SEBI has notified amendments to the ICDR Regulations on 12 October 2012. These amendments were discussed by SEBI in its board meeting held on 16 August 2012.
Some of the key amendments are:
- 'General corporate purposes' has been defined to include such identified purposes for which no specific amount is allocated or any amount so specified towards 'general corporate purposes'. The amount allocated for general corporate purposes in the draft offer document cannot exceed 25% of the amount proposed to be raised by the company.
- Any merchant banker which is an associate of the issuer will only market the issue and will be named as the marketing lead manager on the cover page of the offer document.
- A company proposing a public issue will open the issue to the public after at least three working days from the date of registering the red herring prospectus with the registrar of companies.
- A company proposing an initial public offering should have a minimum pre-tax operating profit of Rs. 15 crores in three of the preceding five years. This has replaced the earlier eligibility requirement of having distributable profits in at least three of the preceding five years.
- A company proposing a public issue through the book building route will allot a minimum of 75% of the net offer to public to qualified institutional buyer, as opposed to the earlier requirement of 50%.
- A company will disclose the floor price at least five working days before the opening of the bid period for an issue.
- If the post issue shareholding of the promoters in the company proposing a public issue is less than 20%, alternate investment funds will be allowed to contribute to meet the shortfall up to a maximum of 10% of the post issue capital of the company.
- The minimum application value based on which a company proposing a public issue shall disclose the minimum application size (in terms of number of securities) in the offer document has been increased from Rs.5,000 - Rs.7,000 to Rs.10,000 - Rs.15,000. The allotment of securities to each retail investor will not be less than the minimum bid lot.
- A company will update the disclosures in the red herring prospectus annually and make it available to the public.
- A company issuing shares through qualified institutions placement will be allowed to offer a maximum discount of 5% on the issue price calculated as per the existing regulations, subject to the approval of its shareholders.
- Any addition to the objects of the issue resulting in a change in the estimated issue size by more than 20% will require fresh filing of the draft offer document with SEBI along with fees. In case of deletion of an object of the issue resulting in a decrease in issue size by more than 20%, if SEBI is of the view that there is any risk on account of such deletion, SEBI may require fresh filing of the draft offer document with fees.
- Any increase or decrease in the estimated issue size by more than 20% will require fresh filing of offer document with SEBI along with fees.
- Retail individual investors can withdraw or revise their bids until finalisation of allotment.
- Qualified institutional buyers or non-institutional investors will neither withdraw nor lower their bids at any stage of the issue process.