The 1st Step in the process of an IPO for a company is hiring a Merchant like us!
We study the financial parameters of the company and sign an underwriting agreement. We assure the company of the capital being raised and act as intermediaries between the company and its investors. Our experts assist and guide you at every step. We ensure to act within the legal framework.
Eligibility requirements for an initial public offer:
(1) An issuer shall be eligible to make an initial public offer only if: a) it has net tangible assets of at least three crore rupees, calculated on a restated and consolidated basis, in each of the preceding three full years (of twelve months each), of which not more than fifty per cent. are held in monetary assets: Provided that if more than fifty per cent. of the net tangible assets are held in monetary assets, the issuer has utilised or made firm commitments to utilise such excess monetary assets in its business or project; Provided further that the limit of fifty per cent. on monetary assets shall not be applicable in case the initial public offer is made entirely through an offer for sale. b) it has an average operating profit of at least fifteen crore rupees, calculated on a restated and consolidated basis, during the preceding three years (of twelve months each), with operating profit in each of these preceding three years; c) it has a net worth of at least one crore rupees in each of the preceding three full years (of twelve months each), calculated on a restated and consolidated basis; d) if it has changed its name within the last one year, at least fifty per cent. of the revenue, calculated on a restated and consolidated basis, for the preceding one full year has been earned by it from the activity indicated by its new name.
(2) An issuer not satisfying the condition stipulated in sub-regulation (1) shall be eligible to make an initial public offer only if the issue is made through the book-building process and the issuer undertakes to allot at least seventy five per cent. of the net offer to qualified institutional buyers and to refund the full subscription money if it fails to do so.
SME Listing exchange is a stock exchange platform dedicated to trading the shares of small and medium scale enterprises (SMEs) who, otherwise, find it difficult for themselves to get listed in the main exchanges.
The SME IPO listing platform of the Exchange shall be open for those SMEs whose post-issue paid-up capital shall be less than or equal to Rs.25 cores.
Eligibility requirements for SME Listing:
- The company should be incorporated under the Companies Act 1956/ 2013 in India
- Post issue paid up capital (face value) up to Rs.25 crore
- Track record of at least 3 years
- Positive net worth
- Operating profit from operations for at least any 2 out of 3 financial years
- Formatting mandatory for a company to have a website.
- It is mandatory for the company to facilitate trading in Demat securities and enter into an agreement with both the depositories.
- There should not be any change in the promoters of the company in preceding one year from date of filing the application to BSE for listing under SME segment.
- Positive Net worth.
- Net Tangible Assets should be Rs 1.5 Crore.
- Track Record
- The company or the partnership/proprietorship/LLP Firm or the firm which have been converted into the company should have combined track record of at least 3 years.
- In case it has not completed its operation for three years then the company/partnership/proprietorship/LLP should have been funded by Banks or financial institutions or Central or state government or the group company should be listed for at least two years either on the main board or SME board of the Exchange.
- The company or the firm or the firm which have been converted into the company should have combined positive cash accruals (earnings before depreciation and tax)in any of the year out of last three years and its net worth should be positive.
- It is mandatory for a company to have a website.
- It is mandatory for the company to facilitate trading in dem at securities and enter into an agreement with both the depositories.
- There should not be any change in the promoters of the company in preceding one year from date of filing the application to BSE for listing under SME segment.
Innovators Growth Platform previously known as Institutional Trading Platform was launched by SEBI for a listing of issuers which are in intensive use of technology, information technology, intellectual property, data analytics, biotechnology, or nano-technology to provide products, services, or business platforms with substantial value addition. SEBI made it easier for startups to list on Innovators Growth Platform by approving changes in order to encourage startups to go public locally and list on the Innovators Growth Platform.
Eligibility requirements for Start-Up Listing:
- Post issue paid up capital (face value) up to Rs.25 crore.
- Track record of at least 3 years.
- Positive net worth
- Annual Revenue: Not less than 10 Crores
- Annual Growth: 20% (Number of Users/Revenue Growth/Customer base).
- Shareholding Condition.
- At least 10 % Pre – Issue Capital as on the date of filing of draft offer document held by:
- A member of the angel investor network or Private Equity Firms Such angel investor network or Private Equity should have had an investment in the startup ecosystem Investment in 25 or more startups and aggregate investment is more than 50 crores.
- The Company shall be incorporated under the Companies Act, 1956 / 2013. The company should be registered as start-up with DPIIT. In case the company is not registered as Start-up with DPIIT then the company’s paid-up capital should be minimum Rs. 1 crore.
- The company or the partnership / proprietorship / LLP firm or the firm which have been converted into the company should have a combined track record of at least 2 years at the time of filing the prospectus with BSE
- The post issue paid up capital of the company (face value) shall not be more than Rs. 25 crores.
- There should be preferably investment by QIB investors (as defined under SEBI ICDR Regulations, 2009)/Angel Investors/Accredited Investors for a minimum period of 2 years at the time of filing of draft prospectus with BSE.
- The Company should not have been referred to National Company Law Tribunal (NCLT) under Insolvency and Bankruptcy Code, 2016.
- There should be no winding up petition against the company that has been accepted by the National Company Law Tribunal (NCLT). None of the Promoter / directors of the company have been debarred by any regulatory agencies.
Qualified Institutional Placement allows an Indian-listed company to raise capital from domestic markets without having to submit any pre-issue filings or legal paperwork to the market regulators. Through QIP, capital can be raised within a short span of time. QIP’s are both time and cost-efficient as the legal work and regulations are relatively low, thus making it easier for an already listed company to raise capital from the market.
Eligibility requirements for QIP’s:
(a) a special resolution approving the qualified institutions placement has been passed by its shareholders, and the special resolution shall, among other relevant matters, specify that the allotment is proposed to be made through qualified institutions placement and the relevant date referred to in sub-clause (ii) of clause (b) of regulation 171;
Provided that no shareholders’ resolution will be required in case the qualified institutions placement is through an offer for sale by promoters or promoter group for compliance with minimum public shareholding requirements specified in the Securities Contracts (Regulation) Rules, 1957;
Provided further that allotment pursuant to the special resolution referred to in this clause (a) of regulation 172 shall be completed within a period of 365 days from the date of passing of the resolution.
b) the equity shares of the same class, which are proposed to be allotted through qualified institutions placement or pursuant to conversion or exchange of eligible securities offered through qualified institutions placement, have been listed on a stock exchange for a period of at least one year prior to the date of issuance of notice to its shareholders for convening the meeting to pass the special resolution:
Provided that where an issuer, being a transferee company in a scheme of compromise, arrangement and amalgamation sanctioned by a High Court under sections 391-394 of the Companies Act, 1956 or approved by a tribunal or the Central Government under sections 230 to 234 of the Companies Act, 2013, whichever is applicable makes qualified institutions placement, the period for which the equity shares of the same class of the transferor company were listed on a stock exchange having nation-wide trading terminals shall also be considered for the purpose of computation of the period of one year.
Provided further that this clause shall not be applicable to an issuer proposing to undertake qualified institutional placement for complying with the minimum public shareholding requirements specified in the Securities Contracts (Regulation) 1957.
c) An issuer shall be eligible to make a qualified institutions placement if any of its promoters or directors is not a fugitive economic offender.
(2) All eligible securities issued through a qualified institutions placement shall be listed on the recognised stock exchange where the equity shares of the issuer are listed.
Provided that the issuer shall seek approval under rule 19(7) of the Securities Contracts (Regulation) Rules, 1957, if applicable.
(3) The issuer shall not make any subsequent qualified institutions placement until the expiry of six months from the date of the prior qualified institutions placement made pursuant to one or more special resolutions.
Follow-on public offering (FPO) refers to the shares issued by an already listed company. These are the additional shares issued by the company after an initial public offering (IPO). They are also known as secondary offerings as they follow an IPO. They could be of 2 main types – Dilutive (New shares are added) and non-dilutive. In Non- dilutive FPO, the existing private shares are sold publicly. We guide and facilitate firms with Follow on public Offers at every possible stage.
Eligibility requirements for FPO’s:
Only such fully paid-up equity shares may be offered for sale to the public, which have been held by the sellers for a period of at least one year prior to the filing of the draft offer document: Provided that in case the equity shares received on conversion or exchange of fully paid-up compulsorily convertible securities including depository receipts are being offered for sale, the holding period of such convertible securities, including depository receipts, as well as that of resultant equity shares together shall be considered for the purpose of calculation of one year period referred in this sub-regulation. Provided further that such holding period of one year shall be required to be complied with at the time of filing of the draft offer document.
Companies issue fixed income instruments to buyers in the form of non-convertible debentures. They are issued by companies to raise long-term capital.
NCDs can be issued via a private placement mechanism or a public issue. Nowadays, the private placement mechanism is extensively used for raising funds through NCDs. Most private, public and non-banking financial companies opt for the route of the private placement for issuance of NCDs.
Eligibility requirements for NCD’s:
(1) No issuer shall make an issue ofnon-convertible securities if as on the date of filing of draft offer document or offer document:
(a) the issuer, any of its promoters, promoter groupor directors are debarred from accessing the securities market or dealing in securities by the Board.
(b) any of the promoters or directors of the issuer is a promoter or director of another company which is debarred from accessing the securities marketor dealing in securities by the Board
(c) the issuer or any of its promoters or directors is a wilful defaulter
(d) any of the promoters or whole time directors of the issuer is a promoter or whole time director of another company which is a wilful defaulter
(e) any of its promoters or directors is a fugitive economic offender
(f) any fine or penalties levied by the Board/Stock Exchanges is pending to be paid by the issuer at the time of filing the offer document: Provided that the:
- restrictions mentioned at (b) and (d) above shall not be applicable in case of a person who was appointed as a director only by virtue of nomination by a debenture trustee in other company.
- restrictions mentioned in (a) and (b) above shall not be applicable if the period of debarment is over as on date of filing of the draft offer document with the Board.
- restrictions mentioned at (c) and (d) shall not be applicable in case of private placement of non-convertible securities.
(2) No issuer shall make a public issue of non-convertible securities if as on the date of filing of draft offer document or offer document the issuer is in default of payment of interest or repayment of principal amount in respect of non -convertible securities, if any, for a period of more than six months.
Migration of listed companies to mainboard means to transfer its listed securities on main board of stock exchanges from other platforms like SME Exchange. Companies listed on the SME exchange need to have a market capitalization of at least Rs 25 crore in order to move up to the mainboard. We guide companies with the legal framework and execution of the same.
Eligibility requirements for Migration of Mainboard IPO:
An issuer that has listed its specified securities on a recognized stock exchange may at its option migrate to the main board of that recogniszed stock exchange as per the following criteria subject to compliance with the eligibility requirements of the stock exchange.
- The company should have been listed on the IGP for a minimum period of one year;
- At the time of making the application for trading under regular category of main board, the number of shareholders should be minimum 200;
- The company should have profitability/ net worth track record of 3 years or have 75% of its capital as on the date of application for migration held by Qualified Institutional Buyers in accordance with Regulation 6(1) and 6(2) of the ICDR Regulations for main board listings.
- Minimum promoter’s contribution shall be 20% which shall be locked in for 3 years. Period of earlier lock-in of 6 months served at the time of listing on IGP shall be deducted from the stipulated lock-in requirement of 3 years.
Buyback refers to the practice of a company buying back its own shares from the market. It can opt for an open market route where the shares are purchased from the secondary markets, or a tender offer route wherein shareholders can tender their shares in the offer.
Eligibility requirements for Buyback-Open market & Tender offer:
A company may buy back its shares or other specified securities from its existing securities holders on a proportionate basis in accordance with the provisions of this Chapter:
Provided that fifteen percent of the number of securities which the company proposes to buyback or number of securities entitled as per their
Shareholding, whichever is higher, shall be reserved for small shareholders.
A rights issue is an invitation to existing shareholders to purchase additional new shares in the company at a discounted price on a stated future date. We carry out the required prerequisites for the same.
General conditions for Right Issue:
- The issuer making a rights issue of specified securities shall ensure that:
(a) it has made an application to one or more stock exchanges to seek an in-principle approval for listing of its specified securities on such stock exchanges and has chosen one of them as the designated stock exchange, in terms of Schedule XIX.
(b) all its existing partly paid-up equity shares have either been fully paid-up or have been forfeited;
(c) it has made firm arrangements of finance through verifiable means towards seventy five per cent. of the stated means of finance for the specific project proposed to be funded from issue proceeds, excluding the amount to be raised through the proposed rights issue or through existing identifiable internal accruals.
- The amount for general corporate purposes, as mentioned in objects of the issue in the draft letter of offer and the letter of offer, shall not exceed twenty five per cent. of the amount raised by the issuer.
- Where the issuer or any of its promoters or directors is a wilful defaulter, the promoters or promoter group of the issuer shall not renounce their rights except to the extent of renunciation within the promoter group.
A bonus issue, also known as a capitalization issue, is an offer of free additional shares to existing shareholders. It is done to encourage retail participation and convert surplus profits into shares.
Eligibility requirements for Bonus Issue:
Subject to the provisions of the Companies Act, 2013 or any other applicable law, a listed issuer shall be eligible to issue bonus shares to its members if:
- it is authorised by its articles of association for issue of bonus shares, capitalisation of reserves, etc.:
Provided that if there is no such provision in the articles of association, the issuer shall pass a resolution at its general body meeting making provisions in the articles of associations for capitalisation of reserve;
- it has not defaulted in payment of interest or principal in respect of fixed deposits or debt securities issued by it;
- it has not defaulted in respect of the payment of statutory dues of the employees such as contribution to provident fund, gratuity and bonus;
- any outstanding partly paid shares on the date of the allotment of the bonus shares, are made fully paid-up;
- any of its promoters or directors is not a fugitive economic offender.
Reverse book building is a process used for efficient price discovery. Once a company announces a delisting plan, public shareholders can tender their shares at or above the floor price. Corporates appoint merchant bankers like us to carry out the delisting processes!
Eligibility requirements for Delisting- Reverse book building & Small Business:
- Equity shares of a company may be delisted from all the recognised stock exchanges where they are listed, without following the procedure in Chapter IV of these regulations, if, –
(a) the company has a paid up capital not exceeding ten crre rupees and net worth not exceeding twenty five crore rupees as on the last date of preceding financial year;
(b) the number of equity shares of the company traded on each such recognised stock exchange during the twelve calendar months immediately preceding the date of board meeting held for consideration of the proposal referred to in sub-regulation (4) of regulation 10 of these regulations is less than ten per cent of the total number of shares of the company:
Provided that where the share capital of a particular class of shares of the company is not constant throughout such period, the weighted average of the shares of such class shall represent the total number of shares of such class of the company;
(c) the company has not been suspended by any of the recognised stock exchanges having nationwide trading terminals for any non-compliance in the preceding one year.
- Delisting of equity shares may be made under sub-regulation (1) only if, in addition to fulfilment of the requirements of regulations 10 and 11 of these regulations, the following conditions are fulfilled:-
(a) acquirer(s) appoints a Manager to the offer and decides an exit price after consultation;
(b) the exit price offered to the public shareholders shall not be less than the floor price determined in terms of clause (e) of sub-regulation (2) of regulation 8 of the Takeover Regulations;
(c) the acquirer writes individually to all the public shareholders of the company informing them of its intention to get the equity shares delisted, the exit price together with the justification therefor and seeking their consent for the proposal for delisting;
(d) the public shareholders, irrespective of their numbers, holding ninety percent or more of the public shareholding give their consent in writing to the proposal for delisting, and consent either to sell their equity shares at the rice offered by the acquirer or to continue to hold the equity shares even if they are delisted;
(e) the acquirer completes the process of inviting the positive consent and finalisation of the proposal for delisting of equity shares within seventy five working days of the first communication made under clause (c);
(f) the acquirer makes payment of consideration in cash within fifteen working days from the date of expiry of seventy five working days mentioned in clause (e).
- The communication made to thepublic shareholders under clause (c) of sub-regulation (2) shall contain justification for the offer price with particular reference to the applicable parameters mentioned in sub-regulation (2) of regulation 20 of these regulations and specifically mention that consent for the proposal would include consent for dispensing with the exit price discovery through reverse book building method.
- The acquirer shall be liable to pay interest at the rate of ten percent per annum to all the shareholders, whose bids have been accepted in the delisting offer, if the price payable in terms of sub-regulation (2) is not paid to all the shareholders within the time specified thereunder:
Provided that in case the delay was not attributable to any act or omission of the acquirer or was caused due to the circumstances beyond the control of the acquirer, the Board may grant waiver from the payment of such interest.
- The relevant recognised stock exchange may delist such equity shares upon satisfying itself of compliance with this regulation
We facilitate preferential allotment processes whereby companies allot shares, equity, and warrants to individuals, companies, and venture capitalists at a pre-determined price.
Conditions for preferential issue:
A listed issuer making a preferential issue of specified securities shall ensure that:
- all equity shares allotted by way of preferential issue shall be made fully paid up at the time of the allotment;
- a special resolution has been passed by its shareholders;
- all equity shares held by the proposed allottees in the issuer are in dematerialised form;
- the issuer is in compliance with the conditions for continuous listing of equity shares as specified in the listing agreement with the stock exchange where the equity shares of the issuer are listed and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements), 2015, as amended, and any circular or notification issued by the Board thereunder;
- the issuer has obtained the Permanent Account Numbers of the proposed allottees, except those allottees which may be exempt from specifying their Permanent Account Number for transacting in the securities market by the Board.