Appendix 67
SEBI (DISCLOSRUE AND INVESTOR PROTECTION) GUIDELINES CLARIFICATION XXVII
In
order to provide the issuer and the lead merchant banker the flexibility of
price and demand discovery,
SEBI introduced the facility of Book Building for raising capital vide
Clarification XIII as modified by Clarifications XVII, XXI and XXIII.
SEBI has received
representations from the merchant bankers expressing difficulties inter alia,
in respect of reservation in the book built portion, disclosure regarding issue
size etc.
The SEBI Board after duly
considering the issues in its meeting held on October 8,1999, has decided to
modify the existing guidelines.
Accordingly, a Clarification
XXVII has been issued pursuant to the aforesaid decision of the Board. A copy
of the Clarification is enclosed.
Part A of the Clarification
modifies the existing book building guidelines as contained in Clarification
XXI dated October 27, 1997 read with Clarification XXIII dated February 12, 1999.
Part B of the Clarification
gives an option to issuer company, inter alia, to offer 15% of the issue size
reserved for individual investors bidding upto 10 tradable lots in the book
built portion to the public at fixed price.
This Clarification is being
issued under sub‑section (1) of the Section II of the Securities and
Exchange Board of India Act, 1992.
This Clarification shall
come into effect from November 26, 1999. The provisions of this Clarification
shall also be applicable to the offer documents pending with SEBI.
MODIFICATION IN THE EXISTING
GUIDELINES FOR BOOK BUILDING GIVEN IN CLARIFICATION XXI READ WITH CLARIFICATION
XXIII
A company proposing to issue
securities to the public through an offer document and availing the book
building facility shall have an option either to follow the guidelines
pertaining to book building as contained in PART A or PART B.
1. A company proposing to issue securities
to the public through the book‑building facility shall follow the
existing guidelines as contained in Clarification XXI dated October 27, 1997
read with Clarification XXIII dated February 12, 1999, as modified hereunder.
2. A company proposing to issue securities to the public
through the book building facility shall;
(i) disclose in the offer document either
the issue size or the number of securities to be offered to the public subject
to compliance with the requirement of Rule 19(2)(b) of the Securities Contracts
(Regulation) Rules, 1957 as modified from time to time;
(ii) make additional disclosures in the offer
document with respect to the arrangements made for meeting the deficit in the
means/of financing and the pattern of deployment of excess funds;
(iii) be permitted to fix a minimum bid size for the book built
portion
(iv) have the option to fix a date of
allotment for book‑built portion which may be prior to the date of
allotment for fixed price portion.
(v) Provided that the date of allotment for
book built portion shall be deemed to be the date of allotment for fixed price portion
for the purposes of dividend and other corporate benefits and the same shall be
disclosed in the offer document;
(vi) be allowed to spill‑over excess
subscription from the fixed price portion to the book built portion reserved
for allocation to individual investors bidding for up to 10 tradable lots, to
the extent of shortfall in the latter.
3. The reservation in allocation to
individual investors applying up to 10 tradable lots through the Syndicate
members shall be with reference to the issue size and not post‑issue
capital as given in Annexure III to the Clarification XXI to Disclosure and
Investor Protection Guidelines dated October 27, 1997.
1.
(a) A company proposing to issue securities
to public through book‑building facility shall have an option to offer
75% of net public offer for bidding as modified by PART A hereinabove.
(b) The balance 25% of the net public offer
shall be made at the fixed price determined by the book‑building
exercise.
Provided that the allotment
and other related requirements as specified for the public issue shall be
applicable.
2. A company availing the optional facility may;
(i) graphically display the demand at the
end of each day of the bidding period at the terminals for the information of
the syndicate members as well as the investors;
(ii) use electronically linked facility for bidding;
(iii) decide the number of bidding centres;
(iv) fix a minimum bid size for the book built portion.
3.
(i) A company availing the optional
facility shall make the allotment in respect of the book built portion in
dematerialised form only.
Provided that
the allottees shall have option to rematerialize the securities so allotted, if
they so desire.
(ii) The lead book runner shall ensure that a
confidentiality clause to the effect that the lead book runner and the issuer
company shall not disclose the book to any person (except to statutory
authorities if so required by such authorities), is incorporated in the
memorandum of understanding entered into between him and the issuer company.
4. A company availing the facility of book
building as specified in Part B above, shall comply with all the other
requirements mutatis mutandis as given in the Clarification XXI dated October
27, 1997 read with Clarification XXIII dated February 12, 1999 and as modified
by Part A of this Clarification. [Issued by SEBI, vide RMB DIP Series Circular
No. 4 (1999‑2000), Dt. 26‑11‑1999].