Amendments to Book-building System under Securities and Exchange Commission (Public Issue) Rules, 2006 The Securities and Exchange Commission has made some significant changes to the existing Book building rules under the Securities and Exchange Commission (Public Issue) Rules, 2006. Changes have been made in three dimensions: some rules have been thoroughly revised, some parameters of existing rules have been changed and some new rules have been inserted. The price discovery process has been revised so that the Issue Manager and the Issuer may not mention/propose any indicative price while sending Information Memorandum to Eligible Institutional Investors (EII) to collect quotations. This should help build the indicative from at least 20 EII with at least 3 EII representing each group of EII. Where some parameters of existing rules have been changed are as follows: a. Asset Managers have been added to the list of EIIs.
b. Individual investment limit for each EII has been changed from 10% to 5%. c. Bidding period has been changed from 3-5 days to 48 hours. d. Lock in period for EII has been changed from 15 trading days to 4 months. e. Some changes in the distribution table.
New rules have been inserted to (a) address conflict of interest in issues from related Issue Mangers, EIIs etc.; (b) impose requirements in relation to Financial Statement and the same being audited by foreign affiliated audit firms; (c) in relation to disclosure of net income excluding all extra-ordinary income; (d) in relation to not allowing disclosure of annualizing EPS in quarterly or half yearly data; (e) in relation to disclosure of NAV with and without revaluation in case of any revaluation in last 24 months and (f) create provision for the Commission to re-audit the audited financial statements in case if any deficiency/anomaly are found. These amendments can be found at the SEC website or at the following link...
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