Methods Of Issuing Securities In The Primary Market.
1. Initial Public Offer;
2. Rights Issue (For existing Companies); and
3. Preferential Issue.
The major change brought about by SEBI was improvement in the quality of disclosure norms. SEBI’s attempts are directed at ensuring full and fair disclosure by issuers.
The offer documents have to be drafted in accordance with the guidelines for disclosure issued by SEBI.
These guidelines provide entry norms for IPOs, specify disclosure of all material facts, lay down minimum contribution by promoters and also specify the lock-in period for such contribution.
The guidelines also provide that the risk factors associated with the issue be promin~ntly displayed in the offer document. SEBI has made justification of pricing mandatory in case of issues at premium.
Further, SEBI has prohibited companies from giving future profitability projections in the offer document, to prevent investors from being misled.
Filing all the offer documents with SEBI has been made mandatQry. SEBI reserves the right to direct any amendment to the draft offer document within 21 days from filing.
SEBI has also decided to treat all the offer documents filed with it as public document and put the same on internet. This ‘enables SEBI to deal with public complaints of misstatements before the opening of the issue.
SEBI has now delegated the task of vetting the offer document to the Lead Manager. The Lead Manager is required to exercise due diligence with regard to the accuracy and adequacy of the disclosures made in the offer document.
SEBI has allowed issuer companies to access the market through the book building route. Book building facilitates the process of price discovery and also reduces transaction costs. SEBI raised the limits for listing on regular stock exchanges to Rs.5 crore.
Issues below Rs.5 crore in size are permitted to be listed only on OTCEI. As market making is mandatory to list on OTCEI, this move provides liquidity to securities of small cap companies.
SEBI issued guidelines for issue related advertisements to prevent fraudulent inducements to invest.
It permits reservation for certain categories of investors of public issues both on firm and competitive basis.
Further, in case of private placement of equity by listed companies, it has directed that they take place only at market related prices.
1. Initial Public Offer;
2. Rights Issue (For existing Companies); and
3. Preferential Issue.
The major change brought about by SEBI was improvement in the quality of disclosure norms. SEBI’s attempts are directed at ensuring full and fair disclosure by issuers.
The offer documents have to be drafted in accordance with the guidelines for disclosure issued by SEBI.
These guidelines provide entry norms for IPOs, specify disclosure of all material facts, lay down minimum contribution by promoters and also specify the lock-in period for such contribution.
The guidelines also provide that the risk factors associated with the issue be promin~ntly displayed in the offer document. SEBI has made justification of pricing mandatory in case of issues at premium.
Further, SEBI has prohibited companies from giving future profitability projections in the offer document, to prevent investors from being misled.
Filing all the offer documents with SEBI has been made mandatQry. SEBI reserves the right to direct any amendment to the draft offer document within 21 days from filing.
SEBI has also decided to treat all the offer documents filed with it as public document and put the same on internet. This ‘enables SEBI to deal with public complaints of misstatements before the opening of the issue.
SEBI has now delegated the task of vetting the offer document to the Lead Manager. The Lead Manager is required to exercise due diligence with regard to the accuracy and adequacy of the disclosures made in the offer document.
SEBI has allowed issuer companies to access the market through the book building route. Book building facilitates the process of price discovery and also reduces transaction costs. SEBI raised the limits for listing on regular stock exchanges to Rs.5 crore.
Issues below Rs.5 crore in size are permitted to be listed only on OTCEI. As market making is mandatory to list on OTCEI, this move provides liquidity to securities of small cap companies.
SEBI issued guidelines for issue related advertisements to prevent fraudulent inducements to invest.
It permits reservation for certain categories of investors of public issues both on firm and competitive basis.
Further, in case of private placement of equity by listed companies, it has directed that they take place only at market related prices.