LIVE GST Audit Course by CA Sachin Jain. Register Now!!

IPO

CS GK Murty (Company Secretary) (225 Points)

27 March 2010

Dear expert members,

could you throw light on the following please:

Our company incorporated in march, 2009 having presently authorized capital of Rs. 2.35 cr. and paid up capital of Rs. 30 lac intends to go for IPO. Is it eligible for doing so?

Reply
Follow
Share

4 Replies

Ankur Garg (Company Secretary and Compliance Officer) (114773 Points)
Replied 27 March 2010

Sourse_www.nseindia.com

Eligibility Criteria for Listing
IPOs by Companies

Qualifications for listing Initial Public Offerings (IPO) are as below:

Paid up Capital

The paid up equity capital of the applicant shall not be less than Rs. 10 crores * and the capitalisation of the applicant’s equity shall not be less than Rs. 25 crores**

Provided however that where the market capitalisation (at issue price) of the applicant’s equity is not less than Rs.100 crores, the paid up capital of the applicant can be less than Rs. 10 crores but in any case it shall not be less Rs. 5 crores.

* Explanation 1

For this purpose, the post issue paid up equity capital for which listing is sought shall be taken into account.

** Explanation 2

For this purpose, capitalisation will be the product of the issue price and the post issue number of equity shares. In respect of the requirement of paid-up capital and market capitalisation, the issuers shall be required to include, in the disclaimer clause of the Exchange required to put in the offer document, that in the event of the market capitalisation (Product of issue price and the post issue number of shares) requirement of the Exchange not being met, the securities would not be listed on the Exchange.
Conditions Precedent to Listing:

The Issuer shall have adhered to conditions precedent to listing as emerging from inter-alia from Securities Contracts (Regulations) Act 1956, Companies Act 1956, Securities and Exchange Board of India Act 1992, any rules and/or regulations framed under foregoing statutes, as also any circular, clarifications, guidelines issued by the appropriate authority under foregoing statutes.
Atleast three years track record of either:

a. the applicant seeking listing; or
b. the promoters****/promoting company, incorporated in or outside India or
c. Partnership firm and subsequently converted into a Company (not in existence as a Company for three years) and approaches the Exchange for listing. The Company subsequently formed would be considered for listing only on fulfillment of conditions stipulated by SEBI in this regard.

For this purpose, the applicant or the promoting company shall submit annual reports of three preceding financial years to NSE and also provide a certificate to the Exchange in respect of the following:

• The company has not been referred to the Board for Industrial and Financial Reconstruction (BIFR).

• The networth of the company has not been wiped out by the accumulated losses resulting in a negative networth

• The company has not received any winding up petition admitted by a court.

****Promoters mean one or more persons with minimum 3 years of experience of each of them in the same line of business and shall be holding at least 20% of the post issue equity share capital individually or severally.
The applicant desirous of listing its securities should satisfy the exchange on the following:

a) No disciplinary action by other stock exchanges and regulatory authorities in past three years

There shall be no material regulatory or disciplinary action by a stock exchange or regulatory authority in the past three years against the applicant company. In respect of promoters/promoting company(ies), group companies, companies promoted by the promoters/promoting company(ies) of the applicant company, there shall be no material regulatory or disciplinary action by a stock exchange or regulatory authority in the past one year.

b) Redressal Mechanism of Investor grievance

The points of consideration are:
- The applicant, promoters/promoting company(ies), group companies, companies promoted by the promoters/promoting company(ies) track record in redressal of investor grievances
- The applicant’s arrangements envisaged are in place for servicing its investor.
- The applicant, promoters/promoting company(ies), group companies, companies promoted by the promoters/promoting company(ies) general approach and philosophy to the issue of investor service and protection
- defaults in respect of payment of interest and/or principal to the debenture/bond/fixed deposit holders by the applicant, promoters/promoting company(ies), group companies, companies promoted by the promoters/promoting company(ies) shall also be considered while evaluating a company’s application for listing. The auditor’s certificate shall also be obtained in this regard. In case of defaults in such payments the securities of the applicant company may not be listed till such time it has cleared all pending obligations relating to the payment of interest and/or principal.
c) Distribution of shareholding

The applicant’s/promoting company(ies) shareholding pattern on March 31 of last three calendar years separately showing promoters and other groups’ shareholding pattern should be as per the regulatory requirements.

d) Details of Litigation

The applicant, promoters/promoting company(ies), group companies, companies promoted by the promoters/promoting company(ies) litigation record, the nature of litigation, status of litigation during the preceding three years period need to be clarified to the exchange.

e) Track Record of Director(s) of the Company

In respect of the track record of the directors, relevant disclosures may be insisted upon in the offer document regarding the status of criminal cases filed or nature of the investigation being undertaken with regard to alleged commission of any offence by any of its directors and its effect on the business of the company, where all or any of the directors of issuer have or has been charge-sheeted with serious crimes like murder, rape, forgery, economic offences etc.

Note:

a) In case a company approaches the Exchange for listing within six months of an IPO, the securities may be considered as eligible for listing if they were otherwise eligible for listing at the time of the IPO. If the company approaches the Exchange for listing after six months of an IPO, the norms for existing listed companies may be applied and market capitalisation be computed based on the period from the IPO to the time of listing.

1 Like

Ankur Garg (Company Secretary and Compliance Officer) (114773 Points)
Replied 27 March 2010

Source_www.bseindia.com

Guidelines for Listing

Checklist

Listing means admission of securities to dealings on a recognised stock exchange. The securities may be of any public limited company, Central or State Government, quasi governmental and other financial institutions/corporations, municipalities, etc.

The objectives of listing are mainly to :

provide liquidity to securities;
mobilize savings for economic development;
protect interest of investors by ensuring full disclosures.

The Bombay Stock Exchange (BSE) has a dedicated Listing Department to grant approval for listing of securities of companies in accordance with the provisions of the Securities Contracts (Regulation) Act, 1956, Securities Contracts (Regulation) Rules, 1957, Companies Act, 1956, Guidelines issued by SEBI and Rules, Bye-laws and Regulations of BSE.

BSE has set various guidelines and forms that need to be adhered to and submitted by the companies. These guidelines will help companies to expedite the fulfillment of the various formalities and disclosure requirements that are required at various stages of

Public Issues
- Initial Public Offering
- Further Public Offering
Preferential Issues
Indian Depository Receipts
Amalgamation
Qualified Institutions Placements

Click here to Download Guidelines

A company intending to have its securities listed on BSE has to comply with the listing requirements prescribed by it. Some of the requirements are as under :

I	Minimum Listing Requirements for New Companies
II	Minimum Listing Requirements for Companies already Listed on other Stock Exchanges
III	Minimum Requirements for Companies Delisted by BSE seeking relisting on BSE
IV	Permission to Use the Name of BSE in an Issuer Company's Prospectus
V	Submission of Letter of Application
VI	Allotment of Securities
VII	Trading Permission
VIII	Requirement of 1% Security
IX	Payment of Listing Fees
X	Compliance with the Listing Agreement
XI	Cash Management Services (CMS) - Collection of Listing Fees

[I] Minimum Listing Requirements for New Companies

The following eligibility criteria have been prescribed effective August 1, 2006 for listing of companies on BSE, through Initial Public Offerings (IPOs) & Follow-on Public Offerings (FPOs):

Companies have been classified as large cap companies and small cap companies. A large cap company is a company with a minimum issue size of Rs. 10 crore and market capitalization of not less than Rs. 25 crore. A small cap company is a company other than a large cap company.
1. In respect of Large Cap Companies
  1. The minimum post-issue paid-up capital of the applicant company (hereinafter referred to as "the Company") shall be Rs. 3 crore; and
  2. The minimum issue size shall be Rs. 10 crore; and
  3. The minimum market capitalization of the Company shall be Rs. 25 crore (market capitalization shall be calculated by multiplying the post-issue paid-up number of equity shares with the issue price).
2. In respect of Small Cap Companies
  1. The minimum post-issue paid-up capital of the Company shall be Rs. 3 crore; and
  2. The minimum issue size shall be Rs. 3 crore; and
  3. The minimum market capitalization of the Company shall be Rs. 5 crore (market capitalization shall be calculated by multiplying the post-issue paid-up number of equity shares with the issue price); and
  4. The minimum income/turnover of the Company shall be Rs. 3 crore in each of the preceding three 12-months period; and
  5. The minimum number of public shareholders after the issue shall be 1000.
  6. A due diligence study may be conducted by an independent team of Chartered Accountants or Merchant Bankers appointed by BSE, the cost of which will be borne by the company. The requirement of a due diligence study may be waived if a financial institution or a scheduled commercial bank has appraised the project in the preceding 12 months.

For all companies :
1. In respect of the requirement of paid-up capital and market capitalization, the issuers shall be required to include in the disclaimer clause forming a part of the offer document that in the event of the market capitalization (product of issue price and the post issue number of shares) requirement of BSE not being met, the securities of the issuer would not be listed on BSE.
2. The applicant, promoters and/or group companies, shall not be in default in compliance of the listing agreement.
3. The above eligibility criteria would be in addition to the conditions prescribed under SEBI (Disclosure and Investor Protection) Guidelines, 2000.

Top

[II] Minimum Listing Requirements for Companies already Listed on Other Stock Exchanges

The listing norms for companies already listed on other stock exchanges and seeking listing at BSE, made effective from August 6, 2002, are as under:

The company shall have a minimum issued and paid up equity capital of Rs. 3 crore.
The company shall have a profit making track record for the preceding last three years. The revenues/profits arising out of extra ordinary items or income from any source of non-recurring nature shall be excluded while calculating the profit making track record.
Minimum net worth shall be Rs. 20 crore (net worth includes equity capital and free reserves excluding revaluation reserves).
Minimum market capitalisation of the listed capital shall be at least two times of the paid up capital.
The company shall have a dividend paying track record for at least the last 3 consecutive years and the dividend should be at least 10% in each year.
Minimum 25% of the company's issued capital shall be with Non-Promoter shareholders as per Clause 35 of the Listing Agreement. Out of above Non-Promoter holding, no single shareholder shall hold more than 0.5% of the paid-up capital of the company individually or jointly with others except in case of Banks/Financial Institutions/Foreign Institutional Investors/Overseas Corporate Bodies and Non-Resident Indians.
The company shall have at least two years listing record with any of the Regional Stock Exchanges.
The company shall sign an agreement with CDSL and NSDL for demat trading.

Top

[III] Minimum Requirements for Companies Delisted by BSE seeking Relisting on BSETop

Companies delisted by BSE and seeking relisting at BSE are required to make a fresh public offer and comply with the extant guidelines of SEBI and BSE regarding initial public offerings.

[IV] Permission to Use the Name of BSE in an Issuer Company's Prospectus

Companies desiring to list their securities offered through a public issue are required to obtain prior permission of BSE to use the name of BSE in their prospectus or offer for sale documents before filing the same with the concerned office of the Registrar of Companies.

BSE has a Listing Committee , comprising of market experts, which decides upon the matter of granting permission to companies to use the name of BSE in their prospectus/offer documents. This Committee evaluates the promoters, company, project , financials, risk factors and several other aspects before taking a decision in this regard.

Decision with regard to some types/sizes of companies has been delegated to the Internal Committee of BSE.

Top

[V] Submission of Letter of Application

As per Section 73 of the Companies Act, 1956, a company seeking listing of its securities on BSE is required to submit a Letter of Application to all the stock exchanges where it proposes to have its securities listed before filing the prospectus with the Registrar of Companies.

Top

[VI] Allotment of Securities

As per the Listing Agreement, a company is required to complete the allotment of securities offered to the public within 30 days of the date of closure of the subscripttion list and approach the Designated Stock Exchange for approval of the basis of allotment.

In case of Book Building issues, allotment shall be made not later than 15 days from the closure of the issue, failing which interest at the rate of 15% shall be paid to the investors.

Top

[VII] Trading PermissionTop

As per SEBI Guidelines, an issuer company should complete the formalities for trading at all the stock exchanges where the securities are to be listed within 7 working days of finalization of the basis of allotment.

A company should scrupulously adhere to the time limit specified in SEBI (Disclosure and Investor Protection) Guidelines 2000 for allotment of all securities and dispatch of allotment letters/share certificates/credit in depository accounts and refund orders and for obtaining the listing permissions of all the exchanges whose names are stated in its prospectus or offer document. In the event of listing permission to a company being denied by any stock exchange where it had applied for listing of its securities, the company cannot proceed with the allotment of shares. However, the company may file an appeal before SEBI under Section 22 of the Securities Contracts (Regulation) Act, 1956.

[VIII] Requirement of 1% Security

Companies making public/rights issues are required to deposit 1% of the issue amount with the Designated Stock Exchange before the issue opens. This amount is liable to be forfeited in the event of the company not resolving the complaints of investors regarding delay in sending refund orders/share certificates, non-payment of commission to underwriters, brokers, etc.

Top

[IX] Payment of Listing Fees

All companies listed on BSE are required to pay to BSE the Annual Listing Fees by 30th April of every financial year as per the Schedule of Listing Fees prescribed from time to time.

The schedule of Listing Fees for the year 2009-10, prescribed by the Governing Board of BSE, is given here under:

SCHEDULE OF LISTING FEES FOR THE YEAR 2009-10

Securities *other than Privately Placed Debt Securities

Sl. No.	Particulars	Amount (Rs.)
1	Initial Listing Fees	20,000.00
2	Annual Listing Fees (i) Companies with listed capital* upto Rs. 5 crore (ii) AboveRs. 5 crore and upto Rs. 10 crore (iii)Above Rs. 10 crore and upto Rs. 20 crore Companies which have a listed capital* of more than Rs. 20 crore are required to pay an additional fee @ Rs. 750 for every additional Rs. 1 crore or part thereof.	10,000.00 15,000.00 30,000.00
	NOTE: In case of debenture capital (not convertible into equity shares) , the fees will be 25% of the above fees.
*includes equity shares, preference shares, fully convertible debentures, partly convertible debentures and any other security convertible into equity shares.