market, including details of the competition,
past production figures for the industry, existing installed capacity,
past trends and future prospects regarding exports (if applicable),
demand and supply forecasts (if given, should be essentially with
assumptions unless sourced from a market research agency of
repute), etc. The source of data used shall be mentioned.
(iii) The approach to marketing and proposed marketing set up.
(iv) The export possibilities and export obligations, if any (in case of a
issuer providing any “service” particulars, as applicable).
(2) Business strategy:
(a) A brief statement about business strategy.
(b) A brief statement about future prospects, including the following:
(i) Capacity and Capacity Utilisation:
(a) A table shall be incorporated giving the existing installed
capacities for each product, capacity utilisation for these
products in the previous three years, proposed capacities for
existing as well as proposed products and the assumptions for
future capacity utilisation for the next three years (from the date
of commencement of commercial production) in respect of
existing as well as proposed products.
(b) If the projected capacity utilisation is higher than the actual
average capacity utilisation by more than 25% during the
previous three years, how the issuer proposes to achieve the
projected levels of capacity utilisation in view of its failure to
achieve levels of similar capacity utilisation in the past, shall be
stated.
(ii) No forecast of projections relating to financial performance of the
issuer shall be given in the offer document.
(3) Intellectual property rights:
(a) If the issuer is entitled to certain intellectual property rights such as trade
marks, brand names, etc. whether the same are legally held by the issuer and
whether all formalities in this regard have been complied with.
(b) In case the intellectual property rights are not registered in the name of the
issuer, the name of the entity with which they are registered.
(c) In case the intellectual property rights are registered in the name of entity in
which the promoters are interested, the salient features of the agreement
entered into for the use of the intellectual property rights by the issuer.
(4) Property
(5) Purchase of property:
(a) As respects any property referred to in sub-clause (b):
(i) the names, address, descriptions and occupations of the vendors;
(ii) the amount paid or payable in cash, shares or debentures to the
vendor and, where there is more than one separate vendor, or the issuer is a sub purchaser, the amount so paid or payable to each vendor, specifying separately the amount, if any, paid or payable for goodwill;
(iii) the nature of the title or interest in such property acquired or to be
acquired by the issuer;
(iv) short particulars of every transaction relating to the property
completed within the two preceding years, in which any vendor of
the property to the issuer or any person who is, or was at the time of
the transaction, a promoter, or a director or proposed director of the
issuer had any interest, direct or indirect, specifying the date of the
transaction and the name of such promoter, director or proposed
director and stating the amount payable by or to such vendor,
promoter, director or proposed director in respect of the transaction.
(b) The property to which sub-clause (a) applies is a property purchased or
acquired by the issuer or proposed to be purchased or acquired, which is to
be paid for wholly or partly out of the proceeds of the issue offered for
subscription by the offer document or the purchase or acquisition of which
has not been completed at the date of issue of the offer document, other than
property:
(i) the contract for the purchase or acquisition whereof was entered into
in the ordinary course of the issuer‘s business, the contract not being
made in contemplation of the issue nor the issue in consequence of
the contract; or
(ii) as respects which the amount of the purchase money is not material.
(a) for the purpose of this clause, where a vendor is a firm, the
members of the firm shall not be treated as separate vendors.
(b) if the issuer proposes to acquire a business which has been
carried on for less than three years, the length of time during
which the business has been carried.
(6) Land :
(a) The names of the entities from whom the land has been acquired/ proposed to
be acquired alongwith the cost of acquisition, along with the relation, if any, of
such entities to any promoter or director of the issuer.
(b) Details of whether the land acquired by the issuer is free from all
encumbrances and has a clear title and whether it is registered in the name
of the issuer.
(c) Details of whether the issuer has applied/ received all the approvals
pertaining to land. If no such approvals are required to be taken by the
issuer, then this fact may be indicated by way of an affirmative statement.
(d) The figures appearing under this section shall be consistent with the figures
appearing under the section “Cost of the Project”.
(C) Key Industry-Regulation (if applicable)
(D) History and Corporate Structure of the issuer:
(1) History and main objects and present business of the issuer including the
following details:
(a) Details of the issuer such as the date of incorporation, date of
commencement of business, date of conversion of partnership into limited
company or private limited company to public limited company, as
applicable, dates on which names have been changed, if applicable, reasons
for change of name, changes in registered offices of the issuer and reasons
therefore, dates on which the Memorandum of Association of the issuer
have been amended citing the details of amendment.
(b) Details of the major events in the history of the issuer, including the details
of:
(i) Capacity/facility creation, location of plant, products, marketing,
competition etc.
(ii) Raising of capital in form of equity or debt,
(iii) Time/cost overrun in setting up projects including the proposed
project,
(iv) Defaults or rescheduling of borrowings with financial institutions/
banks, conversion of loans into equity along with reasons thereof,
lock out, strikes and reasons for the same etc.
(v) Negative features like time / cost overrun, defaults and lock out /
strikes etc
(vi) Details regarding the changes in the activities of the issuer during the
last five years which may have had a material effect on the
profits/loss, including discontinuance of lines of business, loss of
agencies or markets and similar factors.
(c) Complete details of the subsidiaries and holding company, if applicable.
(d) Corporate profile of the issuer regarding its history, the description of the
activities, services, products, market of each segment, the growth of the
issuer, exports and profits due to foreign operations together with the
country-wise analysis, the standing of the issuer with reference to the
prominent competitors with reference to its products, management, major
suppliers and customers, environmental issues, segment, i.e. geographical,
etc.
(e) Injunction or restraining order, if any, with possible implications.
(f) The technology, market, managerial competence and capacity built-up.
(g) Details regarding acquisition of business/undertakings, mergers,
amalgamation, revaluation of assets etc, if any.
(h) The number of members/ shareholders of the issuer.
(2) Main objects as set out in the Memorandum of Association of the issuer
(3) Details regarding subsidiary(ies) of the issuer including:
(a) Name of the subsidiary;
(b) nature of business;
(c) capital structure;
(d) shareholding of the issuer;
(e) amount of accumulated profits or losses of the subsidiary(ies) not accounted
for by the issuer;
Details of current and past directorship(s) in listed companies whose
shares have been/were suspended from being traded on the Bombay Stock
Exchange Ltd. National Stock Exchange of India Ltd., as follows:
Name of the Company :
Listed on [give name of the Stock Exchange(s)] :
Date of Suspension on stock exchanges :
Suspended more than three months: Yes/No. If yes, reasons for
suspension and period of suspension.
Whether suspension revoked: Yes/No. If yes, date of revocation of
suspension.
Term (along with relevant dates) of Director in the above
company(ies).
Explanation: The above details shall be given with respect to a period of
five years prior to date of filing of draft offer document and ought to be
updated upto the date of filing of RHP. In case of offer documents for fast
track issues filed under Regulation 10, the period of five years shall be
reckoned on the date of filing of prospectus with Registrar of Companies
or letter of offer with the designated stock exchange.
(a)(ii) Details of current and past directorship(s) in listed companies which
have been/were delisted from the stock exchange(s), as follows:
Name of the Company :
Listed on [give name of the Stock Exchange(s)] :
Date of delisting on the Stock Exchange(s) :
Compulsory or voluntary delisting :
Reasons for delisting :
Whether relisted: Yes/No. If yes, date of relisting on [give name of the
Stock Exchange(s)]:
Term (alongwith relevant dates) of Director in the above company/ies.]
(b) The nature of any family relationship between any of the directors.
(c) Any arrangement or understanding with major shareholders, customers,
suppliers or others, pursuant to which of the directors was selected as a
director or member of senior management.
(d) Details of service contracts entered into by the directors with the issuer
providing for benefits upon termination of employment and a distinct
negative statement in the absence of any such contract.
(e) Details of borrowing powers.
(2) Compensation of Managing Directors/ Whole time Directors:
(a) The dates, parties to, and general nature of every contract appointing or
fixing the remuneration of a Director, Whole-time Director, Managing
Director or Manager whenever entered into within or more than, two years
before the date of the offer document. During the last financial year, the
amount of compensation paid, and benefits in kind granted on an individual
basis to all such persons, by the issuer for services in all capacities to the
issuer. The disclosure shall also cover contingent or deferred compensation
accrued for the year, even if the compensation is payable at a later date.
(b) If any portion of the compensation was paid pursuant to a bonus or profit sharing
plan, a brief description of the plan and the basis upon which the
directors participate in the plan.
(c) All such contracts shall be included in the list of material contracts required
under sub-item (A) of Item (XII).
(3) Shareholding of directors, including details of qualification shares held by them,
wherever applicable.
(4) Interest of directors:
(a) Full particulars of the nature and extent of the interest, if any, of every
Director.
(i) in the promotion of the issuer; or
(ii) in any property acquired by the issuer within two years of the date of
the offer document or proposed to be acquired by it.
(b) Where the interest of such a director consists in being a member of a firm or
company, the nature and extent of the interest of the firm or company, with
a statement of all sums paid or agreed to be paid to him or to the firm or
company in cash or shares or otherwise by any person either to induce him
to become, or to qualify him as, a director, or otherwise for services
rendered by him or by the firm or company, in connection with the
promotion or formation of the issuer shall be disclosed.
(5) Change, if any, in the directors during the last three years, and reasons, thereof.
(6) Management Organisation Structure.
(7) Corporate Governance:
(a) A disclosure to the effect that the issuer has complied with the requirements
of Corporate Governance contained in the Equity Listing Agreement,
particularly those relating to composition of board of directors, constitution
of committees such as Audit Committee, Shareholder / Investor Grievance
Committee, etc
(b) Details relating to the issuer’s audit committee and remuneration committee,
including the names of committee members and a summary of the terms of
reference under which the committees operate shall also be disclosed.
(8) Key Management Personnel:
(a) Details of the key management personnel as on the date of filing the offer
document with the Board indicating name, date of joining, qualification,
term of office with date of expiration of term and details of service contracts including termination/retirement benefits, if any, details of previous
employment, etc.
(b) Name, business experience, functions and areas of experience in the issuer.
(c) The nature of any family relationship between any of the key managerial
personnel.
(d) Any arrangement or understanding with major shareholders, customers,
suppliers or others, pursuant to which any of the key managerial personnel,
was selected as a director or member of senior management.
(e) During the last financial year, the amount of compensation paid, and
benefits in kind granted, to the key managerial personnel on an individual
basis, by the issuer for services in all capacities to the company. The
disclosure shall also cover contingent or deferred compensation accrued for
the year, even if the compensation is payable at a later date.
(f) If any portion of the compensation was paid pursuant to a bonus or profitsharing
plan, a brief description of the plan and the basis upon which the
key management personnel participate in the plan.
(g) Disclose status of key management personnel, whether they are in the
employment as permanent employees or otherwise.
(h) The shareholding of the key management personnel.
(i) Bonus or Profit Sharing Plan for the key management personnel.
(j) Changes in the Key Management Personnel: Any change otherwise than
by way of retirement in the normal course in the senior key management
personnel particularly in charge of production, planning, finance and
marketing during the last three years prior to the date of filing the offer
document with the Board shall be disclosed. If the turnover of key
management personnel is high compared to the industry, reasons should be
disclosed.
(9) Employees:
(a) Refer the page of the offer document where disclosures regarding
employees stock option scheme/ employees stock purchase scheme of the
issuer, if any, as required by the Regulations or Regulations of the Board
relating to Employee Stock Option Scheme and Employee Stock Purchase
Scheme, is given.
(b) Payment or Benefit to Officers of the issuer (non-salary related): Any
amount or benefit paid or given within the two preceding years or intended
to be paid or given to any officer and consideration for payment of giving of
the benefit.
(F) Promoters/ Principal Shareholders:
(1) Where the promoters are individuals:
(a) A complete profile of the promoters, including their name, age, personal
addresses, educational qualifications, experience in the business or
employment and in the line of business proposed in the offer document,
positions/posts held in the past, Directorship held, other ventures of each
promoter, special achievements, their business and financial activities,
photograph, voter ID number, driving license number shall be disclosed.
(b) A declaration, confirming that Permanent Account Number, Bank Account
Number and Passport Number of the promoters have been submitted to the
recognised stock exchanges on which the specified securities are proposed
to be listed, at the time of filing the draft offer document with them;
(2) Where the promoters are companies:
(a) History of the companies and the promoters of the companies shall be
furnished. Where the promoters of such companies are again companies
or bodies corporate, names of natural persons in control (i.e., holding
fifteen per cent. or more voting rights) or who are on the board of
directors of such bodies corporate shall be disclosed.
(b) Details of change in control or management of the promoter companies, if
any, including details of the persons who held the controlling interest in
the three years immediately preceding the filing the draft offer document.
(c) A declaration, confirming that the Permanent Account Numbers, Bank
Account Numbers, the Company Registration Numbers and the addresses
of the Registrars of Companies where the companies are registered have
been submitted to the recognised stock exchanges on which the specified
securities are proposed to be listed, at the time of filing the draft offer
document with them;
Where the shares for lock-in towards minimum promoters contribution is
offered by principal shareholders such as Venture Capital Funds or Foreign Venture
Capital Investors registered with SEBI:
(a) Details of Fund Manager;
(b) Generic details of the Fund which is the investor in the issuer company;
(c) Details such as total number of investors in the Fund, distribution of
investors category – wise (institutional, corporate, individual etc.) and
percentage stake held by each investor category;
(d) Details of companies funded by the Funds, namely:-
(i) Total number of companies funded;
(ii) Distribution of such companies- country wise, holding period wise,
sector wise;
(iii) Number of companies under the control of the Fund, directly or
indirectly;
(iv) In respect of companies where such Funds have offered their shares
for lock-in as part of minimum promoter‘s contribution:-
Name of the company
Date of listing on each stock exchange
Fund‘s shareholding in the company as on the date of listing
Fund‘s shareholding in the company as on the date of filing of
the DRHP of the company that now seeks to get listed
(e) Average holding period of the Fund‘s investments;
(f) Sector focus/core specialization of the Fund, if applicable.
(3) If the present promoters are not the original promoters and control of the issuer
was acquired within five years immediately preceding the date of filing draft offer
document with the Board, disclosure shall be made of the details regarding the
acquisition of control, date of acquisition, terms of acquisition, consideration paid
for acquisition and compliance with the provisions of the SEBI (Substantial
Acquisition of Shares and Takeovers) Regulations, 1997 and Listing Agreement
as applicable.
(4) If there is no identifiable promoter, such fact shall be disclosed and a further
disclosure shall be made of the shareholders who control individually or as a
group, fifteen per cent. or more of the voting rights of the issuer and of persons, if any, who have the right to appoint director(s) on the board of directors of the
issuer.
(5) If the promoters do not have experience in the proposed line of business, that fact
shall be disclosed explaining how the proposed activities would be carried
out/managed.
(6) If the promoters have any interest in the issuer other than as promoters, brief
details of the interest shall be given along with cross-reference to the pages on
which extensive details have been given in the offer document.
(7) The following information in respect of all the group companies shall be given
wherever applicable:
(a) the name and type of organisation
(b) brief description of the business;
(c) nature and extent of interest of the promoters
(8) Full particulars of the nature and extent of the interest, if any, of every promoter,
directors or group companies :
(a) in the promotion of the issuer; or
(b) in any property acquired by the issuer within two years of the date of filing
draft offer document with the Board or proposed to be acquired by it.
(c) Where the interest of such a director or promoter consists in being a member
of a firm or company, the nature and extent of the interest of the firm or
company, with a statement of all sums paid or agreed to be paid to him or to
the firm or company in cash or shares or otherwise by any person either to
induce him to become, or to qualify him as, a director, or otherwise for
services rendered by him or by the firm or company, in connection with the
promotion or formation of the issuer.
(d) in any transaction in acquisition of land, construction of building and supply
of machinery, etc. with full details of the transaction and the amount
involved
(9) Payment or benefit to promoters of the issuer: Any amount or benefit paid or
given within the two years preceding the date of filing draft offer document with
the Board or intended to be paid or given to any promoter or promoter group and
consideration for payment of giving of the benefit.
(G) Currency of presentation: One standard financial unit shall be used in the offer
document.
(H) Dividend policy
(IX) Financial Statements:
Notes:
1. The financial informations specified in this item shall be certified by only those
auditors who have subjected themselves to the peer review process of the
Institute of Chartered Accountants of India (ICAI) and hold a valid certificate
issued by the ‗Peer Review Board‘ of the ICAI.
2. All financial informations specified in this item must be reaudited for one full
financial year and the stub period, by the auditor certifying them in case where
the financial statements were audited by an auditor who had not been subjected
to peer review process of ICAI.
(A) Selected Consolidated Financial and Operating data:
(1) The consolidated financial statement prepared on the basis of Accounting
Standard 21(AS 21) ―Consolidated Financial Statements‖ issued by the Institute
of Chartered Accountants of India shall be incorporated in the offer document.
(2) All the notes to the accounts, significant accounting policies as well as the
auditors‘ qualifications shall be incorporated.
(B) Financial Information of the issuer:
(1) A report by the auditors of the issuer with respect to:
(a) profits and losses and assets and liabilities, in accordance with para (2) or (3) of sub-item (B) of Item (IX), as the case may require; and
(b) the rates of dividends, if any, paid by the issuer in respect of each class of
shares in the issuer for each of the five financial years immediately preceding the issue of the offer document, giving particulars of each class of shares on which such dividends have been paid and particulars of the cases in which no dividends have been paid in respect of any class of shares for any of those years;
and, if no accounts have been made up in respect of any part of the period of five
years ending on a date three months before the issue of the offer document,
containing a statement of that fact (and accompanied by a statement of the
accounts of the issuer in respect of that part of the said period up to a date not
earlier than six months of the date of issue of the offer document indicating the
profit or loss for that period and the assets and liabilities position as at the end of
that period together with a certificate from the auditors that such accounts have
been examined and found correct by them. The said statement may indicate the
nature of provision or adjustments made or are yet to be made).
(2) If the issuer has no subsidiaries, the report shall:
(a) so far as regards profits and losses, deal with the profits or losses of the
issuer (distinguishing items of a non- recurring nature) for each of the five
financial years immediately preceding the issue of the offer document; and
(b) so far as regards assets and liabilities, deal with the assets and liabilities of
the issuer at the last date to which the accounts of the issuer were made up.
(3) If the issuer has subsidiaries, the report shall:
(a) so far as regards profits and losses, deal separately with the issuer‘s profits
or losses as provided by para (2) of sub-item (B) of Item (IX) and in
addition, deal either:
(i) as a whole with the combined profits or losses of its subsidiaries, so
far as they concern the members of the issuer; or
(ii) individually with the profits or losses of each subsidiary, so far as
they concern the members of the issuer;
or, instead of dealing separately with the issuer‘s profits or losses, deal as a
whole with the profits or losses of the issuer, and, so far as they concern the
members of the issuer, with the combined profits or losses of its
subsidiaries; and
(b) so far as regards assets and liabilities, deal separately with the issuer‘s assets
and liabilities as provided by para (2) of sub-item (B) of Item (IX) and in
addition, deal either:
(i) as a whole with the combined assets and liabilities of its subsidiaries,
with or without the issuer‘s assets and liabilities; or
(ii) individually with the assets and liabilities of each subsidiaries;
and shall indicate as respects the assets and liabilities of the subsidiaries, the
allowance to be made for persons other than the members of the issuer.
(4) If the proceeds, or any part of the proceeds, of the issue of the shares or
debentures are, or is, to be applied directly or indirectly:
(a) in the purchase of any business; or
(b) in the purchase of an interest in any business and by reason of that purchase,
or anything to be done in consequence thereof, or in connection therewith;
the issuer will become entitled to an interest as respects either the capital or
profits and losses or both, in such business exceeding fifty percent, thereof;
a report made by accountants (who shall be named in the offer document)
upon:
(i) the profits or losses of the business of each of the five financial years
immediately preceding the issue of the offer document; and
(ii) the assets and liabilities of the business at the last date to which the
accounts of the business were made up, being a date not more than
one hundred and twenty days before the date of the issue of the offer
document.
(5)(a) If:
(i) the proceeds, or any part of the proceeds, of the issue of the shares or
debentures are or is to be applied directly or indirectly in any manner
resulting in the acquisition by the issuer of shares in any other body
corporate; and
(ii) by reason of that acquisition or anything to be done in consequence
thereof or in connection therewith, that body corporate will become
a subsidiary of the issuer;
a report shall be made by accountants (who shall be named in the offer
document) upon:
the profits or losses of the other body corporate for each of the five
financial years immediately preceding the issue of the offer
document; and
the assets and liabilities of the other body corporate at the last date
to which its accounts were made up.
(b) The said report shall:
(i) indicate how the profits or losses of the other body corporate dealt
with by the report would, in respect of the shares to acquired, have
concerned members of the issuer and what allowance would have
fallen to be made, in relation to assets and liabilities so dealt with for
holders of other shares, if the issuer had at all material times held the
shares to be acquired; and
(ii) where the other body corporate has subsidiaries, deal with the profits
or losses and the assets and liabilities of the body corporate and its
subsidiaries in the manner provided by sub-clause (a) (ii) above in
relation to the issuer and its subsidiaries.
(6) Principal terms of loan and assets charged as security: Brief terms and conditions
of the term loans including re-schedulement, prepayment, penalty, default, etc.
(7) (a) Age-wise analysis of sundry debtors shall be given.
(b) Aggregate book value of quoted investments as well as aggregate market
value of quoted investments shall be disclosed.
(8) All significant accounting policies and standards followed in the preparation of
the financial statements shall be disclosed including all notes thereto and the
auditors‘ qualifications shall be incorporated.
(9) Statements of Assets and Liabilities and Profit and Loss or any other financial
information shall be incorporated after making the following adjustments,
wherever quantification is possible:
(a) Adjustments/ rectification for all incorrect accounting practices or failures to
make provisions or other adjustments which resulted in audit qualifications..
Audit qualifications, which have not been given effect to, if any, shall be
highlighted along with the management comments. If the impact of nonprovisions
is not considered ascertainable, then a statement to that effect by
the auditors
(b) Material amounts relating to adjustments for previous years shall be
identified and adjusted in arriving at the profits of the years to which they
relate irrespective of the year in which the event triggering the profit or loss
occurred.
(c) Where there has been a change in accounting policy, the profits or losses of
the earlier years (required to be shown in the offer document) and of the
year in which the change in the accounting policy has taken place shall be
recomputed to reflect what the profits or losses of those years would have
been if a uniform accounting policy was followed in each of these years.
(d) If an incorrect accounting policy is followed, the re-computation of the
financial statements shall be in accordance with correct accounting policies.
(e) Statement of profit or loss shall disclose the profit or the loss arrived at
before considering extraordinary items and after considering the profit or
loss from extraordinary items. An illustrative format of the disclosure of
profits and losses on this basis is specified hereunder:
| Year ended March 31, …. | |||||
| 20X1 | 20X2 | 20X3 | 20X4 | 20X5 | |
| (Rupees In lakhs) | |||||
| Income | |||||
| Sales - | |||||
| of products manufactured by the issuer | 1000 | 1240 | 1640 | 1800 | 1800 |
| of products traded in by the issuer | 100 | 60 | 60 | 200 | 200 |
| Total | 1100 | 1300 | 1700 | 2000 | 2000 |
| Other income | 10 | 30 | 40 | 60 | 100 |
| Increase (decrease) in inventories | 40 | (70) | 60 | 180 | 310 |
| 1150 | 1260 | 1800 | 2240 | 2410 | |
| Expenditure | |||||
| Raw materials consumed | 400 | 480 | 630 | 1110 | 1200 |
| Staff costs | 200 | 220 | 240 | 340 | 400 |
| Other manufacturing expenses | 250 | 260 | 280 | 540 | 650 |
| Administration expenses | 40 | 42 | 60 | 80 | 85 |
| Selling and distribution expenses | 110 | 120 | 130 | 190 | 250 |
| Interest | 60 | 55 | 90 | 200 | 140 |
| 1095 | 1227 | 1495 | 2635 | 2795 | |
| Net profit before tax and extraordinary items | 55 | 33 | 305 | (295) | (385) |
| Taxation | 25 | 12 | 144 | (185) | (235) |
| Net profit before extraordinary items | 30 | 21 | 161 | (110) | (150) |
| Extraordinary items (net of tax) - | 49 | (64) | 800 | 1000 | |
| Net Profit after Extraordinary Items | 30 | 70 | 97 | 700 | 850 |
(f) The statement of assets and liabilities shall be prepared after deducting the
balance outstanding on revaluation reserve account from both fixed assets
and reserves and the net worth arrived at after such deductions. An
illustrative format of assets and liabilities is specified hereunder:
| As at March 31,… | ||||||
| 20X1 | 20X2 | 20X3 | 20X4 | 20X5 | ||
| (Rupees in lakhs) | ||||||
| (1) | Equity & Liabilities | |||||
| Shareholders‘ Funds | ||||||
| (a) Share capital | ||||||
| (b) Reserves & surplus | ||||||
| (2) | Non Current Liabilities | |||||
| (a) Long term borrowings | ||||||
| (b) Deferred tax liabilities (net) | ||||||
| (c) Long term provisions | ||||||
| (3) | Current Liabilities | |||||
| (a) Short term borrowings | ||||||
| (b) Trade payables | ||||||
| (c) Other current liabilities | ||||||
| (d) Short term provisions | ||||||
| Total | ||||||
| Assets | ||||||
| (4) | Non Current Assets | |||||
| (a) Fixed Assets | ||||||
| (b) Non current investments | ||||||
| (c) Long term loans and advances | ||||||
| (d) Other non current assets | ||||||
| (5) | Current Assets | |||||
| (a) Current Investments | ||||||
| (b) Inventories | ||||||
| (c) Trade receivables | ||||||
| (d) Cash and bank balances | ||||||
| (e) Short term loans and advances | ||||||
| (f) Other current assets | ||||||
| Total | ||||||
(g) Relevant details of all the contingent liabilities.
(10) The turnover disclosed in the Profit and Loss Statement shall be bifurcated into:
(a) turnover of products manufactured by the issuer;
(b) turnover of products traded in by the issuer; and
(c) turnover in respect of products not normally dealt in by the issuer but
included in (b) above, shall be mentioned separately.
(11) The offer document shall disclose details of `Other Income’ in all cases where
such income (net of related expenses) exceeds twenty per cent. of the net profit
before tax, including:
(d) the sources and other particulars of such income; and
(e) an indication as to whether such income is recurring or non-recurring, or has
arisen out of business activities/ other than the normal business activities.
(12) Related Party Transactions: The issuer shall disclose the following details of
related party transactions and make disclosures in accordance with the
requirements of Accounting Standard (AS 18) “Related Party Disclosures” issued
by the Institute of Chartered Accountants of India:
(a) Information with respect to transactions or loans between the issuer and
(i) enterprises that directly or indirectly through one or more
intermediaries, control or are controlled by, or are under common
control with, the issuer;
(ii) associates;
(iii) individuals owning, directly or indirectly, an interest in the voting
power of the company that gives them significant influence over the
issuer, and close members of any such individual‘s family;
(iv) key managerial personnel, that is, those persons having authority and
responsibility for planning, directing and controlling the activities of
the issuer, including directors and senior management of companies
and close members of such individuals‘ families;
(v) enterprises in which a substantial interest in the voting power is
owned, directly or indirectly, by any person described in 261[(iii) or
(iv)] or over which such a person is able to exercise significant
influence and includes enterprises owned by directors or major
shareholders of the issuer.
(b) The nature and extent of any transactions which are material to the issuer or
the related party, or any transactions that are unusual in their nature or
conditions, involving goods, services, or tangible or intangible assets, to
which the issuer or any of its parent companies was a party.
(c) The amount of outstanding loans (including guarantees of any kind) made
by the issuer or any of its parent companies to or for the benefit of any of
the directors or key managerial personnel. The information given should
include the amount outstanding as of the latest date, the nature of the loan
and the transaction in which it was incurred, and the interest rate on the
loan.
(13) Accounting and other ratios:
(a) The following key accounting ratios shall be given for each of the
accounting periods for which financial information is given.
(b) Earnings per Share and Diluted Earnings Per Share: This ratio shall be
calculated after excluding extra ordinary items.
(c) Return on net worth: This ratio shall be calculated after excluding
revaluation reserves and extra-ordinary items.
(d) Net Asset Value per share. This ratio shall be calculated excluding
revaluation reserves.
(e) ‘Accounting and other Ratios‘ shall be based on the Financial Statements
prepared on the basis of Indian Accounting Standards.
(f) In the event of capital structure undergoing a change on account of
capitalisation of reserves, its impact on the key ratios should be distinctly
brought out. The impact of outstanding financial instruments, if any, on the
ratios, should also be disclosed.
(14) Capitalisation Statement:
(a) A Capitalisation Statement showing total debt, net worth, and the debt/
equity ratios before and after the issue is made shall be incorporated.
(b) In case of any change in the share capital since the date as of which the
financial information has been disclosed in the offer document, a note
explaining the nature of the change shall be given.
(c) An illustrative format of the Capitalisation Statement is specified hereunder:
| Particulars | Pre-issue as at 30-6-20X1 | As Adjusted for issue |
| (Rupees in lakhs) | ||
| Short-Term Debt | 1870 | 1870 |
| Long Term Debt | 4370 | 4370 |
| Shareholders Funds | ||
| Share Capital | 4000 | 4450 |
| Reserves | 14570 | 37520 |
| Total Shareholders Funds | 18570 | 41940 |
| Long Term Debt/Equity | 0.24:1 | 0.10:1 |
| Note: Since 31-3-20X1 (which is the last date as of which financial information has been given in para of this document) share capital was increased form Rs.3000 lacs to Rs.4000 lacs by the issue of bonus shares in the ratio of 1 share for every 3 shares. |
||
(15) Presentation of financials in case of change of denomination: In case of change in
standard denomination of equity shares, the compliance with the following shall be
ensured while making disclosure in the offer document:
(a) all the financial data affected by the change in denomination of shares shall
be clearly and unambiguously presented in the offer document.
(b) comparison of financial ratios representing value per share and comparison
of stock market data in respect of price and volume of securities shall be
clearly and unambiguously presented in the offer document.
(c) the capital structure incorporated in the offer document shall be clearly
presented giving all the relevant details pertaining to the change in
denomination of the shares.
(16) Unsecured loans:
(a) Break-up of total outstanding unsecured loans taken by the issuer shall be
given in the offer document into the amount borrowed from
promoters/group companies/subsidiaries / material associate companies and
amount borrowed from others. Further, in respect of each such loan of the
former category, terms and conditions shall be disclosed including the
interest rates and repayment schedule. If the loans can be recalled by the
lenders at any time, the same shall be disclosed.
(b) Break-up of the total outstanding unsecured loans taken 262[from the issuer]
by the promoters, group companies, related parties, material associate
companies and others shall be disclosed.
(c) If the loans can be recalled by the lenders at any time, the same shall be
disclosed along with details of such loans.
(17) For a proper understanding of the future tax incidence, the following factors shall
be identified and explained through proper disclosures:
(a) Profits after tax are often affected by the tax shelters which are available.
(b) Some of these are of a relatively permanent nature (for example, arising out
of export profits) while others may be limited in point of time (for example,
tax holidays for new undertakings).
(c) Tax provisions are also affected by timing differences which can be
reversed in the future (for example, the difference between book
depreciation and tax depreciation).
(d) In respect of provision for taxation, adjustment shall be made for deferred
tax assets and deferred tax liabilities in accordance with the requirements of
Accounting Standard (AS 22) ―Accounting for Taxes on Income‖ issued by
the Institute of Chartered Accountants of India and a reconciliation of
taxable income and book profits shall be disclosed in accordance with the
illustrative format given hereunder:
| Year ended March 31, …. | |||||
| 20X1 | 20X2 | 20X3 | 20X4 | 20X5 | |
| (Rupees in lakhs) | |||||
| Tax at Notional Rate | 28 | 70 | 89 | 546 | 675 |
| Adjustments: | |||||
| Export Profits | (4) | (5) | (20) | (100) | (120) |
| Difference between Tax Depreciation and Book Depreciation | (6) | (8) | (9) | (10) | (10) |
| Other Adjustments | 3 | 3 | 4 | 4 | 5 |
| Net Adjustments | (7) | (10) | (25) | (106) | (125) |
| Tax Saving thereon | (3) | (5) | (13) | (49) | (58) |
| Total Taxation | 25 | 65 | 76 | 497 | 617 |
| Taxation on Extraordinary Items- | 53 | (68) | 682 | 852 | |
| Tax on Profits before Extraordinary Items | 25 | 12 | 144 | (185) | (235) |
(18) The issuer, if it so desires, may include in the offer document, the financial
statements prepared on the basis of more than one accounting practices, subject to
disclosure of the material differences arising because of differences in the
accounting policies of different accounting practices.
(19) In respect of the periods, within the period of five years, when the relevant
Accounting Standard issued by the Institute of Chartered Accountants of India
was mandatory in respect of such issuers:
(a) Where, in respect of listed issuers, the auditors report does not deal with the
profits and losses and assets and liabilities of the issuer and its subsidiaries
as a whole, the consolidated balance sheets and profit and loss accounts
shall be presented in respect of the periods, within the period of five years,
when preparation of such statements was mandatory in respect of such
issuers under the listing agreement with the recognised stock exchanges.
(b) In respect of business segments, disclosure shall be made of segment
revenue, segment result and net capital employed and where the primary
segment is a geographic segment, similar details by geographic segments
shall be given.
(20) The latest statement of audited/unaudited quarterly financial results published by
the issuer in accordance with clause 41 of the equity listing agreement with the
stock exchanges shall be reproduced.
(21) It shall be disclosed in the offer document whether any of the sundry debtors is
related to the directors or promoters or the issuer in any way. Similar disclosures
shall be made in case of loans and advances.
(22) If the issuer has entered into any scheme of arrangement during the period for
which the financials are disclosed in the offer document, lead merchant banker to
the issue shall ensure that the following disclosure requirements as specified in
Accounting Standard 14 has been complied with:-
(a) A description of the accounting treatment followed in respect of financials
contained in the schemes of arrangement and the reasons for following the
treatment if it is different from those, which has been prescribed in
applicable Accounting Standards.
(b) In case of deviations, disclosure of the accounting treatment had the
applicable standard been followed.
(c) Impact on the financials, if any, arising due to such deviation.
(23) Proforma Financial Statements
(1) In addition to other requirements laid down in these regulations and
subject to the stipulation in sub-para (3) of this para, the issuer shall
disclose Proforma Financial Statements in the offer document, if—
(a) an acquisition or divestment is made by the issuer after the end of
the latest disclosed annual financial results in the offer document,
due to which certain companies become/cease to be direct or
indirect subsidiaries of the issuer, and
(b) the financial statements of such acquired or divested entity is
material to the financial statements of the issuer company.
Explanation: The financial statements of the acquired or divested entity
shall be ―material‖ to the financial statements of the issuer if:
(i ) the total book value of the assets of the acquired/ divested entity
amounts to more than 20% of the pre-acquisition/pre-divestment
book value of the assets of the issuer;or
(ii) the total income of the acquired/divested entity amounts to more
than 20% of the pre-acquisition/pre-divestment total income of the
issuer.
(2) Proforma Financial Statements shall be disclosed in respect of the following, namely: —
i. the last completed accounting year, and
ii. the period beginning from the date of the end of the last completed
accounting year and ending on the date on which financial
statements of the issuer have been disclosed in the offer document.
(3) Where the said acquisition or divestment does not fulfill the tests of
materiality specified in clause 23(1)(b) above, the fact of the acquisition
or divestment along with the consideration paid/received and the mode of financing such acquisition shall be disclosed.
(4) The information disclosed as per sub-clause (2) and (3) above shall be
certified by the statutory auditor of the issuer.
(BA) Alternate Financial Information of the issuer in further public offers:
(1) An issuer making further public offer may disclose the financial information
specified in clause (2) of this sub-item , in lieu of information specified under
sub-item (B) if:
(i) the issuer is making further public offer in accordance with provisions
of regulation 10;
(ii) the specified securities offered in further public offer are of the same
class of those already listed on a recognised stock exchange;
(iii) financial reports of the issuer are available on the website of any
recognised stock exchange having nationwide trading terminals or on a
common e-filing platform specified by the Board;
(iv) there has not been any change in management of the issuer;
(v) specified securities of issuer have not been listed pursuant to relaxation
granted from clause (b) of sub-rule (2) of rule 19 of Securities Contracts
(Regulation) Rules, 1957.
(2) The issuer satisfying the conditions specified in clause (1) may disclose its
financial statements as under:
(i) Stand-alone and consolidated financial statements of the issuer:
(1) A report by the auditors of the issuer with respect to profit or loss
and assets and liabilities (indicating changes in accounting policies,
if any) in respect of the last completed accounting year for which
audit has been completed.
(2) A report by the auditors of the issuer on a limited review of the
profit or loss and assets and liabilities (indicating changes in
accounting policies, if any), as at a date not earlier than six months
prior to the date of the opening of the issue, where audited accounts
as at such date are not available.
(3) For the purpose of sub-clauses (1) and (2) above, it shall be
sufficient if:
(a) In the statement of the assets and liabilities, the main heads of
assets and liabilities as provided in Part I of Schedule VI of the
Companies Act, 1956 have been provided. If an issuer is
governed by a statute other than the Companies Act, 1956, the
main heads of assets and liabilities as specified in such statute
shall be provided in the statement of assets and liabilities.
(b) In the statement of profit or loss, the information required to be
disclosed under the heads of income and expenditure as per
clause 41 of the equity listing agreement in respect of quarterly
financial information to be filed with the recognised stock
exchanges, has been provided.
(ii) In addition, the following information for the period between the last date of the
balance sheet and profit and loss account sent to the shareholders and up to the
end of the last but one month preceding the date of the offer document shall be
furnished.
(1) Working results of the issuer under following heads:
(a) (i) Sales / turnover
(ii) Other income
(b) Estimated gross profit / loss (excluding depreciation and taxes)
(c) (i) Provision for depreciation
(ii) Provision for taxes
(d) Estimated net profit / loss
(2) Material changes and commitments, if any affecting financial position of the
issuer.
(3) Week-end prices for the last four weeks; current market price; and highest
and lowest prices of equity shares during the period with the relative dates.
(iii) Stock market quotation of shares/ convertible instruments of the company
(high/ low price in each of the last three years and monthly high/low price
during the last six months).
(iv) Accounting and other ratios: The following accounting ratios shall be given for
each of the accounting periods for which financial information is given:
(1) Earnings per share: This ratio shall be calculated after excluding extra
ordinary items.
(2) Return on Networth: This ratio shall be calculated excluding revaluation
reserves.
(3) Net Asset Value per share: This ratio shall be calculated excluding
revaluation reserves.
(4) Accounting and other ratios shall be based on the financial statements
prepared on the basis of Indian Accounting Standards.
(v) Capitalisation Statement:
(1) A Capitalisation Statement showing total debt, net worth, and the debt/
equity ratios before and after the issue is made shall be incorporated.
(2) In case of any change in the share capital since the date as of which the
financial information has been disclosed in the prospectus, a note
explaining the nature of the change shall be given.
(3) An illustrative format of the Capitalisation Statement is specified
hereunder:
(vi) One standard financial unit shall be used in the offer document.
(C) Financial Information of Group Companies:
(1) In case of an issuer not being a government company, statutory authority or
corporation or any special purpose vehicle set up by any of them, the following
information for the last three years, based on the audited statements, in respect of
all the group companies for past three years shall be given, wherever applicable,
along with significant notes of auditors.
(a) Date of Incorporation;
(b) Nature of activities;
(c) Equity Capital;
(d) Reserves (excluding revaluation reserve);
(e) Sales;
(f) Profit after tax;
(g) Earnings per share and Diluted Earnings Per Share;
(h) Net Asset Value;
(i) The highest and lowest market price of shares during the preceding six
months with suitable disclosures for changes in capital structure during the
period and the market value on the date of registering the offer document
with the Registrar of Companies.
(j) If any of the companies has made public or rights issue in the preceding
three years, the issue price of the security, the current market price and
particulars of changes in the capital structure, if any, since the date of issue and a statement regarding the cost and progress of implementation of the
project in comparison with the cost and implementation schedule given in
the offer document.
(k) Information regarding significant adverse factors related to the group
companies and in particular regarding:
(i) whether the company has become a sick company within the
meaning of the Sick Industrial Companies (Special Provisions) Act,
1995 or is under winding up;
(ii) whether the company has made a loss in the immediately preceding
year and if so, the profit or loss figures for the immediately
preceding three years.
(l) Disclosure shall be made about group companies which had remained
defunct and for which application was made to the Registrar of Companies
for striking off the name of the company, during the five years preceding the
date of filing draft offer document with the Board. The disclosure shall
include reasons for the company having become defunct as also all pending
litigations, if any, in respect of such companies.
(m) The information under items (e), (f), (g) and (k)(ii) need not be given in
respect of a company which is a private limited company not being a
subsidiary of a public limited company.
(2) In case there are more than five listed group companies, the financial information
may be restricted to the five largest listed group companies to be determined on
the basis of the market capitalization one month before the date of filing the draft
offer document or in case of a fast track issue, one month before the reference date
referred to in Explanation (I) to sub-regulation (1) of regulation 10. In case there
are less than five listed group companies, the financial information shall be given
for all the listed group companies and in addition for the largest unlisted group
companies (based on turnover) so that the total number of listed and unlisted
group companies for which the information is required to be given does not
exceed five.
In case there are no listed group companies, the financial information shall be
given for the five largest unlisted group companies based on turnover:
Provided that the financial information regarding every such group company
which has become a sick industrial company or is under winding up or has a
negative net worth shall be given.
(3) If the promoters have disassociated themselves from any of the companies or
firms during the three years preceding the date of filing the draft offer document ,
the reasons therefor and the circumstances leading to the disassociation shall be
furnished together with the terms of such disassociation.
(4) Common Pursuits:
(a) In case there are common pursuits among the group- companies/
subsidiaries/associates companies and the issuer, the reasons and
justification for the same shall be spelt out and the conflict of interest
situations shall be stated.
(b) The related business transactions within the group and their significance on
the financial performance of the issuer.
(5) Sales or purchase between group companies/subsidiaries/ associate companies
when such sales or purchases exceed in value in the aggregate ten per cent. of the total sales or purchases of the issuer and also disclose material items of income or
expenditure arising out of such transactions
(6) If any of the other group companies/subsidiaries/associate companies has business
interests in the issuer then the amount of commercial business that the said company
has /proposes to have with the issuer may be quantified. If no, a distinct negative
statement may be incorporated to this effect.
(D) Changes in accounting policies in the last three years
(E) Management‘s Discussion and Analysis of Financial Condition and Results of
Operations as Reflected in the Financial Statements.
(1) Overview of the business of the issuer.
(2) Significant developments subsequent to the last financial year: A statement by
the directors whether in their opinion there have arisen any circumstances since
the date of the last financial statements as disclosed in the offer document and
which materially and adversely affect or is likely to affect the trading or
profitability of the issuer, or the value of its assets, or its ability to pay its
liabilities within the next twelve months.
(3) Factors that may affect the results of operations.
(4) Discussion on the results of operations: This information shall inter-alia contain
the following:
(a) A summary of the past financial results after adjustments as given in the
auditor‘s report for the past three years containing significant items of
income and expenditure shall be given.
(b) A summary of major items of income and expenditure for the last three
years and most recent entering period
(c) The income and sales on account of major product/ main activities.
(d) In case, other income constitutes more than 10% of the total income, the
break up of the same along with the nature of the income, i.e., recurring or
non-recurring shall be stated.
(e) If a material part of the income is dependant upon a single customer or a
few major customers, disclosure of this fact along with relevant data.
Similarly if any foreign customer constitutes a significant portion of the
issuer‘s business, disclosure of the fact along with its impact on the business
on account of exchange rate fluctuations.
(f) In case the issuer has followed any unorthodox procedure for recording
sales and revenues, its impact may be analysed and disclosed.
(g) The nature of miscellaneous income and miscellaneous expenditure for the
interim period and the preceding years
(5) Comparison of recent financial year with the previous financial years (last three
years) on the major heads of the profit and loss statement, including an analysis of
reasons for the changes in significant items of income and expenditure shall also
be given, inter-alia, containing the following:
(a) unusual or infrequent events or transactions including unusual trends on
account of business activity, unusual items of income, change of accounting
policies and discretionary reduction of expenses etc.
(b) significant economic changes that materially affected or are likely to affect
income from continuing operations;
(c) known trends or uncertainties that have had or are expected to have a
material adverse impact on sales, revenue or income from continuing
operations;
(d) future changes in relationship between costs and revenues, in case of events
such as future increase in labour or material costs or prices that will cause a
material change are known;
(e) the extent to which material increases in net sales or revenue are due to
increased sales volume, introduction of new products or services or
increased sales prices;
(f) total turnover of each major industry segment in which the issuer operated;
(g) status of any publicly announced new products or business segment;
(h) the extent to which business is seasonal;
(i) any significant dependence on a single or few suppliers or customers;
(j) competitive conditions.
(6) ‗Management‘s Discussion and Analysis of Financial Condition and Results of
Operations as Reflected in the Financial Statements‘ shall be based on the
financial statements prepared on the basis of Indian accounting practices and may
additionally be presented based on other accounting practices and shall also
include the post audit period..
(X) Legal and Other Information:
(A) Outstanding Litigations and Material Developments:
(1) Litigations involving the issuer/ its directors/promoters/group companies/
subsidiaries:
(i) All criminal proceedings;
(ii) All actions by statutory / regulatory authorities;
(iii) Taxation – Separate disclosures regarding claims related to direct and indirect
taxes, in a consolidated manner giving details of number of cases and total
amount;
(iv) Other pending litigations – As per policy of materiality defined by the board
of the issuer and disclosed in the offer document.
(2) Outstanding dues to creditors:
(i) Based on the policy on materiality of the board of the issuer and as disclosed
in the offer document, disclosure for such creditors;
(ii) Consolidated information on outstanding dues to small scale undertakings
and other creditors, separately giving details of number of cases and amount
involved;
(iii) Complete details about outstanding dues to creditors as per (i) and (ii) above
shall be disclosed on the webpage of the company with a web link thereto in
the offer document.
(3) 268[****]
(4) If any the above mentioned litigations, etc., arise after the filing the offer document,
the facts shall be incorporated appropriately in the offer document. In case there are
no such cases, a distinct negative statement is required to be made in this regard in
the offer document.
(5) Material developments since the last balance sheet date.
(B) Government Approvals or Licensing Arrangements:
(1) Investment approvals (FIPB/ RBI, etc.).
(2) All government and other approvals.
(3) Technical approvals.
(4) Letter of intent or industrial license and declaration of the Central Government,
Reserve Bank of India or any regulatory authority about the non-responsibility for
financial soundness or correctness of the statements.
(XI) Other Regulatory and Statutory Disclosures:
(A) Authority for the issue and details of resolution passed for the issue.
(B) Prohibition by the Board: A specific confirmation that there is no prohibition on the
issuer, promoters, promoter group, directors, group companies or on the natural persons
(4) Shareholders’ agreements:
(a) Key terms of subsisting shareholders‘ agreements, if any (to be provided
even if the issuer is not a party to such an agreement, but is aware of such an
agreement).
(b) Guarantees, if any, given to third parties by the promoters offering their
shares in the proposed offer for sale, stating reasons, amount, obligations on
the issuer, period of guarantee, financial implications in case of default,
security available, consideration etc.
(c) All such agreements shall be included in the list of material contracts
required under sub-item (A) of Item XVI
(5) Other agreements:
(a) The dates, parties to, and general nature of every other material contract, not
being a contract entered into in the ordinary course of the business carried
on or intended to be carried on by the issuer or a contract entered into more
than two years before the date of the offer document.
(b) All such agreements shall be included in the list of material contracts
required under sub-item (A) of Item (XII)
(6) Strategic partners.
(7) Financial partners.
(E) Management:
(1) Board of Directors:
(a) Name, age, qualifications, Director Identification Number, experience,
address, occupation and date of expiration of the current term of office of
manager, managing director, and other directors (including nominee
directors, whole-time directors), giving their directorships in other
companies.
Inserted vide SEBI (Issue of Capital and Disclosure Requirements) (Fourth Amendment) Regulations, 2010, w.e.f. 12.11.2010. To view the notification,Click Here
ICDR – SCHEDULE XII
[See regulation 45(10)]
FORMAT OF REPORT FOR GREEN SHOE OPTION
The report for Green Shoe Option shall be filed in the following format:-
(1) Name of the issuer:
(2) Name of the Stabilising Agent (Registration No. as merchant banker with SEBI):
(3) Issue size (No. of equity shares) :
(4) Issue opened on :
(5) Issue closed on :
(6) Over-allotment in issue (%):
(7) Date of commencement of trading :
(8) Amount in the ‘Green Shoe Option Bank Account‘ (in rupees) :
(9) Details of promoter(s) from whom shares borrowed (Name & Number of shares borrowed):
(10) Date on which the stabilisation period ended :
(11) Number of shares bought during the stabilization period :
(12) Date on which issuer allotted further shares to the extent of shortfall:
(13) Date when the shares in the Green Shoe Option Demat Account were returned to the
promoter(s):
(14) Date when the money in the Green Shoe Option Bank Account was remitted to the issuer:
(15) Details of the Depository account (Special account for Green Shoe Option securities) where shares purchased from the market were kept inter-alia the following:
(a) Depository Participant
(b) Account No.
(c) Number of shares purchased, date wise.
(d) Number of shares taken out, date wise.
(16) Details of amount transferred to the Investor Protection and Education Fund established by the Board.
Amount (in rupees) Cheque/Pay Order details