Saturday 21 January 2012

Amendment to SEBI Regulations - Issue of Capital and Disclosure Requirements

SEBI has recently issued notification on 23rd September 2011 by means of which it has amendment Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 (“Regulations”) for the second time. This post will throw light on the important issues pertaining to this amendment –

Rights Issue of Indian Depository Receipts – Requirement of Satisfaction of Certain Conditions by the Issuer (Insertion of Chapter XA)

Chapter XA has been inserted in the Regulations related to rights issue of Indian Depository Receipts (“IDR”). Section 106A states, in addition to compliance with Chapter X of Regulations, issuer has to fulfil the conditions mentioned therein under Chapter XA. Ath the same time, these provisions will not be applicable to the rights issue under Regulation 98, 102 and 103, of the Regulations which connotes Conditions for issue of IDR, Display of Bid Data, and Disclosure in prospectus and Abridged Prospectus respectively. Further, Section 106A obliges an issuer to prepare the offer document in accordance with the home country requirements Section 106B signifies the eligibility criteria of an issuer in relation to IDR. Further, Section 106C provides regulations as regards Renunciation by IDR holder.Other provisions under this Chapter are as follows

Regulation 106D – Steps to be taken by Domestic Depository for IDR holders

Regulation 106E – Announcement of record date for determining eligible shareholders

Regulation 106F – Provisions relating to disclosures in the offer document and the addendum for the rights offering.

Regulation 106G – Provision as regards filing of draft offer document and the addendum for rights offering.

Regulation 106H – Applicability of sub-regulations (1), (2), (3), and (4) of Regulation 106G when certain condition provided therein under Regulation 106H are satisfied.
Regulation 106I – Provision as regards Dispatch of abridged letter of offer and application form.

Regulation 106J – Period of subscription of rights issue as applicable under the laws of the home country of the issuer, but shall not be less than 10 days in any case.

Regulation 106K – Provisions as regards Pre-Issue Advertisement for rights issue.

Regulation 106L – Provisions as regards Utilisation of funds raised in rights issue.

Amendment of Provisions as regards Disclosures in Abridged Prospectus – PART D of Schedule VIII [See regulation 58(1)] –
Provisions relating to Part D of Schedule VIII have been amended by this notification. It basically consists of the provisions relating to the disclosures which ought to be made in Abridged Products.
General Instructions – Information of generic form and not specific form should be brought out under the General Information Document (“GID”). Size of the paper should be A4. Further, provisions relating to the font size and other matters have been included under this new notification.

Disclosures – The requirements of the cover page have been specified under the notification. Also, the provisions as regards the inside cover page have also been provided under the notification. Table of Content should be in tabular form.
History of the issuer and the details of any demergers, mergers and acquisitions to be provided.
Promoters and their background to be provided.
Shareholding pattern and information as regards Boards of Directors. Information in relation to Group Companies, subsidiaries have been provided under this Part of the notification. Summary of Our Business as appearing in offer document. Attention of investor should be invited to refer to RHP for details with regards to business. Summary Statement of Assets and Liabilities, as restated, appearing in offer document in tabular form. The risk factors should be classified. Provisions as regards Particulars of Issue and Basis of Issue Pricehave been provided. Also, provisions as regards Details of Bidding Centres have been provided.

Disclosures in the Addendum to the Offer Document for Rights Issue of Indian Depository Receipts – Schedule XXI , PART A [Regulation 106F (2)]

The listed issuer making a rights issue of IDRs shall make the disclosures as specified in this Part in the form of an addendum to the offer document.

I. Cover Page  It includes Front Cover Page and Back Cover Pages
II. Instructions for Applications
III. General Information
IV. Management (Board of Directors)
V. Financial Information of the Issuer
VI. Risk Factors and Management Perception, If any.
VII. Capital Structure.
VIII. Particulars of the Issue.
IX. Market price information and other information concerning the shares/IDRs
X. Exchange Rates.
XI. Material Litigations and Defaults
XII. Material Development.
XIII. Material Contracts and Documents for Inspection
XIV. Other Regulatory and Statutory Disclosures.
XV. Undertakings by the issuer in connection with the issue.
XVI. Utilisation of Issue Proceeds.
XVII. Restrictions on foreign ownership of Indian securities, if any.
XVIII. Any other material disclosures (as deemed necessary)
XIX. Declaration.

Disclosures in Abridged Letter of Officer for Rights Issue of Indian Depository Receipts – Schedule XXI PART B [Regulation 106I (1)]

A listed issuer making a rights issue of IDRs shall make disclosures, as required under its home country regulations, if any and as specified in Part B of this Schedule, in the abridged letter of offer for rights offering.

I. Instructions for applicants.
II. General Information.
III. Capital Structure of the Issuing Company.
IV. Terms of the Parent Issue.
V. Particulars of the Issue
VI. Company, Management and Project.
VII. Outstanding Material Litigations and Defaults (in a summarised tabular form).
VIII. Material Development.
IX. Time and Place of Inspection of material contracts. (List of material contracts not required)
X. Financial Performance of the Issuing company as per last completed accounting year for which audit has been completed and for the latest stub period for which audit/limited review has been completed.
XI. Disclosure on Investor Grievances and Redressal System.
XII. Brief details of the Domestic Depository, Overseas Custodian Bank and Depository Agreement
XIII. Signatories to the Letter of offer

No comments:

Post a Comment