Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) (Amendment) Regulations, 2009

No. LAD-NRO/GN/2009-10/23/186926. In exercise of the powers conferred by Section
30 of the Securities and Exchange Board of India Act, 1992 (15 of 1992), the Board
hereby makes the following regulations to amend the Securities and Exchange Board of
India (Issue of Capital and Disclosure Requirements) Regulations, 2009, namely:-

1. (i) These regulations may be called the Securities and Exchange Board of India
(Issue of Capital and Disclosure Requirements) (Amendment) Regulations, 2009.
(ii) These regulations except clauses (a) and (b) of sub-regulation (ix) of regulation
shall come into force on the date of their publication in the Official Gazette.
(iii) Clause (a) of sub-regulation (ix) of regulation 2 of these regulations shall come
into force on 1st April, 2010.
(iv) Clause (b) of sub-regulation (ix) of regulation 2 of these regulations shall come
into force on 1st January, 2010.

2. In the Securities and Exchange Board of India (Issue of Capital and Disclosure
Requirements) Regulations, 2009 –

(i) in regulation 2, in sub-regulation (1),-

(a) for clause (k), the following clause shall be substituted, namely:-

‘(k) “convertible security” means a security which is convertible into or
exchangeable with equity shares of the issuer at a later date, with or
without the option of the holder of the security and includes convertible
debt instrument and convertible preference shares;’

(b) in clause (zd), after sub-clause (x), the following sub-clause shall be
inserted, namely:-

“(xi) insurance funds set up and managed by army, navy or air force of
the Union of India;”

(ii) in regulation 10, in sub-regulation (1),

(a) in clause (b), for the words “ten thousand crore rupees” occurring
towards the end, the words “five thousand crore rupees” shall be
substituted;

(b) after clause (c), the following proviso shall be inserted, namely:-

“Provided that for issuers, whose public shareholding is less than fifteen
per cent. of its issued equity capital, the annualised trading turnover of its
equity shares has been at least two per cent. of the weighted average
number of equity shares available as free float during such six months’
period.”

(c) In clause (e), the following proviso shall be inserted, namely:-

“Provided that if the issuer has not complied with the provision of the
equity listing agreement relating to composition of board of directors, for
any quarter during the last three years immediately preceding the
reference date, but is compliant with such provisions at the time of filing
of offer document with the Registrar of Companies or designated stock
exchange, as the case may be, and adequate disclosures are made in the
offer document about such non-compliances during the three years
immediately preceding the reference date, it shall be deemed as
compliance with the condition;”

(iii) in regulation 29, in clause (a), after the words “retail individual
shareholders” and before the words “may be offered”, the words “or
employees of the issuer entitled for reservation made under regulation 42
making an application for specified securities of value not more than one
lakh rupees,” shall be inserted;

(iv) in regulation 42,-

(a) in sub-regulation (4), in clause (a), for the words “ten per cent. of the
issue size” occurring at the end, the words “five per cent. of the post
issue capital of the issuer”, shall be substituted;

(b) after clause (f), the following clause shall be inserted, namely:-

“(g) value of allotment to any employee in pursuance of reservation
made under sub-regulations (1) or (2), as the case may be, shall not
exceed one lakh rupees.”

(v) in regulation 50, in sub-regulation (1), the following proviso shall be
inserted, namely:-

“Provided that value of specified securities allotted to any person in
pursuance of reservation made under clause (a) of sub-regulation (1) or
clause (a) of sub-regulation (2) of regulation 42, shall not exceed one lakh
rupees.”

(vi) after regulation 55, the following regulation shall be inserted, namely:-

“55A. Reservation for employees alongwith rights issue.-Subject to other applicable provision of these regulations the issuer may make reservation for its employees alongwith rights issue subject to the condition that value of allotment to any employee shall not exceed one lakh rupees.”

(vii) in regulation 96, in sub-regulation (2),-

(a) in clause (e), figure and mark “43,” shall be omitted;

(b) after clause (i), the following clause shall be inserted, namely:-

“(ia) regulation 43, except sub-regulation (3) thereof;”

(viii) in regulation 98, in clause (e), the following proviso shall be inserted,
namely:-

“Provided that atleast thirty per cent. of the said fifty per cent. IDR issued
shall be allocated to retail individual investors and in case of under Page
subscription in retail individual investor category, spill over to the extent of
under-subscription shall be permitted to other categories.”

(ix) in schedule VIII, in Part A, in para (2), in item (IX),-

(a) after the title “Financial Statements”, the following notes shall be
inserted, namely:-

“[Notes:
1. The financial informations specified in this item shall be certified by
only those auditors who have subjected themselves to the peer
review process of the Institute of Chartered Accountants of India
(ICAI) and hold a valid certificate issued by the ‘Peer Review
Board’ of the ICAI.

2. All financial informations specified in this item must be reaudited for
one full financial year and the stub period, by the auditor certifying
them in case where the financial statements were audited by an
auditor who had not been subjected to peer review process of
ICAI.]”

(b) in sub-item (B), after clause (21), the following clause shall be inserted,
namely:-

“(22) If the issuer has entered into any scheme of arrangement during the
period for which the financials are disclosed in the offer document, lead
merchant banker to the issue shall ensure that the following disclosure
requirements as specified in Accounting Standard 14 has been complied
with:-

(a) A description of the accounting treatment followed in respect of
financials contained in the schemes of arrangement and the reasons
for following the treatment if it is different from those, which has
been prescribed in applicable Accounting Standards.

(b) In case of deviations, disclosure of the accounting treatment had
the applicable standard been followed.

(c) Impact on the financials, if any, arising due to such deviation.”

(c) after sub-item (B), the following sub-item shall be inserted, namely:-

“(BA) Alternate Financial Information of the issuer in further public
offers:

(1) An issuer making further public offer may disclose the
financial information specified in clause (2) of this sub-item ,
in lieu of information specified under sub-item (B) if:

(i) the issuer is making further public offer in
accordance with provisions of regulation 10;

(ii) the specified securities offered in further public
offer are of the same class of those already listed
on a recognised stock exchange;

(iii) financial reports of the issuer are available on the
website of any recognised stock exchange having
nationwide trading terminals or on a common efiling
platform specified by the Board;

(iv) there has not been any change in management of the
issuer;

(v) specified securities of issuer have not been listed
pursuant to relaxation granted from clause (b) of
sub-rule (2) of rule 19 of Securities Contracts
(Regulation) Rules, 1957.

(2) The issuer satisfying the conditions specified in clause (1)
may disclose its financial statements as under:

(i) Stand-alone and consolidated financial statements
of the issuer:

(1) A report by the auditors of the issuer with
respect to profit or loss and assets and liabilities
(indicating changes in accounting policies, if
any) in respect of the last completed accounting
year for which audit has been completed.

(2) A report by the auditors of the issuer on a limited
review of the profit or loss and assets and
liabilities (indicating changes in accounting
policies, if any), as at a date not earlier than six
months prior to the date of the opening of the
issue, where audited accounts as at such date are
not available.

(3) For the purpose of sub-clauses (1) and (2) above,
it shall be sufficient if:

(a) In the statement of the assets and liabilities,
the main heads of assets and liabilities as
provided in Part I of Schedule VI of the
Companies Act, 1956 have been provided. If
an issuer is governed by a statute other than
the Companies Act, 1956, the main heads of
assets and liabilities as specified in such
statute shall be provided in the statement of
assets and liabilities.

(b) In the statement of profit or loss, the
information required to be disclosed under
the heads of income and expenditure as per
clause 41 of the equity listing agreement in
respect of quarterly financial information to
be filed with the recognised stock
exchanges, has been provided.

(ii) In addition, the following information for the period
between the last date of the balance sheet and profit
and loss account sent to the shareholders and up to
the end of the last but one month preceding the date
of the offer document shall be furnished.

(1) Working results of the issuer under following
heads:

(a) (i) Sales / turnover

(ii) Other income

(b) Estimated gross profit / loss (excluding
depreciation and taxes)

(c) (i) Provision for depreciation

(ii) Provision for taxes

(d) Estimated net profit / loss

(2) Material changes and commitments, if any
affecting financial position of the issuer.

(3) Week-end prices for the last four weeks; current
market price; and highest and lowest prices of
equity shares during the period with the relative
dates.

(iii) Stock market quotation of shares/ convertible
instruments of the company (high/ low price in each
of the last three years and monthly high/low price
during the last six months).

(iv) Accounting and other ratios: The following
accounting ratios shall be given for each of the
accounting periods for which financial information
is given:

(1) Earnings per share: This ratio shall be
calculated after excluding extra ordinary items.

(2) Return on Networth: This ratio shall be
calculated excluding revaluation reserves.

(3) Net Asset Value per share: This ratio shall be
calculated excluding revaluation reserves.

(4) Accounting and other ratios shall be based on
the financial statements prepared on the basis
of Indian Accounting Standards.

(v) Capitalisation Statement:

(1) A Capitalisation Statement showing total debt,
net worth, and the debt/ equity ratios before
and after the issue is made shall be
incorporated.

(2) In case of any change in the share capital since
the date as of which the financial information
has been disclosed in the prospectus, a note
explaining the nature of the change shall be
given.

(3) An illustrative format of the Capitalisation
Statement is specified hereunder:
------------

(vi) One standard financial unit shall be used in the offer
document.”

(x) In schedule XI,-

(a) In Part A, in para (10), in the title, the bracket and the words “(not
applicable in case of an IDR issue)” shall be omitted;
(b) after Part C, the following part shall be inserted, namely:-

“PART D
Alternate method of book building

In case of further public offers, the issuer may opt for an alternate
method of book building, as given in this part subject to the following:

(a) Issuer shall follow the procedure laid down in Part A of this
Schedule except clause (13) and clause (15) (a) thereof.

(b) The issuer shall disclose a floor price in the red herring prospectus.

(c) Investors other than retail individual investors shall bid at any price
above the floor price.

(d) The bidder who bids at the highest price shall be allotted the number
of securities that he has bided for and then the bidder who has bided
at the second highest price and so on, until all the specified
securities on offer are exhausted.

(e) Allotment shall be on price priority basis for investors other than
retail individual investors.

(f) Allotment to retail individual investors shall be made
proportionately as illustrated in this Schedule.

(g) Where, however the number of specified securities bided for at a
price is more than available quantity, then allotment shall be done
on proportionate basis.

(h) Retail individual investors shall be allotted specified securities at the
floor price.

(i) The issuer may place a cap either in terms of number of specified
securities or percentage of issued capital of the issuer that may be
allotted to a single bidder.”