SEBI proposes to streamline the ICDR Regulations

Further, the reference to section 121 of the Companies Act, 1956 has been removed considering that the same is not present under the Act, 2013 and accordingly, the reference to the Act, 2013 has been made.

Further, 25% of the consideration based on warrant exercise price as paid shall be forfeited in case of non-exercise of option.

·     Applicant is holding equity shares in physical mode;

·     Applicant has renounced entitlement in part or in full; and

·     Applicant is not a renouncee.

Provided that the issue can be underwritten only to the extent of entitlement of shareholders other than the promoters and promoter group.

Provided that the above restriction shall not apply to any sale of equity shares by any person belonging to promoter(s) of the promoter group which qualifies for inter-se transfer amongst qualifying persons under regulation 10 (1) (a) of Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeover Regulations), 2011 or in case of transfer of shares held by the promoters or promoter group on account of invocation of pledge by a lender.

(e) the identity of the natural persons who are the ultimate beneficial owners of the shares proposed to be allotted and/or who ultimately control] the proposed allottees, the percentage of post preferential issue capital that may be held by them and change in control, if any, in the issuer consequent to the preferential issue.

Provided that if there is any listed company, mutual fund, bank or insurance company in the chain of ownership of the proposed allottee, no further disclosure will be necessary.

identity of the natural persons who are the ultimate beneficial owners of the shares proposed to be allotted and/or who ultimately control the proposed allottees, the percentage of post preferential issue capital that may be held by them and change in control, if any, in the issuer consequent to the preferential issue:

Provided that if there is any listed company, mutual fund, scheduled commercial bank, insurance company registered with the Insurance Regulatory and Development Authority of India, foreign portfolio investor other than Category III foreign portfolio investor, foreign venture capital investor or alternative investment funds in the chain of ownership of the proposed allottee, no further disclosure will be necessary.

(a) makes an issue of equity shares by way of capitalization of profits or reserves, other than by way of a dividend on shares;

(b) makes a rights issue of equity shares;

(c) consolidates its outstanding equity shares into a smaller number of shares;

e) divides its outstanding equity shares including by way of stock split;

f) re-classifies any of its equity shares into other securities of the issuer;

g) is involved in such other similar events or circumstances, which in the opinion of the concerned stock exchange, require adjustments.

a) makes an issue of equity shares by way of capitalization of profits or reserves, other than by way of a dividend on shares;

b) makes an issue of equity shares after completion of a demerger wherein the securities of the resultant demerged entity are listed on a stock exchange;

c) makes a rights issue of equity shares; d) consolidates its outstanding equity shares into a smaller number of shares; e) divides its outstanding equity shares including by way of stock split;

f) re-classifies any of its equity shares into other securities of the issuer;

g) is involved in such other similar events or circumstances, which in the opinion of the concerned stock exchange, require adjustments.

Provided that in case of a preferential issue of specified securities pursuant to a scheme of corporate debt restructuring as per the corporate debt restructuring framework specified by the Reserve Bank of India, the allottee may pay the consideration in terms of such scheme.

{77.(2) and (3)}An amount equivalent to at least twenty five per cent. of the consideration determined in terms of regulation 76 shall be paid against each warrant on the date of allotment of warrants.

Provided that in case of a preferential issue of specified securities pursuant to a scheme under the corporate debt restructuring framework specified by the Reserve Bank of India, the allottee may pay the consideration in terms of such scheme.

(2) In the case of warrants, an amount equivalent to at least twenty five per cent. of the consideration determined in terms of regulation 76 shall be paid against each warrant on the date of allotment of warrants and the balance seventy five per cent. of the consideration shall be paid at the time of allotment of the equity shares pursuant to exercise of options against each such warrant by the warrant holder. Alternately, twenty five per cent. of the consideration can be computed on the basis of the current market price and the balance can be paid based on the price at the time of exercise.

It is also proposed to clarify that the 25 per cent. consideration can be based on the pricing formula computed using the current market price, and the balance consideration can be paid at the time of exercise which can be subsequently determined at the time of final pricing.

(a) relaxation- the flexibility to decide number of warrants to be attached to a specified security shall now vest with the issuer.

(b) Clarificatory – the same will remove any ambiguity regarding the pricing.

These companies, while in the process of turning around are unable to raise funds through QIP as their pre-QIP net worth will be small or negative. As such, these companies have to look for other avenues for fund raising which may be time consuming and expensive options. QIB investors are in a better position to evaluate such opportunities and QIBs also are not required to be given any protection. Hence, it is proposed to delete this requirement.

For the purpose of sub-regulation (2), the expression “qualified institutional buyers belonging to the same group” shall mean entities where

(i) any of them controls directly or indirectly, through its subsidiary or holding company, not less than fifteen per cent. of the voting rights in the other; or

(ii) any of them directly or indirectly, by itself, or in combination with other persons exercise control over the others;

(iii) there is a common director, excluding nominee director amongst the investor, its subsidiary or holding company and other investor.