| What is listing?
Listing means admission of the securities to dealings on a recognized stock exchange. The securities may be of any public limited company, Central or state government, quasi government or other financial institution/corporation, municipalities, etc.
| What are the requirements for a PSU to get listed on BSE? A company will have to meet the conditions prescribed under SEBI ICDR Regulations 2009 as well as minimum listing requirements prescribed by the exchange for seeking listing of its equity shares on BSE
| What is an Offer Document? Is it compulsory to issue an Offer Document? An ‘Offer Document’ is a document which contains all the relevant information about the company, promoters, projects, financial details, objects of raising the money, terms of the issue etc, which is issued for the benefit of prospective investors, and is required to be filed with SEBI and the exchanges(s). A company coming out with a Public Offer has to compulsorily issue an Offer Document.
| What is the time taken for preparation of an Offer Document? The time taken for preparation of the DRHP depends upon the size of the company, and the industry to which it relates. The period varies between 2 to 6 months.
| Please explain DRHP/RHP/Prospectus
DRHP stands for Draft Red Herring prospectus, which is filed with SEBI and the Exchanges. SEBI makes the DRHP filed by companies available on its website for inviting comments from the public.
RHP stands for Red Herring Prospectus. It does not have details of either price or number of shares being offered or the amount of issue. The price band is normally disclosed in the RHP. It incorporates all the changes suggested by SEBI. It is filed with ROC before the issue opens.
Prospectus is an Offer Document which contains all the relevant details including the final price and the number of shares issued. This is also required to be filed with ROC after the issue closes.
| What is book building?
It is a process of price discovery, where the price band for the issue has to be disclosed before opening of the issue. The investor is free to make an offer within the price band. The final price is arrived at after the closure of the issue, based on the demands received at various price levels.
| Is book building compulsory?
Book building may be optional or compulsory. In case of compulsory book built issues at least 50% of net offer to public needs to be allotted to QIBs failing which the full subscription monies has to be refunded. Further, if the issue to the public is between 10% and 24.99%, then the company will have to meet the requirements of Rule 19(2) (b) which, inter alia, requires that the issue is made through book built route and at least 60% of the issue size is allocated to QIB’s. However, infrastructure companies are exempt from this requirement.
| Does a company have the option to decide whether to come out with a fixed price issue or through book building issue? A company has the option to come out with a fixed price issue or book built issue. However, if the company does not satisfy any of the conditions stipulated in Chapter III Part I Clause 26 (I) of the SEBI ICDR REGULATIONS 2009, then it has to compulsorily go through the book built route.
| Is appointment of a merchant banker compulsory?
Appointment of a merchant banker is compulsory for a Public Offer.
| Does BSE vet the Offer Document?
BSE does not vet the Offer Document. However, the exchange may suggest certain changes/disclosures etc. to be made in the Offer Document.
| Is SEBI approval compulsory for Public Offer?
Any company coming out with a Public Offer or a rights issue of securities of more than Rs. 50 lakhs in value is required to file a draft Offer Document with SEBI for its observations. SEBI issues an observations letter if the Offer Document contains all the necessary material...
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