Promoters Contribution and Lock-in Requirements
Promoters Contribution not less than 20% of post issue capital
Promoters holding upto 20% of post issue capital locked-in for 3 years and excess of
promoters holding locked-in for 1 year
Entire pre-issue capital locked-in for 1 year from the date of allotment in IPO or
commencement of commercial production, whichever is later
No requirement for promoters contribution if company listed for 3 years and has paid
dividends for 3 years
QIB
A Qualified Institutional Buyer (or QIB), in law and finance, is a purchaser
of securities that is deemed financially sophisticated and is legally recognized by security
market regulators to need less protection from issuers than most public investors. Typically,
the qualifications for this designation are based on an investor's total assets under
management as well as specific legal conditions in the country where the fund is located.
What is E-IPO?
A company can also issue capital to public through the online system of the stock exchange.
The appointment of various intermediaries by the issuer includes a prerequisite that such
members/registrars have the required facilities to accommodate such an online issue
process.
Buyout
A buyout, in finance, is an investment transaction by which the ownership equity of
a company, or a majority share of the stock of the company is acquired. The acquiror
thereby "buys out" control of the target company.
A buyout can take the form of a leveraged buyout, a venture capital buyout or
a management buyout. Where the company being bought out is a public company, a buyout
is often called a "going private" transaction.
Advantages:
The main benefit of buying an existing business is the fact that all legwork has
already been done for you. Getting a business off the ground is often the
hardest part, so you are guaranteeing a head start by skipping the first stage.
No need to file paperwork, obtain permits, and consult with lawyers.
Buying an existing business gives you the advantage of an
established customer base. People will already know the place, so the costs
of advertising will be less. You will also avoid the uncertain initial period,
where attracting customers to the business can turn into a fulltime job in itself.
When you buy an existing business, you may get employees that are already
working there to stay and work for you. This will allow you to employ their
expertise rather than having to train new people to take over the work.
Disadvantages:
You will inherit all problems that run with the business. If the previous owner had trouble
attracting new customers, paying the lease, or running new campaigns, you will have to
deal with everything to set things right before you can even start to think about moving
forward.
If the business has a history of disappointing customers, you may also have a hard time
convincing people that things will change under your direction. Buying an existing
business will probably mean a large initial investment, usually much higher than it will
require to start a business from scratch. The investment will also have to be in a lump
sum, and you won't have the chance to go through the process in phases.
Book Building
Book building refers to the process of generating, capturing, and recording investor demand
for shares during an IPO (or other securities during their issuance process) in order to
support efficient price discovery.[1] Usually, the issuer appoints a major investment bank to
act as a major securities underwriter or bookrunner. The “book” is the off-market collation of
investor demand by the bookrunner and is confidential to the bookrunner, issuer,
and underwriter. Where shares are acquired, or transferred via a bookbuild, the transfer
occurs off-market, and the transfer is not guaranteed by an exchange’s clearing house.
Where an underwriter has been appointed, the underwriter bears the risk of non-payment by
an acquirer or non-delivery by the seller.
Placements
Equity Investment in large, profitable companies who need finance but don’t want to raise
through public sources
The investment is in growing companies with profitable track record for funding their growth
capital
Time horizon is 2 years to 5 years
In the current scenario includes Pre-IPO investments
Kinds of offer Documents
Draft prospectus
Draft letter of offer
Prospectus
Abridged Prospectus
Shelf Prospectus
Information Memorandum
DRHP
Disadvantages of floatation
Your business may become vulnerable to market fluctuations beyond your control.
The costs of flotation can be substantial and there are also ongoing costs such as
higher professional fees.
You will have to consider shareholders' interests when running the company - which
may differ from your own objectives.
You may have to give up some management control of the business and ultimately
there's a risk the company could be taken over.
Public companies have to comply with a wide range of additional regulatory
requirements and meet accepted standards of corporate governance.
Managers could be distracted from running the business by the flotation process, and
by dealing with investors afterwards.
Employees may become demotivated. If shares are only offered to selected
employees, those without shares may resent those who have them if the flotation is
successful. In addition, shareholding employees could feel that there is little left to work
for if they are sitting on valuable shares.
Promoter
A corporate promoter (also "projector") is a person who solicits people to invest money into a
corporation, usually when it is being formed. An investment banker, an underwriter, or
astock promoter may, wholly or in part, perform the role of a promoter. Promoters general
owe a duty of utmost good faith, so as to not mislead any potential investors, and disclose all
material facts about the company's business.
