Regulation 59E - General Conditions - Securities And Exchange Board of India (Issue Of Capital And Disclosure Requirements) Regulations, 2018

1 [General Conditions 59E. (1) Notwithstanding anything contained in any other provisions of these regulations, subject to intimation to the Board and the stock exchanges, an issuer opting for initial public offer through pre-filing the draft offer document in terms of the provisions of this Chapter shall, till the Board recommends any changes or issues observations on the pre-filed draft offer document, be permitted the following: (a) Existence of 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 issuer shall mandatorily convert such outstanding convertible securities or exercise any other right which would entitle any person with any option to receive equity shares of the issuer and intimate such act of conversion to the Board before the Board recommends any changes or issues observations on the pre-filed draft offer document: Provided further that the following shall be permitted even after the issuance of observations by the Board on the pre-filed draft offer document: (i) Existence of 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; 3 [ (ii) 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; ] 2 [ (iii) ] Existence of 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; (b) Issue of specified securities; (c) Issue such convertible securities that are mandatorily and compulsorily convertible into equity shares at the time of filing of offer document, provided the details for such securities are given in the updated draft red herring prospectus-I in relation to the maximum number of shares in which such convertible securities shall be converted. (2) If there are any changes in the pre-filed draft offer document after the Board recommends any changes or issues observations on such pre-filed draft offer document in relation to the matters specified in Schedule XVI-A , an updated pre-filed draft offer document or a fresh pre-filed draft offer document, as the case may be, shall be filed with the Board along with fees specified in Schedule III . Explanation: For the purpose of this regulation, changes made in the pre-filed draft offer document in relation to the matters specified in clause (1) of Schedule XVIA before the Board recommends any changes or issues observations on the pre-filed draft offer document shall not require fresh filing of such pre-filed draft offer document. (3) If there are any changes in the updated draft red herring prospectus-I in relation to the matters specified in Schedule XVI , an updated pre-filed offer document or a fresh draft offer document under Chapter II or fresh pre-filed draft offer document, as the case may be, shall be filed with the Board along with fees specified in Schedule III . (4) Subject to the compliance with the provisions of the Companies Act, 2013 , a public issue may be opened within eighteen months from the date of issuance of the observations by the Board under regulation 59C of these regulations: Provided that the issuer shall file updated draft red herring prospectus-I with the Board and the stock exchanges in terms of regulation 59C of these regulations within sixteen months from the date of issuance of the observations by the Board. ] *************** NOTES:- 1 . Inserted vide Notification No. SEBI/LAD-NRO/GN/2022/107 dated 21-11-2022 2 . 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, (ii) 3 . 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)