Amendments to Part B of Chapter XI of the SEBI (DIP) Guidelines, 2000
Summary
This document amends Part B of Chapter XI of the SEBI (DIP) Guidelines, 2000, to update the terminology and procedures for public issues through book building. It introduces two primary modes for public issues: 100% book building or a split of 75% book building and 25% fixed pricing. The amendments also specify allocation percentages for different investor categories, underwriting requirements, and disclosure obligations for prospectuses.
Text
"100% Book Building Process" shall be substituted by the words "Offer to Public through Book Building Process"
An issuer company may make an issue of securities to the public through a prospectus in the following manner: - a. 100% of the net offer to the public through book building process, or b. 75% of the net offer to the public through book building process and 25% at the price determined through book building.
In case the issuer company appoints more than one book runner, the names of all such book runners who have submitted the due diligence certificate to SEBI, may be mentioned on the front cover page of the prospectus. A disclosure to the effect that " the investors may contact any of such book runners, for any complaint pertaining to the issue" shall be made in the prospectus, after the "risk factors".
The red herring prospectus shall disclose, only the floor price of the securities offered through it and shall not mention the maximum price or the indicative price band.
The margin collected from categories other than Qualified Institutional Buyers shall be uniform across the book runner(s)/syndicate members, for each such category.
Bids for securities beyond the investment limit prescribed under relevant laws shall not be accepted by the syndicate members from any category of investors.
The online, real time graphical display of demand and bid prices at the bidding terminals, shall be made. The book running lead manager shall ensure the availability of adequate infrastructure for data entry of the bids on a real time basis.
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 60% 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.
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.
In sub clause (vi) the words "Institutional investors" shall be substituted by the words "Qualified Institutional Buyers".
In case an issuer company makes an issue of 100% of the net offer to public through 100% book building process - a. not less than 25% of the net offer to the public shall be available for allocation to retail individual investors i.e. investors applying for upto 1000 securities; b. not less than 15% of the net offer to the public shall be available for allocation to non institutional investors i.e. investors applying for more than 1000 securities; c. not more than 60% of the net offer to the public shall be available for allocation to Qualified Institutional Buyers.
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 15% of the net offer to the public, shall be available for allocation to non institutional investors and not more than 60% 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.
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Source: SecMarx — Amendments to Part B of Chapter XI of the SEBI (DIP) Guidelines, 2000. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.