Appendix 85
GUIDELINES FOR ISSUE OF SECURITIES BY COMPANIES AND THEIR LISTING ON OVER THE COUNTER EXCHANGE OF INDIA (OTCEI)
[F. No. 1/2/SE/ 89 dated 9‑5‑1991
issued by the Ministry of Finance, Department of Economic Affairs, Stock
Exchange Division to the Over the Counter Exchange of India]
Please refer to your letters No. RR/CCI/25/91 dated 4‑3‑ 1991 and RR/CCI/65/91 dated 25‑3-1991, regarding guidelines for listing of companies on the Over the Counter Exchange of India (OTCEI).
2. It has been decided by the Government
that the issue of securities by companies and their listing on the OTCEI will
be governed by the following guidelines:
(i) the minimum issued equity share capital
of a company for eligibility for listing on the OTCEI will be Rs. 30 lakhs,
subject to a minimum public offer of equity shares worth Rs. 20 lakhs in face
value;
(ii) *[* * * *]
(iii) companies with an issued equity capital
of more than Rs. 300 lakhs seeking listing on the OTCEI will have to comply
with the listing requirements and guidelines as are applicable to such
companies for enlistment on other recognised Stock Exchanges;
(iv) *[* * * *]
(v) a company with an issued equity share
capital of more than Rs. 10 crores will not be eligible for listing on the
OTCEI;
(vi) *[* * * *]
(vii) a company which is listed on any other
recognised Stock Exchange in India would not simultaneously be eligible for
listing on the OTCEI;
(viii) *[* * * *]
(ix) *[* * * *]
(x) *[* * *
*]
3. The OTCEI shall make it clear to the
companies, their shareholders and investors that tax concessions, if any, in
respect of companies listed on it and investments in their shares will be as
per the tax laws and/or the decisions of the Department of Revenue, Ministry of
Finance. It is also clarified that the functioning and operations of the OTCEI
shall be subject to the provisions of the Securities Contracts (Regulation)
Act, 1956; the Companies Act, 1956; the Capital Issues (Control) Act, 1947 and
other relevant laws which are applicable to the corporate sector and the
investors.
4. This letter issues in super session of
this Ministry's letter of even number dated 18th February, 1991.
Listing norms for companies OTCEI‑Removing certain restrictions‑Guidelines
for listing on the OTCEI related by SEBI
Press Release (Ref. No. PR
23/95) dated 6th May, 1995 Issued by the Secondary Market Department, SEBI
Securities and Exchange
Board of India has decided to do away with the following restrictions in the
existing Guidelines for listing of companies on the OTCEI:
(1) Prohibition from listing on
the OTCEI for companies engaged in investments, leasing, finance, hire
purchase, amusement parks, etc.
(2) Requirement
of minimum public offer of 40% of the issued capital of Rs. 20 lakhs worth of
shares in value whichever was higher, for companies with an issued equity
capital of more than Rs. 30 lakhs but less than Rs. 3 crores.
(3) Requirement
that the companies covered under the MRTP Act/FERA are to be listed on the
OTCEI only if they satisfy the guidelines for listing on other stock exchanges.
(4) The
requirements mentioned below, which have become redundant due to the abolition
of the Office of the Controller of Capital Issues (CCI):
(i) whenever
securities are issued at a price above par, the premium will be determined by
the CCI,
(ii) a
company shall not issue securities at par in case the securities are eligible
to be issued at a premium under the guidelines issued by the CCI.
Press Release, dated 7‑4‑1995
1. Only
companies with a post‑issue paid up share capital of Rs. 1 crore shall be
eligible for listing on the OTCE.
2. The company should have a
track record for the post three years represented by continuous profitability.
3. The sponsor in these scrips
should at least hold 10 per cent of the public offer as market making inventory
instead of 5 per cent as applicable to other OTCEI listed companies.
4. The objective of the issue
could also include seeking membership on stock exchanges including OTCEI.
However, the company listed on OTCEI or its group/associate companies will not
be permitted to make market in their own scrips.
5. Debt equity ratio should be
as per the Non‑Banking Finance Companies (Reserve Bank of India)
Directions, 1977.
6. The company seeking listing
on OTC Must have been registered with Reserve Bank of India under the Non‑Banking
Finance Companies (Reserve Bank) Directions under the category of equipment
leasing companies, hire‑purchase companies, housing finance companies,
investment companies or loan companies at least not less than two years prior
to the date of applying for listing on OTCEI.
7. The company seeking listing
on OTCEI should obtain investment grade rating by a rating agency in cases
where it has floated fixed deposits or debenture issues.
In respect of amusement park
companies, the existing guidelines for OTCEI listed companies will continue to
apply.
OTC Exchange of India has
revised its guidelines for bought‑out deals. The revised guidelines are
as under:-
1. The offer of the bought‑out
should be initially made to OTCEI Members and Dealers. If participation is not
forthcoming, the same may be offered to the non‑OTCEI Members and
Dealers. (This is only recommendatory).
2. The Members and Dealers are free to
decide the ratio in a Bought‑out Deal between OTCEI Members/Dealers and
Non‑OTCEI Members/Dealers, subject to the condition that the Members and
Dealers should participate in the bought‑out deal by taking up minimum 10
per cent of the total value of securities for which the bought‑out is
done.
3. The earlier requirement of the entire
bought‑out (except the Market Making Inventory) to be offered to the
public at the time of offer for sale is no longer required. However, the offer
for sale will have to comply with the requirement of Rule 19‑2(B) of the
Securities Contract (Regulation) Rules which requires offer of minimum 25 per
cent of the post‑issue paid‑up capital to the public.
4. The above norms shall be subject to
review by OTCEI as and when required and subject to the SEBI guidelines and any
amendments thereto.
5. OTCEI reserves the right to stipulate
conditions relating to restriction of transfer in respect of the shares covered
under the sponsorship agreement.
These guidelines
are effective from January 22, 1996 and will also be applicable to the
bough/out deals which have been already registered with OTCEI as well as to the
cases where the "offer for sale documents" have already been filed
with SEBI.
(Disclosure of Investor
Protection Guidelines 2000)
14.0 Any company making an
initial public offer of equity share or any other security convertible at a
later date into equity shares and proposing to list them on the Over The
Counter Exchange of India (OTCEI) shall comply with all the requirements
specified in these guidelines:
14.1 Eligibility norms
14.1.1 Any company making an
initial public offer of equity share or any other security convertible at a
later date into equity shares and proposing to list them on the OTCEI, is
exempted from the eligibility norms specified in Clause 2.2 of Chapter II of
these guidelines subject to its fulfilling the following besides the listing
criteria laid down by the OTCEL
(i) it is sponsored by a member of the OTCEI and;
(ii) has appointed at least two market makers
(one compulsory and one additional market maker).
14.1.2 Any offer for sale of equity
share or any other security convertible at a later date into equity shares
resulting out of a Bought out Deal (BOD) registered with the OTCEI is exempted
from the eligibility norms specified in Clause 2.2 of Chapter II of these
guidelines subject to the fulfillment of the listing criteria laid down by the
OTCEI.
Provided that
the issuer company which has made issue of capital under Clauses 14.1.1 &
14.1.2 above, shall not delist its securities from OTCEI for a minimum period
of three years from the date of admission to dealing of such securities on
OTCEI.
14.2 Pricing Norms
14.2.1 Any offer for sale of equity
share or any other security convertible at a later date into equity shares
resulting out of a Bought out Deal (BOD) registered with OTCEI is exempted from
the pricing nouns specified, in Clause 3.2 of Chapter III of these guidelines
subject to the following conditions:
(i) The promoters after such issue shall
retain at least 20% of the total issued capital with the lock‑in of three
years from the date of the allotment of securities in the proposed issue; and
(ii) At least two market makers (One
Compulsory and one additional market maker) are appointed in accordance with
the Market Making guidelines stipulated by the OTCEL
14.3 Projections
14.3.1 In case of securities
proposed to be listed on OTCEL for the purpose of Clause (6.12.1) of Chapter VI
of these guidelines, projections based on the appraisal done by the sponsor who
undertakes to do market making activity in the securities offered in the
proposed issue can be included in the offer document subject to compliance with
other conditions contained in the said clause.