Regulation 5 - Entities not eligible to make an initial public offer - Securities And Exchange Board of India (Issue Of Capital And Disclosure Requirements) Regulations, 2018

Entities not eligible to make an initial public offer 5. (1) An issuer shall not be eligible to make an initial public offer - (a) if the issuer, any of its promoters, promoter group or directors or selling shareholders are debarred from accessing the capital market by the Board. (b) if any of the promoters or directors of the issuer is a promoter or director of any other company which is debarred from accessing the capital market by the Board. (c) if the issuer or any of its promoters or directors is a 1 [ wilful defaulter or a fraudulent borrower. ] (d) if any of its promoters or directors is a fugitive economic offender. Explanation: The restrictions under (a) and (b) above shall not apply to the persons or entities mentioned therein, who were debarred in the past by the Board and the period of debarment is already over as on the date of filing of the draft offer document with the Board. (2) An issuer shall not be eligible to make an initial public offer if there are any outstanding convertible securities or any other right which would entitle any person with any option to receive equity shares of the issuer: Provided that the provisions of this sub-regulation shall not apply to: (a) outstanding options granted to employees, whether currently an employee or not, pursuant to an employee stock option scheme in compliance with the Companies Act, 2013 , the relevant Guidance Note or accounting standards, if any, issued by the Institute of Chartered Accountants of India or pursuant to the Companies Act, 2013 , in this regard; 2 [ (b) outstanding stock appreciation rights granted to employees pursuant to a stock appreciation right scheme, which are fully exercised for equity shares prior to the filing of the red herring prospectus (in case of book-built issues) or the prospectus (in case of fixed price issues), as the case may be, disclosures regarding such stock appreciation rights and the scheme and the total number of equity shares resulting from the exercise of such rights are made in the draft offer document and offer document. ] 3 [ (c) ] fully paid-up outstanding convertible securities which are required to be converted on or before the date of filing of the red herring prospectus (in case of book-built issues) or the prospectus (in case of fixed price issues), as the case may be. *********** NOTES:- 1 . Substituted vide Notification No. SEBI/LAD-NRO/GN/ 2022/ 63 dated 14-01-2022 before it was read as wilful defaulter. 2 . Inserted vide F. No. SEBI/LAD-NRO/GN/2025/233 dated 03-03-2025 w.e.f. 03-03-2025 (For effective date in certain cases see Notification) 3 . Re-Numbered vide F. No. SEBI/LAD-NRO/GN/2025/233 dated 03-03-2025 w.e.f. 03-03-2025 (For effective date in certain cases see Notification) before it was read as, (b)