Amendments to the SEBI (Disclosure and Investor Protection) Guidelines, 2000 - SEBI - RMB (Compendium) Series Circular No. 3 (2001- 2002)

Circulars RMB (Compendium) Series Circular No. 3 (2001- 2002) January 11, 2002 To All Registered Category I Merchant Bankers Dear Sirs, Sub: Amendments to the SEBI (Disclosure and Investor Protection) Guidelines, 2000 The Board, in its meeting held on March 15, 2001, considered and approved certain modifications in the SEBI (DIP) guidelines in order to introduce the facility of issue of debt securities without issue of equity, for companies desirous of coming out with a public issue. Accordingly, the amendments that have been made in the Guidelines are enclosed. Further, the existing clause 8.2.2.1 stands deleted as the same appears as clause 8.21.2 of the guidelines. These amendments shall come into force from the date of the circular. Yours faithfully, R.M. JOSHI Executive Director AMENDMENT TO SEBI (DISCLOSURE AND INVESTOR PROTECTION ) GUIDELINES, 2000 CHAPTER VIII - OTHER ISSUE REQUIREMENTS 1. The existing clause 8.2 shall be substituted by the following : 8.2 Public issue and listing of non-convertible debt securities (hereinafter referred to as NCDS) and Debt Securities convertible into equity after allotment (hereinafter referred to as DSCE). An unlisted company making a public issue of NCDS may, subject to other applicable provisions of these guidelines, make a public issue and make an application for listing its NCDS in the Stock Exchange/s without making a prior public issue of equity and listing thereof, if the following conditions are fulfilled: The NCDS shall carry a credit rating not below investment grade at-least from one Credit Rating Agency registered with the Board. Where the issue size of the NCDS is ₹ 100 crores or more, such rating shall be obtained from at least two Credit Rating Agencies. The promoter's contribution of atleast 20% of the project cost i.e. objects proposed to be inter alia financed through the issue, shall be brought in the form of equity. Where the promoters contribution exceeds ₹ 100 crores, the promoters shall bring in ₹ 100 crores before the opening of the public issue and the remaining promoters' contribution shall be brought in on pro rata basis, before calls on the NCDS are made. The promoters' contribution of 20% of equity shall be locked in for a period of 3 years from the date of allotment in the public issue of NCDS. The issuer company shall agree to comply with the requirements of continuing disclosures as specified under the listing agreement to be entered into with concerned stock exchanges as is applicable for listing of equity shares. The issuer company shall agree to obtain prior consent of the holders of the NCDS through special resolution to be passed at the general meeting of the NCDS holders for change in terms of issue, change in capital structure and change in shareholding pattern. There shall be no partly paid up shares/other securities at the time of filing of draft offer document with the Board. The issuer company may come out with a public issue of equity/security convertible into equity after allotment during the currency of the NCDS or thereafter, only after complying with the guidelines applicable for an initial public offering of such securities. The equity held by the promoters or others at the time of issue of NCDS may be listed only when an initial public offer of equity/securities convertible into equity after allotment is made after complying with the applicable provisions of these Guidelines. A Municipal Corporation which has no share capital may be subject to the provisions of sub-clauses (a), (b) and (c) of Clause 8.2.1, make a public issue of NCDS and list the same on the stock exchange/s. 8.2.3 An unlisted company making a public issue of DSCE may, subject to other applicable provisions of these guidelines make a public issue and make an application for listing on the stock exchanges without making a prior public issue of its equity and listing thereof, if the following conditions are fulfilled: The provisions of clauses (a) to (e) of clause 8.2.1 shall be mutatis mutandis complied with. An issuer company making an initial public offer of DSCE may come out with a subsequent public issue of equity/security convertible into equity after allotment during the currency of the DSCE only after complying with the guidelines applicable for an initial public offering of such securities. Provided that the provisions of Clause 2.6 shall not be applicable for an Initial Public Offer of such securities if the floor price for conversion of DSCE is determined and disclosed in the offer document for issue of DSCE. The equity held by the promoters and others may be listed along with the listing of equity in initial public offering of equity/security convertible into equity after allotment or at the time of listing if equity arising on conversion of the DSCE . If the equity shares held by the promoters is proposed to be listed on conversion of DSCE, it shall be ensured that the number of equity shares allotted to the public (after excluding the allotment of equity shares to holders of DSCE issued on firm allotment/reservation basis) as a percentage of the total paid up equity capital after conversion and listing of the promoters equity, is not less than the percentage specified in clause (b) of sub-rule (2) of Rule 19 of Securities Contracts (Regulations) Rules, 1957. 8.2.5 The lead merchant banker can mention a price band of 20% (cap in the coupon rate/ price band should not be more than 20% of the floor coupon rate/price) in the offer document filed with the Board and the specific coupon rate/price can be determined by an issuer in consultation with the lead manager at a later date before filing of the offer document with the RoC/s. 8.2.5 The issuer may subject to the provisions of Chapter XI of these guidelines, make the issue through book building process to ascertain and determine the coupon rate and price/ conversion price of the NCDS/DSCE.