SEBI Guidelines for IPO

Entry norms
• Entry Norm I (commonly known as
“Profitability Route”)
• Entry Norm II (Commonly known as
“QIB Route”)
• Entry Norm III (commonly known as
“Appraisal Route”)
 Entry Norm I (commonly known
as “Profitability Route”)
• Net Tangible assets of at least Rs. 3 crores in each of the
preceding three full years.
• Distributable profits in at least three of the immediately
preceding five years
• Net worth of at least Rs. 1 crore in each of the preceding
three full years.
• If the company has changed its name within the lastone
year, at least 50% revenue for the preceding 1 year should
be from the activity suggested by the new name.
• The issue size does not exceed 5 times the pre issue net
worth as per the audited balance sheet of the last financial
year
Entry Norm II (Commonly known
as “QIB Route”)
• Issue shall be through book building
route, with at least 50% to be mandatory
allotted to the Qualified Institutional
Buyers (QIBs).
• The minimum post issue face value capital
shall be Rs. 10 crores or there shall be a
compulsory market making for at least 2
years
Entry Norm III (commonly known
as “Appraisal Route”)
• The “project” is appraised and participated to
the extent of 15%by Financial Institutions/
Scheduled CommercialBanks of which at
least 10% comes from the appraiser's).
• The minimum post issue face value capital
shall be Rs. 10 crores or there shall be a
compulsory market making for at least 2
years.
 Size of the Public Issue
• Issue of shares to general public cannot be less than
25% of the total issue, incase of information technology,
media and telecommunication sectors this stipulation is
reduced subject to the conditions that:

• Offer to the public is not less than 10% of the securities

issued.
• A minimum number of 20 lakh securities is offered to the
public and
• Size of the net offer to the public is not less than Rs. 30
crores.
 Promoter Contribution
• Promoters should bring in their
contribution including premium fully before
the issue
• Minimum Promoters contribution is 20-
25% of the public issue.
• Lock in period for promoters contribution
is three years
 Collection centers for receiving
applications
• There should be at least 30 mandatory collection
centers, which should include invariably the
places where stock exchanges have been
established.
• For issues not exceeding Rs.10 crores (including
premium, if any), the collection centres shall be
situated at:-
the four metropolitan centres viz. Bombay, Delhi,
Calcutta, Madras; and at all such centres where
stock exchanges are located in the region in
which the registered office of the company is
situated.
Regarding allotment of shares
• Net Offer to the General Public has to be at least 25% of
the Total Issue Size for listing on a Stock exchange.
• It is mandatory for a company to get its shares listed at
the regional stock exchange where the registered office
of the issuer is located.
• Minimum of 50% of the Net offer to the Public has to be
reserved for Investors applying for less than 1000
shares.
• There should be atleast 5 investors for every 1 lakh of
equity offered (not applicable to infrastructure
companies).
 Timeframes for the Issue and
Post- Issue formalities
• The minimum period for which a public issue has
to be kept open is 3 working days and the
maximum for which it can be kept open is 10
working days.

• Allotment has to be made within 30 days of the

closure of the Public Issue and 42 days in case of
a Rights issue.
• All the listing formalities for a public Issue has to
be completed within 70 days from the date of
closure of the subscription list.
 Category of Investors
• Retail individual Investor (RIIs)
• Non Institutional Investors (NIIs)
• Qualified Institutional Buyers (QIBs)
 Despatch of Refund Orders
• Refund orders have to be dispatched
within 30 days of the closure of the Public
Issue.
• Refunds of excess application money i.e.
for un-allotted shares have to be made
within 30 days of the closure of the Public
Issue.
• Green shoe option (Special provision)