TaxTMI 
TaxTMI 
AMENDMENTS TO SEBI (DISCLOSURE AND INVESTOR PROTECTION) GUIDELINES, 2000
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....sures for an IPO. The draft offer document is, however, processed by SEBI and stock exchanges in a manner similar to that of a draft IPO document. (b) It is felt that there is a need to enable well established and compliant listed companies to access Indian primary market in a time effective manner through follow-on public offerings and rights issues. Accordingly, it has been decided to enable listed companies satisfying certain specified requirements to make Fast Track Issues (FTIs). (c) The amendments made vide this circular enable such listed companies to proceed with follow-on public offering/rights issue by filing a copy of the Red Herring Prospectus (in case of book built issue)/Prospectus (in case of fixed price issue) registered with the Registrar of Companies or the letter of offer filed with Designated Stock Exchange, as the case may be, with SEBI and stock exchanges. Such companies are not required to file draft offer document with SEBI and stock exchanges. (ii) Amendments to Guidelines on Issue of Indian Depository Receipts (IDRs) - Presently, SEBI (DIP) Guidelines provide that only Qualified Institutiona....
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....tely preceding the record date, and (ii) who makes application or bids in a public issue for value not exceeding Rs. 1,00,000. (vi) Clarification on the term CEO/CFO - SEBI (DIP) Guidelines requires all directors, CEO and CFO of the issuer company to certify that disclosures made in the offer document are true and correct. It is now clarified that the terms "CEO" and "CFO" in SEBI (DIP) Guidelines shall have the same meaning as assigned to them in clause 49 of the Equity Listing Agreement. (vii) Deletion of the chapter on "Guidelines for Issue of Capital by Designated Financial Institutions (DFIs)" - SEBI had introduced separate guidelines in 1992 for primary issuances by DFIs, to place companies/corporations/institutions engaged mainly in financing of developmental activities and playing a catalytic role in the infrastructure development of the country on a different footing. Presently, DFIs operationally compete on equal footing with private entities and it is felt that DFIs, as a concept, may have outlived its utility. It has therefore been decided to remove the special dispensations given to DFIs by deleting the chapter on "Guidelines for Issue of ....
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....egistered with the Registrar of Companies or letters of offer filed with stock exchanges on or after the date of this circular. (ii) Amendments to clauses 5.3.3, 6.8.4.1 and 6.12.4 shall be applicable to all draft offer documents filed with SEBI after the date of this circular. (iii) All other amendments shall come into force with immediate effect. 4. This circular and the entire text of SEBI (DIP) Guidelines, including the amendments issued vide this circular, are available on SEBI website at www.sebi.gov.in under the categories "Legal Framework" and Issues and Listing. 5. All registered merchant bankers are directed to ensure compliance with the applicable amendments made vide this circular. Yours faithfully, Neelam Bhardwaj Encl.: Annexure I Annexure I Amendments to SEBI (DIP) Guidelines, 2000 Chapter I Preliminary 1. In clause 1.2.1, after sub-clause (xiib), the following sub-clause shall be inserted, namely:- "(xiic) "Fast Track Issue" means a public issue or rights issue made by a listed company which satisfies all the requirements of clause 2.1.2A." 2. In clause 1.2.1, after sub-claus....
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....mediately preceding the reference date; (f) The impact of auditors' qualifications, if any, on the audited accounts of the company in respect of the financial years for which such accounts are disclosed in the offer document does not exceed 5 per cent of the net profit/loss after tax of the company for the respective years. (g) No prosecution proceedings or show cause notices issued by the Board are pending against the company or its promoters or whole time directors as on the reference date; and (h) The entire shareholding of the promoter group is held in dematerialised form as on the reference date. Explanation - For the purposes of this clause : (a) "Reference date" shall mean : (i) in case of a public issue of securities by a listed company satisfying all the requirements specified in this clause, the date of filing of red herring prospectus (in case of a book built issue) or pr....
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....s 3.4.1 and 3.4.2", the words and figures "sub-clauses 3.4.1, 3.4.1A and 3.4.2" shall be substituted. Chapter IV Promoters' contribution and lock-in requirements PART II - Lock-in requirements 7. For clause 4.0, the following clause shall be substituted, namely :- "4.0 Promoters' contribution in any issue shall be in accordance with the following provisions as on - (i) the date of filing red herring prospectus (in case of a book built issue) or prospectus (in case of a fixed price issue) with ROC or letter of offer with Designated Stock Exchange, as the case may be, in case of a fast track issue; and (ii) the date of filing draft offer document with the Board, in any other case". PART II - Lock-in requirements 8. Clauses 4.13 and 4.13.1 and the proviso to the latter shall be omitted. Chapter V Pre-issue obligations 9. In clause 5.2, the following sentence shall be inserted at the end, namely :- "In case of a fast track issue, the requisite fee shall be paid along with the copy of the red herring prospectus, prospectus or let....
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.... the contents of the final offer documents hosted on the websites are the same as that of their printed versions, shall apply to a fast track issue." 18. In clause 5.6A.1, the following proviso shall be inserted, namely:- "Provided that in case of a fast track issue, the advertisement shall be made before the issue opening date." 19. After 5.6B.1, the following clause shall be inserted, namely:- "5.6B.1 IPO grading reports for each of the grades obtained by the unlisted company shall be included in the list of material contracts required under clause 6.15.1." 20. In clause 5.8.1 for the word and figures "30 days", the word and figures "21 days" shall be substituted. 21. After clause 5.15.1, the following clauses shall be inserted namely:- "5.15A Non applicability of certain provisions to fast track issues 5.15A.1 Nothing contained in clauses 5.3.1.3, 5.3.3.1, 5.3.3.2, 5.3.4.1, 5.3.5.1, 5.3.6.1, 5.3.6.2 and sub-clauses (i) and (iii) of clause 5.6.2 shall apply to a fast track issue." Chapter VI Contents of offer document Section I - Contents of the prospectus 22. In clause 6.3 - (i) before the existing first proviso, th....
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....listed in the Memorandum of Association or other charter or instrument governing the issuer shall be made in the prospectus". 26. In clause 6.8.4.6, after sub-clause (a), the following clause shall be inserted, namely:- "(b) A cash flow statement showing funds which have been brought in as promoters' contribution and have been deployed prior to the public issue". 27. After clause 6.9.5.7, the following clause shall be inserted, namely:- "6.9.5.7A Corporate Governance - 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." 28. In clause 6.9.6.1, after sub-clause (b), the following proviso shall be inserted, namely :- "Provided that nothing contained in sub-clause (b) shall apply to a fast track issue." 29. In clause 6.9.6.2, after sub-clause (c), the following proviso shall be inserted, namely:- "Provided that nothing contained in sub-clause (c) shall apply to a fa....
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....s (in case of issues other than fast track issues), red herring prospectus and prospectus shall be approved by the Board of Directors of the issuer and shall be signed by all Directors, the Chief Executive Officer, i.e., the Managing Director or Manager within the meaning of the Companies Act, 1956 and the Chief Financial Officer, i.e., the whole-time Finance Director or any other person heading the finance function and discharging that function. (b) The signatories shall further certify that all disclosures made in the prospectus are true and correct." Section II - Contents of abridged prospectus 39. For sub-clause (e)(iii) of clause 6.19.2, the following sub-clause shall be inserted, namely :- "(iii) Instruction to applicants to disclose Permanent Account Number in the application form, irrespective of the amount for which application/bid is made, along with the instruction that applications without Permanent Account Number would be rejected." Section III - Contents of the letter of offer 40. In clause 6.39- (i) for the words "section of this C....
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....), for the word and figures "120 days", the word and figures "180 days" shall be substituted. 44. In clause 6A.26, for sub-clause (1), the following shall be substituted, namely :- "1. Promoters and their background. If there are no identifiable promoters, details and background of all the persons who hold 5 per cent or more equity share capital of the company." Part IV : Contents of Abridged Prospectus (See Rule 8(i) of the IDR Rules) 45. For sub-clause (iii) of clause 8.3, the following sub-clause shall be inserted, namely :- "(iii) Instruction to applicants to disclose Permanent Account Number in the application form, irrespective of the amount for which application/bid is made, along with the instruction that applications without Permanent Account Number would be rejected." Chapter VII Post-Issue Obligations 46. After clause 7.2.2.2, the following clause shall be inserted, namely :- "7.2.2.3 Due diligence certificate to be submitted with final post-issue monitoring report - The post issue lead merchant banker shall file a due diligence certificate in the format given in Schedule XVI-A along with the final post....
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.... contained in this clause shall apply to public issues or rights issues made by banks or public financial institutions or to offers for sale." 54. For clause 8.17.2, the following clause shall be substituted, namely :- "8.17.2 (i) A monitoring report, as per the format specified in Schedule XIX, shall be filed by the monitoring agency with the issuer company, on a half yearly basis, till the proceeds of the issue have been entirely utilized. (ii) The monitoring report together with the management's comments thereon shall be placed by the issuer company before its audit committee without delay." 55. In clause 8.18.4, after the words "in the draft prospectus" and before the full stop, the words "and/or red herring prospectus and prospectus filed with ROC" shall be inserted. 56. In clause 8.21.1- (i) for the words and figures "22nd day", the words and figures "31st day" shall be substituted; (ii) in proviso to the clause, after the words "shelf prospectus" and before the full stop, the words "or fast track issue" shall be inserted. Chapter IX Guidelines on Advertisement 57. After clause 9.2, the following clause....
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....shares, FCDs, PCDs or any other financial instrument which may be converted into or exchanged with equity shares at a later date unless it has obtained the Permanent Account Number of the proposed allottees." Chapter XVI Operational Guidelines 65. In clauses 16.1.2 and 16.1.3, the following proviso shall be inserted, namely :- "Provided that nothing contained in this clause shall apply to a fast track issue." 66. In clause 16.1.5, the following proviso shall be inserted, namely :- "Provided that nothing contained in sub-clauses (a) and (b) shall apply to a fast track issue." Schedule-III Format of due Diligence Certificate to be given by lead Merchant Banker(s) Alongwith Draft offer Document 67. In the main part- (i) In item (2), in clause (c), the words "and such disclosures are in accordance with the requirements of the Companies Act, 1956, the SEBI (Disclosure and Investor Protection) Guidelines, 2000 and other applicable legal requirements" shall be inserted at the end. (ii) After item (5), the following paragraphs shall be inserted, namely :- "6. We certify that clause 4.6 of the SEBI (Disclo....
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....disclosure has been made in the prospectus that the investors shall be given an option to get the shares in demat or physical mode. 13. We certify that the following disclosures have been made in the draft prospectus/letter of offer : (a) An undertaking from the issuer that at any given time there shall be only one denomination for the shares of the company and (b) An undertaking from the issuer that it shall comply with such disclosure and accounting norms specified by the Board from time to time." 68. In the Annexure to the Due Diligence Certificate, after item 23, the following items shall be inserted, namely :- "24. A detailed checklist indicating compliance with each of the clauses contained in Chapters II, III, IV, V, VI, VI-A, VII, VIII, VIII-A, IX, X, XI, XI-A, XII-A and XVI of the SEBI (Disclosure and Investor Protection) Guidelines, 2000." Schedule III-A Format of due Diligence Certificate to be given by Debenture Trustee 69. In Schedule III-A, in item (2)(d), between the words "draft prospectus/" and "letter of offer", the words "Red....
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....losures as specified in the SEBI (Disclosure and Investor Protection) Guidelines, 2000. 5. We confirm that agreements have been entered into with both the depositories for dematerialisation of the securities of the issuer. 6. We certify that as per the requirements of 1st proviso to clause 4.9.1 of the SEBI (Disclosure and Investor Protection) Guidelines, 2000, cash flow statement has been prepared and disclosed in the red herring prospectus and/or prospectus." Schedule VIIA Order of presentation of disclosures in prospectus 72. For clause (X)(2)(xvii)(c), the following clause shall be substituted, namely :- "(c) Permanent Account Number." 73. After Schedule XVI, the following Schedule shall be inserted, namely :- "Schedule XVI-A (Clause 7.2.2.3) Format of due diligence certificate to be given by lead merchant banker(s) along with final post issue monitoring report To Securities and Exchange Board of India Dear Sirs, Sub. : Issue of . . . . . by Ltd. . . . . . We, the under noted post issue Lead Merchant Banker(s) to the abovementioned issue state as follows : (1) We confirm that- ....