TaxTMI 
TaxTMI 
GUIDELINES ON BOOK BUILDING
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....pectus. (iv) (a) The securities available to the public shall be separately identified as 'net offer to the public'. (b) The requirement of minimum 25% of the securities to be offered to the public shall also be applicable. (v) In case the book-building option is availed of, underwriting shall be mandatory to the extent of the net offer to the public. (vi) The draft prospectus containing all the information except the information regarding the price at which the securities are offered shall be filed with the Board. (vii) One of the lead merchant banker to the issue shall be nominated by the issuer company as a Book Runner and his name shall be mentioned in the prospectus. (viii) (a) The copy of the draft prospectus filed with the Board may be circulated by the Book Runner to the institutional buyers who are eligible for firm allotment and to the intermediaries eligible to act as underwriters inviting offers for subscribing to the securities. (b) The draft prospectus to be circulated shall indicate the price band within which the securities are being offered for subscription. (ix) The Book Runner on receipt of the offers shall maintain a record ....
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....r to the public to pay in advance all moneys required to be paid in respect of their underwriting commitment by the eleventh day of the closure of the issue the shares allotted as per the private placement category shall be eligible to be listed. (xx) (a) ^2(The bidding terminals shall contain a online graphical display of demand and bid prices updated at periodic intervals, not exceeding 30 minutes. The book running lead manager shall ensure the availability of adequate infrastructure ^3(with syndicate member(s)) for data entry of the bids in a timely manner.) (b) Allotment of securities under the public category shall be eligible to be listed. (xxi) (a) In case of undersubscription in the net offer to the public spillover to the extent of under subscription shall be permitted from the placement portion to the net offer to the public portion subject to the condition that preference shall be given to the individual investors. (b) In case of under subscription in the placement portion spillover shall be permitted from the net offer to the public to the placement portion. (xxii) The issuer company may pay interest on the application moneys till the date of allotm....
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....hts, duties, responsibilities and obligations of the company and stock exchange (s) inter se. The agreement may also provide for a dispute resolution mechanism between the company and the stock exchange. (iv) (b) The company may apply for listing of its securities on an exchange other than the exchange through which it offers its securities to public through the on-line system.) (v) ^9(The Lead Merchant Banker shall act as the Lead Book Runner.) ^10((v) (a) In case the issuer company appoints more than one ^11(merchant banker(s)), the names of all such (merchant bankers(s)) who have submitted the due diligence certificate to SEBI, may be mentioned on the front cover page of the prospectus. A disclosure to the effect that " the investors may contact any of such (merchant bankers(s)), for any complaint pertaining to the issue" shall be made in the prospectus, after the "risk factors".) ^12((v) (b) The lead book runner/issuer may designate, in any manner, the other Merchant Banker(s), subject to the following: 1. the inter-se allocation of responsibilities amongst the merchant bankers shall be disclosed in the prospectus on the page giving the details of the issue manag....
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....us. (viii) (a) ^21(The red herring prospectus shall disclose, either the floor price of the securities offered through it or a price band along with the range within which the price can move, if any.) ^22(Provided that the issuer may not disclose the floor price or price band in the red herring prospectus if the same is disclosed in case of an initial public offer, at least two working days before the opening of the bid and in case of a further public offer, at least one working day before the opening of the bid, by way of an announcement in all the newspapers in which the pre-issue advertisement was released by the issuer or the merchant banker;) ^23(Provided further that the announcement shall contain the relevant financial ratios, computed for both upper and lower end of the price band and also a statement drawing attention of the investors to the section titled "basis of issue price" in the offer document.) ^24(Provided further that where the issuer opts not to make the disclosure of the price band or floor price in the red-herring prospectus in terms of the foregoing proviso, the following shall be additionally disclosed in the red-herring prospectus: (a) ^25(a ....
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.... responsibility given in Schedule II. (x) ^29(Deleted) (xi) (a) ^30(Deleted) (b) ^31 The issuer company shall circulate the application forms to the Brokers) (xii) ^32(Deleted) (xiii) The pre-issue obligations and disclosure requirements as specified in Chapter V and VI respectively of these Guidelines, shall be applicable to issue of securities through book building unless stated otherwise in this Chapter. (xiv) The Book Runner(s) and the issuer company shall determine the issue price based on the bids received through the 'syndicate members' ^33(and 'Self Certified Syndicate Banks'.) ^34((xiv)(a) Retail individual investors may bid at "cut off" price instead of their writing the specific bid prices in the bid forms.) (xv) On determination of the price, the number of securities to be offered shall be determined (issue size divided by the price which has been determined). (xvi) Once the final price (cut-off price) is determined all those bidders whose bids have been found to be successful (i.e. at and above the final price or cut-off price) shall become entitle for allotment of securities. (xvii) No incentive, whether in cash or kind, shall....
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....ents as specified in these Guidelines, the following disclosures shall be suitably made: (i) ^44(The particulars of syndicate members, brokers, Self Certified Syndicate Banks, registrars, bankers to the issue, etc.) (ii) The following statement shall be given under the 'basis for issue price':- "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." (iii) ^45(The following accounting ratios shall be given under the basis for issue price for each of the accounting periods for which the financial information is given: 1. EPS, pre-issue, for the last three years (as adjusted for changes in capital). 2. P/E pre-issue. 3. Average return on net-worth in the last three years. 4. Net-Asset value per share based on last balance sheet. 5. Comparison of all the accounting ratios of the issuer company as mentioned above with the industry average and with the accounting ratios of the peer group (i.e. companies of comparable size in the same industry. (Indicate the source from which industry average and accounting ratios of the pe....
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....n case 75% of the net offer to the public is offered through the book building, process shall not be less than the number of mandatory collection centres as specified in these regulations. In case 100% of the net offer to the public is made through book building process, the bidding centres shall be at all the places, where the recognised stock exchanges are situated.) (b) The same norms as applicable for collection centres shall be applicable for the bidding centres also. (vi) ^57(Individual as well as qualified institutional buyers shall place their bids only through the 'brokers' who shall have the right to vet the bids. Provided that ASBA investors shall place their Application Supported by Blocked Amount through Self Certified Syndicate Banks.) (vi)(a) ^58(During the period the issue is open to the public for bidding, the applicants may approach the brokers of the stock exchange/s through which the securities are offered under on-line system or Self Certified Syndicate Banks, as the case may be, to place an order for bidding for the securities. Every broker shall accept orders from all clients/investors who place orders through him and every Self Certified Syndicat....
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....) not more than 50% of the net offer to the public shall be available for allocation to Qualified Institutional Buyers. Provided that, ^71(50% of net offer to public) shall be mandatorily allotted to the Qualified Institutional Buyers, in case the issuer company is making a public issue under Clause 2.2.2 and 2.3.2 of these guidelines) ^72(Provided further that, in respect of issues made under Rule 19(2)(b) of Securities Contract (Regulation) Rules 1957, with 60% mandatory allocation to Qualified Institutional Buyers, the percentage allocation to retail individual investors and non institutional investors in terms of clause 11.3.5(i)(a) shall be 30% and 10% respectively.) (ii) ^73(In case an issuer company makes an issue of 75% of the net offer to public through book building process and 25% at the price determined through book building - a. in the book built portion, not less than 25% of the net offer to the public, shall be available for allocation to non Qualified Institutional Buyers and not more than 50% of the net offer to the public shall be available for allocation to Qualified Institutional Buyers. b. the balance 25% of the net offer to the public, offered a....
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....tors. i) There shall be a lock-in of 30 days on the shares allotted to the Anchor Investors from the date of allotment in the public issue. j) No person related to the book running lead managers/ promoters/promoter group in the concerned public issue or the book running lead managers to the concerned public issue can apply under Anchor Investor category. k) The parameters for selection of Anchor Investors shall be clearly identified by the merchant banker and shall be available as part of records of the merchant banker for inspection by SEBI. l) The applications made by Qualified Institutional Buyers under Anchor Investor category and under Non Anchor Investor category may not be considered as multiple applications. ) (iii) ^77(Allotment to retail individual investors, non-institutional investors and qualified institutional buyers shall be made proportionately as illustrated in Schedule XVIII.) (iv) ^78(In the event of under subscription in any category, the undersubscribed portion shall be allocated to the bidders as per disclosures made in terms of clause 11.3.2(v). Provided that, the unsubscribed portion in the "Qualified Institutional Buyer" category, shall....
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....ssociated shall maintain records of the book building prices. (iii) The Board shall have the right to inspect the records, books and documents relating to the Book building process and such person shall extend full co-operation. ^99(11.4 Applicability to fast track issues) 100(11.4.1 Unless specified otherwise in this Chapter and unless the context otherwise requires, all references in this Chapter to "draft prospectus" shall be construed as having been made to "red herring prospectus", in application to fast track issues.) ^101(11.4.2 Nothing contained in sub-clause (vi) of clause 11.2 or sub-clause (viii) of clause 11.3.1 shall apply to a fast track issue.) ******* 1 Inserted heading of the Chapter vide SEBI Circular No. SEBI/CFD/DIL/DIP/14/2005/25/1 dated January 25, 2005. 2 Substituted vide SEBI Circular No. SEBI/CFD/DIL/DIP/28/2007/29/11 dated November 29, 2007 for the following "Allotment of securities under the pubic category shall be made as per the Guidelines." 3 Inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/31/2008/30/7 dated July 30, 2008. 4 Substituted vide SEBI Circular No. RMB (Compendium) Series Circular No. 2 (2001-2002) da....
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....ough it and shall not mention the maximum price or the indicative price band" Initially inserted vide SEBI Circular No. RMB (Compendium) Series Circular No. 1 (2001-2002) dated November 29, 2001. 22 Substituted vide SEBI Circular No. SEBI/CFD/DIL/DIP/34/2009/24/09 dated February 24, 2009, for the following proviso, which was inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/15/2005/29/3 dated March 29, 2005. "Provided that in case of a further public issue of a class of securities which is already listed on a recognised stock exchange, it shall not be necessary to disclose the floor price or price band in the red-herring prospectus if the same is disclosed by way of an announcement made by the issuer or the merchant banker at least one day before the opening of the bid in all those newspapers where pre-issue advertisement was released." 23 Substituted vide SEBI Circular No. SEBI/CFD/DIL/DIP/34/2009/24/09 dated February 24, 2009, for the following proviso, which was inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/15/2005/29/3 dated March 29, 2005. "Provided that in case of a further public issue of a class of securities which is already listed on a recognised stock ex....
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....the names, addresses and the telephone numbers of the stock brokers and centres for bidding". Prior to the above, the clause was substituted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 for the following: "The issuer company shall after receiving the final observations if any on the offer document from the Board make an advertisement in an English National daily with wide circulation, one Hindi National newspaper and a Regional language newspaper with wide circulation at the place where the registered office of the Issuer company is situated". 31 Substituted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 for the following: "The advertisement so issued shall contain the salient features of the final offer document as specified in Form 2A of the Companies Act circulated along with the application form." 32 Omitted the following clause vide SEBI Circular No. RMB (Compendium) Series Circular No. 1 (2001-2002) dated November 29, 2001: "The issuer company shall compulsorily offer an additional 10% of the issue size offered to the public through the prospectus." 33 Inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/31/2008/30/7 dated July 30,....
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....8. 44 Substituted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 for the following: "The particulars of syndicate members along with the details of registrars, bankers to the issue, etc." 45 Substituted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 for the following: "The following accounting ratios shall be given under the basis for issue price for each of the accounting periods for which the financial information is given: 1 EPS, pre-issue, for the last three years (as adjusted for changes in capital). 2 P/E, pre-issue and comparison thereof with industry P/E where available (giving the source from which industry P/E has been taken). 3 Average return on net-worth in the last three years. 4. Net-Asset value per share based on last balance sheet. 5. The accounting ratios disclosed in the offer document shall be calculated after giving effect to the consequent increase of capital on account of compulsory conversions outstanding, as well as on the assumption that the options outstanding, if any, to subscribe for additional capital shall be exercised." 46 Omitted the following sub-clause, vide SEBI Circular No. SEBI/CFD/DIL/DIP/....
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....B (Compendium) Series Circular No. 1 (2001-2002) dated November 29, 2001 for the following: "The number of bidding centres shall not be less than the number of mandatory collection centres specified in these Guidelines." 57 Substituted vide SEBI Circular No. SEBI/CFD/DIL/DIP/31/2008/30/7 dated July 30, 2008 for the following: "(Individual as well as qualified institutional buyers shall place their bids only through the 'brokers' who shall have the right to vet the bids. The applicant shall enclose the proof of DP ID and Client ID along with the application, while making bid)" 58 Substituted vide SEBI Circular No. SEBI/CFD/DIL/DIP/31/2008/30/7 dated July 30, 2008 for the following: "During the period the issue is open to the public for bidding, the applicants may approach the brokers of the stock exchange/s through which the securities are offered under on-line system, to place an order for bidding to the securities. Every broker shall accept orders from all clients/investors who place orders through him." 59 Inserted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 the following clause, which has been deferred vide press release no. PR No.246/2003 dated....
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..... 11 dated August 14, 2003 for the following: "In case an issuer company makes an issue of 100% of the net offer to public through 100% book building process - a) not less than 25% of the net offer to the public shall be available for allocation to retail individual investors i.e. investors applying for upto 1000 securities; b) not less than 15% of the net offer to the public shall be available for allocation to non institutional investors i.e. investors applying for more than 1000 securities; c) not more than 60% of the net offer to the public shall be available for allocation to Qualified Institutional Buyers." Initially substituted vide SEBI Circular No. RMB (Compendium) Series Circular No. 1 (2001-2002) dated November 29, 2001 for the following: "Atleast 15% of the issue size shall be reserved for allocation to individual investors applying upto 10 tradeable lots through the syndicate member." 69 Substituted vide SEBI Circular No. SEBI/CFD/DIL/DIP/15/2005/29/3 dated March 29, 2005 for the figures "25%". 70 Substituted vide SEBI Circular No. SEBI/CFD/DIL/DIP/15/2005/29/3 dated March 29, 2005 for the figures "25%". 71 Substituted vide SEBI Circular No. SEB....
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....ar No. RMB (Compendium) Series Circular No. 1 (2001-2002) dated November 29, 2001 78 Substituted the sub-clause vide SEBI Circular No. SEBI/CFD/DIL/DIP/15/2005/29/3 dated March 29, 2005 for the following: "In case of under subscription in any category, the undersubscribed portion may be allocated to the bidders in the other categories. Provided that, the unsubscribed portion in the "Qualified Institutional Buyer" category, shall not be available for subscription to other categories, in case the issuer company has made an issue of securities under clause 2.2.2 or clause 2.3.2 of these guidelines." Prior to the above substitution, the sub-clause was substituted vide SEBI Circular No. RMB (Compendium) Series Circular No. 1 (2001-2002) dated November 29, 2001 for the following: "In case of undersubscription in the category referred to in clause (ii) of this clause, the Issuer company has the option to allocate it to whichever category it deems fit or let the undersubscribed portion lapse." 79 Omitted the following sub-clause, vide SEBI Circular No. SEBI/CFD/DIL/DIP/16/2005/19/9 dated September 19, 2005: "The allocation to QIBs shall be made as per disclosures....
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.... ensure that each successful client/applicant pays submits the duly filled-in and signed application form to him along with the amount payable towards the application money by the payin date. Amount already paid by the applicant as margin money shall be adjusted towards the total allocation money payable. The broker shall, thereafter, hand over the application forms of the successful applicants who have paid the application money, to the exchange, which shall submit the same to the Registrar to Issue/company for their records" 84 Substituted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 for the following: "In case the issuer company has made an issue of 75% of the net offer to public through book building process and 25% at the price determined through book building - a. the offer of 25% of the net offer to the public, made at a price determined through book building, shall open within 15 days from the date of closure of bidding ; b. the offer for subscription to the public, shall remain open for a period of atleast 3 working days after completing all the requirements of advertisement and despatch of issue material to all the stock exchanges ; c. during....
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....the shortfall. 87 Inserted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 the following clause, which has been deferred vide press release no. PR No.246/2003 dated October 13, 2003: On pay-in date, the clearing house shall, without any instruction from the broker, debit the escrow account of each broker to the extent of allocation made to his clients/investors and credit the amount so collected from each broker to the 'Issue Account'. 88 Inserted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 the following clause, which has been deferred vide press release no. PR No.246/2003 dated October 13, 2003: The concerned Exchange shall not use the Settlement/Trade Guarantee Fund of the Exchange for honoring brokers commitments in case of failure of broker to bring in the funds. 89 Inserted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 the following clause and the aforesaid inserted clause was deferred vide press release no. PR No.246/2003 dated October 13, 2003: "The broker shall open an 'Escrow Securities Account' with any depository for the purpose of receiving credit of securities on behalf of the clients. 90 Inserted vide SEBI....