Capital Market Related Topics, Regulatory Insights and Exchange Related issues

1. Capital Market Related Topics, Regulatory Insights and Exchange Related issues PSRAO & ASSOCIATES

2. LEGAL FRAMEWORK

3. IMPORTANT SEBI REGULATIONS • SEBI ( ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) Regulations, 2009 • SEBI ( ISSUE AND LISTING OF DEBT SECURITIES) Regulations, 2008. • SEBI ( PROHIBITION OF INSIDER TRADING )Regulations, 1992 • SEBI ( MERCHANT BANKERS ) Regulations, 1992 • SEBI ( UNDERWRITERS )Regulations, 1993 • SEBI ( REGISTRARS TO AN ISSUE AND SHARE TRANSFER AGENTS ) Regulations, 1993 • SEBI ( BANKERS TO AN ISSUE ) Regulations, 1994 • SEBI ( SUBSTANTIAL ACQUISITION OF SHARES AND TAKEOVERS ) Regulations 1997 (Takeover Code) • SEBI ( PROHIBITION OF FRADULENT AND UNFAIR TRADE PRACTICES RELATING TO SECURITIES MARKET ) Regulations, 2003

4. Fund Raising in a Company at Different Stages Depository Receipts with the underlying being Shares, Foreign Currency Bond convertible into shares, Depository receipts with the underlying being shares. Strategic Investment GDR, FCCB & ADR Shares Customer, Supplier, Competitor Shares / PCD / FCD QIP FII, Hedge funds and FII, US QIB Shares Rights Issue QIB Shares / Warrants / FCD / PCD Follow-on Public Issue Existing Shareholders Shares Private Placement FIIs, FI, Banks, Insurance Cos, MF, HNI, Individuals including NR Shares IPO Promoters, Financial Investor, Strategic Investor Warrants / Shares Private Equity FIIs, FI, Banks, Insurance Cos, MF, HNI, Individuals including NR Shares Venture Capital Private Equity investors Seed Capital Venture Capitalist IPO: Initial Public Offer QIP: Qualified Institutions Placement GDR: Global Depository Receipts FCCB: Foreign Currency Convertible Bond ADR: American Depository Receipts Personal Contribution, Family, Friends, Angel Investors

6. FUND RAISING OPTIONS Note: Specified securities means Equity, convertible Securities. ( Partly Convertible Debentures PCD & Fully Convertible Debentures FCD

7. Investor Categories QIB means; • A MF, VCF, FVCF • Foreign Institutional investor • Public Financial Institution • Scheduled commercial bank • Multilateral and bilateral development financial institution • State Industrial development corporation • Insurance Company • Provident Fund ( Min Corpus 25 Cr ) • Pension fund ( R 25 Cr ) • National Investment Fund • Insurance funds setup and managed by the Dept of Posts, India” as per the amendment of SEBI (ICDR) Reg, 09 on 12th November,2010) Retail Investor means an investor who applies or bids for specified securities for a value of not more than Rs. 2 Lakh (as per the amendment of SEBI (ICDR) Reg, 09 on 12th November,2010) Non Institutional investor means an investor other than a retail individual investor and qualified institutional buyer

8. SEBI ( ICDR) REGULATIONS, 2009

9. SEBI ( ICDR ) Regulations, 2009

10. INITIAL PUBLIC OFFER ( IPO) – ICDR REG, ‘09 Eligibility criteria for Unlisted Companies for I P O • Book building route mandatory with 50% QIB participation if all issues during the same financial year (including proposed IPO) > 5X pre-issue net worth Exemptions from SEBI Eligibility Norms Listing criteria of Bombay Stock Exchange Limited • Banking company • Correspondent new bank (“public sector banks”) • Infrastructure company • Whose project is appraised by a FI/ IDFC/ IL&FS or bank which was earlier an FI • 5% of the project cost is financed by the appraiser(s)/ institutions jointly or severally • Rights issues For large cap companies: • Post Issue paid up equity capital - Rs. 3 Crores • Issue size - Rs. 10 Crores • Post Issue market capitalization – Rs. 25 Crores

11. Initial Public Offer ( IPO) – ICDR Reg, ‘09

12. Initial Public Offer ( IPO) – ICDR Reg, ‘09 Reservation on a competitive basis * Firm allotment + Reservation • No reservation can be made for the issue management team, syndicate members, their promoters, directors and employees and for the group/associate companies of issue management team • Net Public Offer” i.e. the size of the offer, net of reservations and firm allotments, if any, has to be greater than 10% of post issue capital

13. Initial Public Offer ( IPO) – ICDR Reg, ‘09

14. Initial Public Offer ( IPO) – ICDR Reg, ‘09

15. Corporate Governance Requirements Composition of Board of Directors • Reconstitution of the Board of Directors • At least one-half non executive Directors • One-third independent Directors in case of a non-executive Chairman • One-half independent Directors in case of an executive Chairman • One-half independent Directors in case non-executive Chairman being a promoter or related to the promoters or persons occupying management positions at the Board level or at one level below the Board Committees of the Board • Audit Committee • Should comprise at least three members • Two-thirds of the members shall be independent Directors • At least one Director should have financial and accounting knowledge • Committee Chairman to be an independent Director • Shareholder’s/Investor Grievance Committee • A board committee under the chairmanship of a non-executive director • Redressal of shareholder and investors complaints like transfer of shares, non-receipt of balance sheet, non-receipt of declared dividends etc. • Remuneration Committee (optional) • Should comprise at least three members • Have all non-executive Directors • Committee Chairman to be an independent Director • A report on Corporate Governance to be included in the Annual Report of the Company • Clause 49 requirements of the Listing Agreement of the Stock Exchanges to be met at the time of filing the DRHP with SEBI • Instances in the past where DRHP filed with SEBI by certain PSUs without Clause 49 compliance, with an undertaking to comply with the same prior to opening of the Issue

16. Key Parties and Responsibilities for an IPO Intermediary Structure Book Runners’ Legal Counsel BRLM Broker / Syndicate Legal Counsels IPO Grading Agency Registrars Escrow Bankers Printers Advertising Agency Issuer Company / Selling Shareholder Arrangement Coordination

17. Rights Issue SEBI approval of prospectus not required if: • Issuer company is listed for last three years • Average market cap is greater than Rs 5,000 Crores • 95% of investor grievances redressed (till last quarter) • No SEBI proceedings pending • Entire shareholding in dematerialized form

18. Rights Issue – ICDR Reg, ‘09

19. Bonus Issue – ICDR Reg, ‘09

20. PREFERENTIAL ALLOTMENT – ICDR REG, ‘09

21. Preferential Allotment – ICDR Regulations, 09

22. Preferential Allotment – Other Regulatory Provisions

23. Preferential Allotment – Listing Agreement CLAUSE 49 Quarterly disclosure of uses/application of funds raised by Preferential Allotment Annual Statement of funds utilised for purposes other than stated purposes – certified by statutory auditors to the Audit Committee till such time, money raised is fully spent

24. QIP – ICDR REG, 09.

25. QIP – ICDR REG, 09.

26. IDR – INDIAN DEPOSITORY RECIEPT

28. Issue of Specified Securities by Small and Medium Enterprises- SME

29. Issue of Specified Securities by small and medium enterprises

30. Issue of Specified Securities by small and medium enterprises

31. Issue of Specified Securities by small and medium enterprises

32. DELISTING OF SECURITIES – SEBI ( DELISTING OF EQUITY SHARES ) REGULATIONS, 2009

33. DELISTING OF SECURITIES – SEBI ( DELISTING OF EQUITY SHARES ) REGULATIONS, 2009

34. DELISTING OF SECURITIES – SEBI ( DELISTING OF EQUITY SHARES ) REGULATIONS, 2009

35. LISTING / STOCK EXCHANGE

36. LISTING AGREEMENT – Important Clauses

37. LISTING AGREEMENT – Important Clauses

38. LISTING AGREEMENT – Important Clauses

39. LISTING AGREEMENT – Important Clauses

40. REPORT ON CORPORATE GOVERNANCE

41. TYPES OF LISTING

42. Benefits of Listing

43. Questions? Thank you !