Y
 Y



 

 
 

By
Shwetha S N
MBA00901044
Y
 Y


 


] t was enacted to prevent undesirable
transactions in securities by regulating the
business of dealing therein and by providing for
certain other matters connected therewith and
]
ame into force on Feb, 20, 1957.
  
 !
] Any stock exchange, which is desirous of being
recognized may make an application in the prescribed
manner to the
entral Government.
] very application under sub- section (1) shall contain
such particulars as may be prescribed and
-> a copy of the bye- laws of the stock exchange for the
regulation and control of contracts and
->also a copy of the rules relating in general to the
constitution of the stock exchange and in particular, to-


' ›he governing body of such stock exchange, its
constitution and powers of management and the
manner in which its business is to be transacted;
' ›he powers and duties of the office bearers of the
stock exchange.
' ›he admission into the stock exchange of various
classes of members, the qualifications and the
exclusion, suspension, expulsion and re-admission
of members.
' ›he procedure for the registration of partnerships
as members of the S and the nomination and
appointment of authorized representatives and
clerks.


] Function :
³›o liquefy the capital by enabling a person who
has invested money in, to convert it into
disposing of his share in the enterprise to
someone else´.
¢"!#$
] f the
entral Government is of the opinion that
to be withdrawn,
-a written notice (reasons stated) and
-to be heard by notification in the Official Gazette.

] No such withdrawal shall affect the validity of

any contract entered into or made before the
date of the notification.
Y%
] here securities are listed on the application of any
person in any recognized S, such person shall comply
with the conditions of the listing agreement with that
stock exchange .

] here a recognized S acting in pursuance of any power

given to it by its bye-laws, refuses to list the securities of
any company, the company shall be entitled to be
furnished with reasons for such refusal and the company
may appeal to Securities Appellate ›ribunal (SA›)
against such refusal.


] g: r



   



ast month, Sebi rejected M
 Stock xchange which
continued its tirade against the SB , alleging
"discrimination" and "character assassination" while
rejecting its application for launching a full-fledged stock
exchange. ›he exchange will soon decide whether to
challenge the Sebi order in the high court (H
) here or at
the Securities Appellate ›ribunal (SA›).
RY%
] A recognized stock exchange may delist the
securities of any listed companies on such
grounds as are prescribed under the Act.
] ›he concerned company or any aggrieved
investor may appeal to SA› against such
delisting.
± %&%!#


'(&) !

] very recognised stock exchange shall furnish

the
entral Government with a copy of the
annual report, and such annual report shall
contain such particulars as may be prescribed.
*$+# !
(&),$
] For the regulation and control of contracts.
] n particular such bye- laws may provide for:

(a) ›he opening and closing of markets and the regulation of

the hours of trade;
(b) A clearing house, the delivery of and payment for
securities, the passing on of delivery orders and the
regulation and maintenance of clearing house.
(c) ›he submission to the SB by the clearing house as soon
as may be after each periodical settlement of all or any of
the following particulars as the SB may, from time to
time require, namely:


(i) ›he total number of each category of security
carried over from one settlement period to another.

(ii) ›he total number of each category of security

actually delivered at each clearing

(d) ›he publication by the clearing house of all or any

of the particulars submitted to the SB .
(e) ›he regulation or prohibition of blank transfers.
(f) ›he number of contracts in respect of which
settlements shall be made or differences paid
through the clearing house.
(g) ›he fixing, altering or postponing of days for
settlements.


(h) ›he determination and declaration of market
rates, including the opening, closing, highest and
lowest rates for securities.
(i) ›he terms, conditions and incidents of contracts,
if any and the forms of contracts in writing.

(j) ›he regulation of the entering into, making,

performance, rescission and termination of
contracts, including contracts between members or
or between a member and a person who is not a
member, and the consequences of default or
insolvency on the part of a seller or buyer or
intermediary, the consequences of a breach or
omission by a seller or buyer


(k) ›he levy and recovery of fees, fines and penalties.
(l) ›he fixing of a scale of brokerage and other
charges.
(m) the emergencies in trade, the power to fix
maximum and minimum prices for securities.
(n) the regulation of dealings by members for their
own account.
(o) the separation of the functions of jobbers and
brokers.
(3) ›he bye-laws made under this section may;

irovide that the contravention of any of the bye-laws

shall render the member concerned liable to one or
more of the following punishments, namely:

(i) fine,
(ii) expulsion from membership,
(iii) suspension from membership for a specified
period,
(iv) any other penalty of a like nature not involving
the payment of money.

(4) shall be published in the Gazette of ndia and also

in the Official Gazette of the State and shall have
effect as from the date of its publication in the
Gazette of ndia.
*$Yp
((#&),
$#  !
] ›he SB is writing received from the governing
body of a recognised stock exchange, if it is satisfied
after consultation with the governing body that it is
necessary or expedient so to do and after recording
its reasons for so doing, make bye-laws, for all or
any of the matters specified or amend any bye-laws.

] t shall be published in the Gazette of ndia and also

in the Official Gazette of the State.


] irovided that if the SB is satisfied in any case
that in the interest of the trade or in the public
interest any bye-laws should be made, amended
or revised immediately, by order in writing
specifying the reasons therefor, dispense with
the condition of previous publication
*$%#&%
#  !
] f in the opinion of the
entral Government an
emergency has arisen that it expedient so to do, by
notification in the Official Gazette, for reasons to be set
out therein, direct a recognised stock exchange to
suspend such of its business for such period, not
exceeding 7 days.

] f period of suspension is to be extended beyond the first

period, no notification extending the period of
suspension shall be issued unless the governing body of
the recognised stock exchange has been given an
opportunity of being heard in the matter.
þ* #*#%
] 1. Any person who-
(a) ithout reasonable excuse fails to comply.

(b) nters into any contract in contravention .

(c) Manages, controls, or assists in keeping any

place other than that of a recognised S.
(d) Not being a member of a recognised S or his
agent authorised as such under the rules or bye-
laws of such stock exchange or not being a dealer in
securities licensed and also


(e) canvasses, advertises or touts in any manner
either for himself or on behalf of any other
person for any business connected with
contracts in contravention or

(f) Joins, gathers or assists in gathering at any

place other than the place of business specified
in the bye-laws of a recognised S any person or
persons for making bids or offers or for entering
into or performing any contracts in
contravention shall be punishable with
imprisonment for a term which may extend to
one year or with fine, or with both.


2. Any person who enters into any contract who fails
to comply with or with the orders of the
entral
Government or with the orders of the Securities
Appellate ›ribunal shall, on conviction, be
punishable with fine which may extend to one
thousand rupees.
R*
R  Y
÷
 
(a) ›o enhance the level of investors¶ protection
(b) ›o increase the transparency and efficiency of
the primary market
(c) ›o strengthen the disclosure and eligibility
norms for issuer companies
(d) ›o rationalize and simplify various operational
procedures in the primary market so as to facilitate
raising of resources by the issuer companies.
 &)!
%#-
1.›hese guidelines shall be applicable to all public
issues by listed and unlisted companies, all offers for
sale and rights issues by listed companies whose
equity share capital is listed, except in case of rights
issues where the aggregate value of securities
offered does not exceed Rs.50 lakhs.
2.Unless otherwise stated, all provisions in these
guidelines applicable to public issues by unlisted
companies shall also apply to offers for sale to the
public by unlisted companies.
Y .!(##!R*%#/
!)
1) Grading of all nitial iublic Offerings ( iO)

2) Draft Offer Documents

3) Qualified nstitutions ilacement(Q i).

4) More clarity on provisions relating to

minimum promoters¶ contribution for the
purpose of public issues.

(%)*
] (a) At present, in terms of the
ompanies Act, 1956 and
the SB (D i) Guidelines, there is no regulatory
stipulation on an unlisted company making an iO to
compulsorily list the securities being issued through the
iO on S having nationwide trading terminals.

(b) isting of securities on S having nationwide trading

terminals provides an active trading platform to
investors from all across the country in securities of the
company.

(c) ›he SB (D i) Guidelines to provide that an

unlisted company making an iO shall list the securities
being issued through the iO on at least one stock
exchange having nationwide trading terminals.
#% !
'%&%!%!&
&%#% -
÷
 

An issue shall open within 12 months from the date
of issuance of the observation letter by SB .

m
 

 
File an updated offer document with SB , highlighting
all changes made in the document and in case of
'significant changes' in the offer document, it shall be
filed with SB atleast 1 month before filing final
prospectus with Ro
S.
÷
  
 

 

here the issuer has not disclosed floor price or price

band in prospectus filed with Ro
S, it shall be
disclosed atleast 2 working days before opening of the
bid in case of iO and atleast 1 working day before the
opening of the bid in case of FiO, by way of an
announcement in all the newspapers in which the pre-
issue advertisement was released by the issuer or the
merchant banker.
%*(
] Justification for price is required to be given in the
Offer Document and further, if the ssuer has not
disclosed floor price or price band in the prospectus
and taken an option to disclose it before 2 working
days (for iO) or 1 working day (for FiO) before
opening of an issue
] announcement shall contain the relevant financial
ratios, computed for both upper and lower end of
the price band and the basis of issue
price or prescribed statements to guide investors in
RHi which are,


(c) Names and editions of the newspapers where the
announcement of the floor price or price band would
be made;
(d) Names of websites (with address), journals or
other media in which the said announcement will be
made.
 Y  
!"
#!$%$$&' $#(#




! 

›he amendments include introduction of Net
›angible Assets and minimum number of allottees
and appraisal route as an alternative to the
mandatory book building route. ›he changes are as
follows;
] ligibility norms should be satisfied both at the time
of filing draft offer document and final document.
] A company with net tangible assets of at least 3 crs
can make iO through public issue. ›he company
should have track record of profitability. ›he issue
size should not be more that five times the pre-issue
net worth.


]
ompanies can make iO either through book
building process or project appraisal method. ›he
company must have post issue capital of Rs 10
crs or should have arrangement of µmarket maker¶
for at least two years.
] f a company has changed name in last 12 months, at
least 50% of the revenue for the preceding 1 full year is
earned by the company from the activity suggested by
the new name.



] An unlisted public company shall not make an

allotment pursuant to a public issue or offer for sale
of equity shares or any security convertible into
equity shares unless in addition to satisfying the
conditions mentioned
] No research report shall be circulated by the issuer
or any member of the issue management team
syndicate or their associates, commencing from a
date 45 days immediately preceding the filing of
draft offer document with SB and till 45 days after
commencement of trading in the relevant securities.
*

.0
1*  YYY

Y
 Y
›he companies eligible to make public issue can
freely price their equity shares or any security
convertible at later date into equity shares in the
following cases:
1. iublic Rights ssue by isted
ompanies
2. iublic ssue by Unlisted
ompanies
3. nfrastructure company
4. nitial public ssue by Banks
 ) YY 
Y
1. ›he lead merchant banker shall exercise due
diligence.
2. ›he liability of the merchant banker shall
continue even after the completion of issue
process.
3. ›he lead merchant banker shall pay requisite
fee along with draft offer document filed with
the Board.
4. Documents to be submitted along with the Offer
Document by the ead Manager
5. Memorandum of Understanding (MOU)


] nter-se Allocation of Responsibilities:
n case a public or rights issue is managed by
more than one Merchant Banker the rights,
obligations and responsibilities of each
merchant banker shall be demarcated.
] n addition to the due diligence certificate
furnished along with the draft offer document.
›hank you«