Corporate Actions includes activities that bring material change to an organization and impact its stakeholders, including shareholders, both common and preferred, as well as bondholders. These events are generally approved by the company’s board of directors; shareholders may be permitted to vote on some events as well. Some corporate actions require shareholders to submit a response.
Merchant Banking Services
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.
Migration of listed companies to main board means to transfer its listed securities on main board of stock exchanges from other platforms.
Leading exchange BSE has come out with a new framework for companies seeking to migrate from its small and medium enterprises (SME) platform to the main board. Under the new guidelines, companies listed on SME exchange need to have a market capitalisation of at least Rs 25 crore in order to move up to the main board, BSE said in a circular.
A stock split is when a company divides the existing shares of its stock into multiple new shares to increase the liquidity of the shares. We help out the companies with all the respective regulatory and operational framework!
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