SEBI (Disclosure and Investor Protection) Guidelines Clarification No. XXIV
Summary
This circular clarifies revised eligibility norms for public issues, specifically relaxing dividend payment requirements for closely held companies. It modifies infrastructure company eligibility criteria and prohibits television crawler advertisements in public issues. The provisions apply to offer documents filed or issues opening after specified dates in May and June 1999.
Text
No body corporate... shall make a public issue of any equity share... unless the body corporate has i. a track record of distributable profits in terms of Section 205 of Companies Act, for at least three (3) out of immediately preceding five (5) years and ii. a pre-issue networth of not less than Rs. One Crore in three (3) out of preceding five (5) years, with the minimum networth to be met during immediately preceding two (2) years.
"Networth" shall mean aggregate value of paid-up equity capital and free reserves (excluding reserves created out of revaluation) reduced by the aggregate value of accumulated losses, intangible assets and deferred expenditure not written off including miscellaneous expenses not written off.
The words ‘by the appraising institution’ appearing after ‘(in debt and / or equity)’ shall be substituted by the following words namely; "by any of the aforesaid institutions, jointly or severally, irrespective of whether they have appraised the project or not."
Issue advertisements on television in the form of crawlers (the advertisements which run simultaneously with the programme in a narrow strip or any other form, at the bottom or elsewhere on the television screen) shall not be allowed.
The Part A and Part B of the Clarification shall be applicable to all the offer documents filed with SEBI after May 19, 1999.
The Part C shall be applicable to all the public and rights issues opening on or after June 1, 1999.
Source: SecMarx — SEBI (Disclosure and Investor Protection) Guidelines Clarification No. XXIV. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.