[ Source: Extracted from Website of SEBI]

Project Map

Primary Market - IPO- SEBI Guidelines for Book Building (Part: 2) - Additional Disclosures
Apart from meeting the disclosure requirements as specified in these Guidelines, the following disclosures shall be suitably made: (Clause 11.3.2) i. ii. The particulars of syndicate members, brokers, registrars, bankers to the issue, etc.). The following statement shall be given under the 'basis for issue price':"The issue price has been determined by the Issuer in consultation with the Book Runner(s), on the basis of assessment of market demand for the offered securities by way of Book-building." iii. The following accounting ratios shall be given under the basis for issue price for each of the accounting periods for which the financial information is given: 1. EPS, pre-issue, for the last three years (as adjusted for changes in capital). 2. P/E pre-issue. 3. Average return on net-worth in the last three years. 4. Net-Asset value per share based on last balance sheet. 5. The accounting ratios disclosed in the offer document shall be calculated after giving effect to the consequent increase of capital on account of compulsory conversions outstanding, as well as on the assumption that the options outstanding, if any, to subscribe for additional capital shall be exercised

Underwriting (Clause 11.3.3)

i. In case the issuer company is making an issue of securities a. under sub clause (a) of clause 11.3, 100% of the net offer to the public; b. under sub clause (b) of clause 11.3, the book built portion - 75% of the net offer to the public, shall be compulsorily underwritten by the syndicate members/book runner(s). Provided that nothing contained in sub-clause (i) shall apply to 50% of the net offer to the public, mandatorily to be allotted to the Qualified Institutional Buyers under proviso to clause 2.2.2 or clause 2.3.2 of these guidelines, in case the company is making an issue of securities under clause 2.2.2 or clause 2.3.2, as the case may be. ii. The 'syndicate members' shall enter into an underwriting agreement with the Book Runner(s) indicating the number of securities which they would subscribe at the predetermined price. b. The Book Runner(s) shall in turn enter into an underwriting agreement with the Issuer company. In the event of the syndicate members not fulfilling their underwriting obligations the Book Runner(s) shall be responsible for bringing in the amount devolved. (Deleted) a.

iii. iv.

Procedure for bidding (Regulation 11.3.4)

1. The method and process of bidding shall be subject to the following: i. Bid shall be open for atleast 5 days and not more than 10 days, which may be extended to a maximum of 13 days in case the price band is revised in accordance with clause 11.3.1.) The advertisement mentioned at clause 11.3.1 (xi) shall also contain the following: a. the date of opening and closing of the bidding(not less than 5 days). b. the names and addresses of the syndicate members as well as the bidding terminals for accepting the bids. c. the method and process of bidding. Bidding shall be permitted only if an electronically linked transparent facility is used. The 'syndicate members' shall be present at the bidding centres so that at least one electronically linked computer terminal at all the bidding centres is available for the purpose of bidding. The number of bidding centres, in case 75% of the net offer to the public is offered through the book building, process shall not be less than the number of mandatory collection centres as specified in these regulations. In case 100% of the net offer to the public is made through book building process, the bidding centres shall be at all the places, where the recognised stock exchanges are situated.) b. The same norms as applicable for collection centres shall be applicable for the bidding centres also. Individual as well as qualified institutional buyers shall place their bids only through the brokers who shall have the right to vet the bids. The applicant shall enclose the proof of DP ID and Client ID along with the application, while making bid). a. During the period the issue is open to the public for bidding, the applicants may approach the brokers of the stock exchange/s through which the securities are offered under on-line system, to place an order for bidding to the securities. Every broker shall accept orders from all clients/investors who place orders through him The investors shall have the right to revise their bids. Bidding Form a. There shall be a standard bidding form to ensure uniformity in bidding and accuracy. b. The bidding form shall contain information about the investor, the price and the number of securities that the investor wishes to bid. c. The bidding form before being issued to the bidder shall be serially numbered at the bidding centres and date and time stamped. d. The serial number may be system generated or stamped with an automatic numbering machine. e. The bidding form shall be issued in duplicate signed by the investor and countersigned by the syndicate member, with one form for the investor and the other for the syndicate member(s)/Book Runner(s). At the end of each day of the bidding period the demand shall be shown graphically on the terminals for information of the syndicate members as well as the investors. The identities of the Qualified Institutional Buyers making the bidding, shall not be made public a.

ii.

iii. iv.

v.

vi.

vii. viii.

ix. x.

Allocation / Allotment Procedure (Regulation 11.3.5)

i. (In case an issuer company makes an issue of 100% of the net offer to public through 100% book building process -

a. b.

c.

not less than 25% of the net offer to the public shall be available for allocation to retail individual investors not less than 25% of the net offer to the public shall be available for allocation to non institutional investors i.e. investors other than retail individual investors and Qualified Institutional Buyers; not more than 50% of the net offer to the public shall be available for allocation to Qualified Institutional Buyers. Provided that, 50% of the issue size shall be mandatorily allotted to the Qualified Institutional Buyers, in case the issuer company is making a public issue under Clause 2.2.2 and 2.3.2 of these guidelines)

ii.

(In case an issuer company makes an issue of 75% of the net offer to public through book building process and 25% at the price determined through book building a. in the book built portion, not less than 25% of the net offer to the public, shall be available for allocation to non Qualified Institutional Buyers and not more than 50% of the net offer to the public shall be available for allocation to Qualified Institutional Buyers. b. the balance 25% of the net offer to the public, offered at a price determined through book building, shall be available only to retail individual investors who have either not participated or have not received any allocation, in the book built portion." Provided that, 50% of the issue size shall be mandatorily allotted to the Qualified Institutional Buyers, in case the issuer company is making a public issue under Clause 2.2.2 and 2.3.2of these guidelines)

iii.

iv.

Allotment to (retail individual investors and non institutional investors.), shall be made on the basis of the proportionate allotment system as specified in Schedule XVIII. (In case of under subscription in any category, the undersubscribed portion may be allocated to the bidders in the other categories. Provided that, the unsubscribed portion in the "Qualified Institutional Buyer" category, shall not be available for subscription to other categories, in case the issuer company has made an issue of securities under clause 2.2.2 or clause 2.3.2 of these guidelines.)

v.

vi. vii. viii. ix. x.

(The allocation to the Qualified Institutional Buyers shall be determined by the Book Runner(s) based on prior commitment, investor quality, price aggression, earliness of bids, etc. 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. Schedule XX may be referred to for Clarificatory Examples for issue size and allocation has been specified in Schedule XX. Model Time Frame for Book Building is specified in Schedule XXI. The broker shall refund the margin money collected earlier, within 3 days of receipt of basis of allocation, to the applicants who did not receive allocation) On payment and receipt of the sum payable on application for the amount towards minimum subscription, the company shall allot the shares to the applicants as per these Guidelines.

In case the issuer company has made an issue of 75% of the net offer to public through

book building process and 25% at the price determined through book building a. the offer of 25% of the net offer to the public, made at a price determined through book building, shall open within 15 days from the date of closure of bidding ; b. the offer for subscription to the public, shall remain open for a period of atleast 3 working days after completing all the requirements of advertisement and despatch of issue material to all the stock exchanges; c. during the time when the offer is open, the investors who have received an intimation of entitlement of securities under sub clause (xviii) of clause 11.3.1, shall submit the application forms along with the application moneys ; d. the other retail individual investors who had not participated in the bidding process or have not received intimation of entitlement of securities under sub clause (xviii) of clause 11.3.1 may also make an application.

Maintenance of Books and Records (Regulation 11.3.6)

i. ii. A final book of demand showing the result of the allocation process shall be maintained by the book runner/s. The Book Runner/s and other intermediaries in the book building process associated shall maintain records of the book building prices.

The Board shall have the right to inspect the records, books and documents relating to the Book building process and such person shall extend full co-operation.