Initial Public Offers - IPO Consultants

Public Issue in relation to the Stock Market means invitation by a company to the public for subscribing the securities of the Company. The public issue may be Initial Public Offering (IPOs) or Follow on public Offer (FPOs).
Initial Public Offering (IPO) In initial public offering (IPO), the unlisted Company makes either fresh issue of shares or offer for sale of the exiting shares. It is the first sale of shares and debentures by a company to the public and a closely held Company being transformed into a widely held Company

The Regulatory Framework for IPOs is broadly contained in the following Acts, Rules and regulations:

  1. The Companies Act 2013
  2. The Companies (Prospectus and allotment of Securities) Rules 2014
  3. The Companies (Shares Capital and Debentures) Rules 2014
  4. The Securities Contracts (Regulations) Act 1956
  5. The Securities Contracts (regulation) Rules 1957
  6. The Securities and Exchange Board of India (Issue of capital and Disclosure Requirements) Regulations 2018
  7. The Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations 2015
  8. The Depositories Act 1996
  9. The Securities and Exchange Board of India (Depositories and Participants) Regulations 1996
  10. The Foreign Exchange Management Act 1999
  11. Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000
  12. FDI policy

The above list is not exhaustive and there are some other regulations which are required to be complied with while coming out with an IPO.

  1. Issuer has net tangible assets of a minimum Rs. 3 crore in each of the preceding 3 full years (of twelve months each), and not more than 50% of these tangible assets are held in monetary assets. In case more than 50 % are held in monetary assets, the issuer has made firm commitment to utilize such excess assets in its business or project. However such limit of 50% shall not apply in case offer for sale.
  2. Issuer has a minimum average pre-tax operating profit of Rs. 15 Crore, ascertained on a restated and consolidated proposal, during three out of the preceding 5 years.
  3. If issuer has changed its name within the last 1 year, at least 50% of the revenue has been earned from the activity indicated by the new name in the preceding 1 year.
  4. The gross value of the proposed issue and all previous issues made during the financial year does not exceed five times the pre issue net worth stated in the audited balance sheet of the previous financial year.

In case the issue is made through book-building, the issuer undertakes to allot at least 75 % of the net offer to qualified institutional buyers and to return the full subscription money if it fails to make this allotment.

Following guidelines are provided under Chapter IX of SEBI (ICDR) Regulations 2018

  1. Post issue paid up capital
  2. Filling of draft offer documents to SEBI
  3. Observation of SEBI on Offer Documents
  4. Final Offer Documents filled to SEBI
  5. Underwriting of Issue
  6. Merchant Banker obligation for underwriting
  7. Minimum number of allottees
  8. Minimum application value
  9. Market Making
  10. Migration to SME platform
  11. Migration to main board (Optional)
  12. Migration to main board (Compulsory)
  13. Not more than Rs. 25 crore
  14. Not required
  15. Not required
  16. Yes
  17. 100% Underwritten
  18. At least 15%
  19. At least 50
  20. At least of Rs. 1,00,000
  21. Compulsory for 3 years
  22. Special Resolution by postal ballot
  23. If Rs. 25 Crore>Capital > Rs. 10 Crore & SR of shareholders
  24. Capital is more than Rs. 25 Crore
  1. Post issue paid up capital is less than Rs. 25 Crore
  2. Positive Cash accruals or PBDT for 2 out of 3 preceding years
  3. Track record of at least 3 Years.
  4. Net worth should be positive
  5. Net Tangible assets of at least 3 Crore
  6. Positive Net-worth
  7. Track record of 3 Years or should have been funded by Loan/Equity by Banks/ Financial Institution or Central/State Government
  8. The post-issue paid up capital of the company (face value) shall not be more than Rs. 25 crores.
  9. Group Company has been listed for 2 years on Main Board or SME Board
  1. Promoters, promoter group or persons in control of the issuer or directors are not debarred from accessing the capital market by the SEBI or related to any other company restricted under the directions of SEBI from accessing the capital market.
  2. Issuer has entered into an agreement with a depository for dematerialisation of securities proposed to be issued or already issued.
  3. Firm arrangements have been made through verifiable means for 75% of the stated means of finance, except the existing internal accruals or proposed to be raised through public issue.

Minimum post issue capital should be more than Rs. 10 Crore. In addition, the SME IPO norms are also applicable.

CMC provides full-fledged services for businesses seeking to list on stock exchange under Main Board & SME IPO. Our professional team prepares all the documents including the prospectus, files the applications, helps in acquiring investors to raise capital, and all related activities for submission of your company to the stock exchange in the shortest time. We follow a proven approach to cope with the market challenges and help companies adjust to the public infrastructure.

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