securities and exchange board of india (issue of …azb & partners privileged and confidential...

AZB & Partners Privileged and confidential

November 2018 AZB Capital Markets Update

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SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND

DISCLOSURE REQUIREMENTS) REGULATIONS, 2018

mailto:[email protected]









1

The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018 (“ICDR 2018”) have been notified on September

11, 2018 and have been effective since November 10, 2018. Accordingly, the Securities and Exchange Board of India (Issue of Capital and Disclosure

Requirements) Regulations, 2009 (“ICDR 2009”) would stand rescinded and repealed by the ICDR 2018.

This Memorandum sets out a snap-shot of the key changes brought by the ICDR 2018 as well as a detailed comparison of the ICDR 2009 vis-à-vis the ICDR

2018. Accordingly, this Memorandum has been segregated into the following segments:

(a) Section I – A snap-shot of the key structural and global changes;

(b) Section II - Key regulatory changes – key points to be noted, if applicable (only in context of public issuances on the main board);

(c) Annex A – A tabular comparison of the provisions of the ICDR 2018 with the provisions of the ICDR 2009; and

(d) Annex B – Comparison of the index/ format of ICDR 2018 with the provisions of the ICDR 2009.

While the ICDR 2018 governs, the process of issuance and listing of securities, inter-alia, through public issuances (on the Main Board as well SME exchange),

rights issues, preferential issuances, QIP and issuance of IDR, this Memorandum primarily focusses on the changes in the ICDR 2018 vis-à-vis public offerings

on the Main Board. For a detailed list of changes, please refer to Annex A.

Glossary of key terms:

(a) AIF – Alternative investment fund

(b) CA – Chartered Accountants

(c) Companies Act – The Companies Act, 2013, as amended

(d) DRHP – Draft Red Herring Prospectus

(e) ESOP – Employee stock option plan

(f) FEO Act - Fugitive Economic Offenders Act, 2018 (17 of 2018)

(g) FPO – Further public offer

(h) FDI – Foreign direct investment

(i) FPI (as used in the summary of the regulations) – Foreign portfolio investor other than Category III foreign portfolio investor

(j) FVCI - Foreign venture capital investors

(k) IDR - Indian Depository Receipts

(l) IPO – Initial public offering of equity shares

(m) IPP – Institutional placement programme

(n) IRDAI - The Insurance Regulatory and Development Authority of India

(o) QIP – Qualified institutions placement

(p) LLP – Limited Liability Partnership

INTRODUCTION AND SCOPE



2

(q) LODR Regulations – The Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended

(r) Main Board - A recognised stock exchange having nationwide trading terminals, other than SME exchange

(s) MCA – Ministry of Corporate Affairs

(t) NBFC-SI – Systematically important non-banking financial companies

(u) NII – Non-institutional investor

(v) RHP – Red Herring Prospectus

(w) SEBI – Securities and Exchange Board of India

(x) SCRR - Securities Contracts (Regulation) Rules

(y) SBEB Regulations - Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014

(z) SEBI Act – Securities Exchange Board of India Act, 1992, as amended

(aa) OFS – Offer for sale

(bb) PFI - Public financial institution as defined under the Companies Act, 2013

(cc) Public issue/ offer – IPO and/or FPO

(dd) SME – Small and medium enterprises

(ee) QIB – Qualified institutional buyer

(ff) VCF – Venture Capital Fund



3

The format of ICDR 2009 has been re-structured in ICDR 2018 to, inter-alia, make the regulations more user friendly and align the regulations with the changes

to other statutes and regulations. While the key structural and global changes in the format of ICDR 2018 (excluding in the schedules) is stated below, we have

set out a detailed comparison of the index of ICDR 2009 and ICDR 2018 as Annex B:

Provisions of IPO on the Main Board, rights issue and FPO have been segregated into different chapters. Accordingly, the common conditions for public

offers and rights issues as existing in ICDR 2009 have been done away with.

ICDR 2009 stated provisions for public issuances (IPOs and FPOs) at one place. However, the ICDR 2018 segregates provisions of the IPOs from FPOs.

Provisions pertaining to IPP have been deleted from ICDR 2018.

Further, certain new terms have been introduced and/or defined in the ICDR 2018, including, lead managers, main board, updated draft red herring

prospectus and fugitive economic offenders.

The ICDR 2018 now requires disclosure of financial information on a consolidated basis for a period of three immediately preceding fiscals in the DRHP/

offer document and stub period.

References to the Companies Act, 1956 have been replaced with the corresponding provisions in the Companies Act, 2013.

The term ‘selling shareholder’ has been introduced in the ICDR 2018.

The promoters and directors of the issuers not being declared as a ‘fugitive economic offender’ has been included as an eligibility requirement for all forms

of issuances provided under the ICDR 2018.

In relation to QIPs, enabling provisions for an offer for sale component in QIPs have been included.

SECTION I – A SNAP-SHOT OF KEY STRUCTURAL AND GLOBAL CHANGES



4

PART A – KEY AMENDMENTS TO DEFINITIONS AND CONCEPTS

1. APPLICABILITY OF THE ICDR 2018

(a) Key changes

While the ICDR 2018 specifies the date on which the said regulations would be effective, it does not clarify the applicability on offer documents to

be filed in relation to deals for which DRHPs have already been cleared by SEBI.

Threshold of aggregate value of issue size for rights issues by listed issuers has been increased from Rs. 50 lacs to Rs. 10 crores.

2. DEFINITION OF ‘ASSOCIATE’

(a) Key changes

New definition included in ICDR 2018.

Who is an associate of an issuer? – An entity (not being a subsidiary but including a joint venture company) in which an issuer exercises control of

at least 20 % of total voting power or control of or participation in business decisions under an agreement.

(b) Key points to be noted

The ICDR 2018 provides the definition of associate only in context of an issuer.

Companies Act vis-à-vis ICDR 2018 - The Companies Act defines ‘associate companies’, i.e., the definition applies to companies only (including

joint ventures). However, while the ICDR 2018 refers to the Companies Act in context of the meaning of ‘associate’, the language of the definition

appears to be agnostic to the nature in which an associate is incorporated, i.e., whether such associate is a company or body corporate or firm or

partnership or LLP. Further, while the ICDR defines the term ‘associate’ and the Companies Act defines the term ‘associate companies’, in context

of the disclosures in the offer document it should be discussed whether the two definitions should be read harmoniously in line with the practice

thus far, i.e., to include entities irrespective of the way in which they are incorporated.

Companies Act vis-à-vis Ind-AS - The term ‘Associate’ is also defined under the Accounting Standard (IND AS-28), which is broader than

definition under the Companies Act. Further, under the IND-AS, ‘Significant Influence’ is the power to participate in the financial and operating

policy decisions of the investee, and influence is presumed to be significant if the shareholding threshold reaches 20 %, which is similar to

Companies Act, 2013. Further, on account of the difference between the Companies Act and Ind-AS, there may be a disconnect in the ‘associates’

disclosed under the financial statements vis-à-vis the general disclosures in the other sections of the offer document.

SECTION II – KEY REGULATORY CHANGES (PUBLIC ISSUANCES ON THE MAIN BOARD)



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3. DEFINTION OF EMPLOYEES

(a) Key changes

Definition has been aligned to the Companies (Share Capital and Debenture) Rules, 2014, as amended and SBEB Regulations.

A proviso has been include to distinguish between the definition applicable for general disclosures (ICDR 2018 applies) vis-à-vis the definition for

stock option scheme (SBEB Regulations apply). In this context, it should be noted that, the definition of ‘employee’ under the ICDR 2018 and the

SBEB Regulations has almost been aligned.

Requirement of employees being ‘full-time’ has been deleted.

Scope of the definition has been narrowed vis-à-vis the ICDR 2009 to exclude (i) employees of material associates of the issuer and (ii) directors

who either themselves or through any body corporate, directly or indirectly hold more than 10 % of the issuer’s outstanding equity shares. Further,

the amended definition also includes certain language changes, including, replacing the term ‘immediate relatives of the promoters’ with ‘promoter

group’ and ‘holding company’ with ‘promoter’.


While the definition of ‘employees’ under the ICDR 2018 as well as the SBEB Regulations refer to ‘permanent employees’, it should be noted that

Regulations 5(2) (exemption for outstanding stock options from eligibility requirements) and 17 (a) (exemption from one year lock-up) has been

clarified to include employees who are not currently on the pay-roll of the issuer. While this clarification does not have any bearing to the extent

of reservation and pricing, this is a welcome change for extending the benefits of outstanding stock options/ equity shares from such options on

employees who are no longer on the payrolls of the issuer.

While past employees get benefit under the lock-in provisions, the excluded categories will no longer be eligible for employee reservation and

differential pricing.

On account of alignment in the said definition with the one under the SBEB Regulations, i.e., exclusion of employees of associates and directors

holding above 10% of the outstanding equity shares, there should not be a disconnect between employees eligible for employee reservation as well

as employees under the ESOP disclosure.

4. FUGITIVE ECONOMIC OFFENDER – ELIGIBILITY REQUIREMENT FOR ALL FORMS OF ISSUANCES UNDER THE ICDR 2018

(a) Key changes

New inserted definition and corresponding eligibility provisions in light of the FEO Act.

No issuer shall be eligible to make any of the issuances provided for under ICDR 2018 if any of its directors or promoters are declared to be



6

fugitive economic offenders.

This eligibility requirements extend only to directors or promoters of the issuer.


Eligibility certificate from the issuer and certificates from the directors, promoters and selling shareholders (if applicable) to include undertaking to

this effect. Further, the Offer Agreements should include representations and warranties to this effect.

5. GROUP COMPANIES (IDENTIFICATION AND LITIGATION APPROACH)

(a) Key take away

What are group companies? (i) companies with which the issuer has had related party transactions during the past three fiscals and stub period (as

appearing the audit report and financial statements), and (ii) other companies considered material by the board.

Promoters and subsidiaries have been excluded from the definition.

Related party test is only vis-à-vis the financials disclosed in the offer document, i.e., past three fiscals and stub.

Litigation – The ICDR 2018 segregates the disclosure requirement for litigations of group companies from the general litigation disclosure of the

issuer, promoter, directors and subsidiaries.

What litigations are to be disclosed? – Only such litigations of the group companies which in the judgement of the issuer impacts such issuer

would need to be disclosed.


Counsels and lead managers to rely on the related party schedule disclosed in the last three years’ financials and stub period. Transactions between

the dates as on which related party schedule is included in the DRHP and till the date of filing of DRHP, shall also be procured from issuer.

Further, in relation to the materiality test for litigations, discussions would need to be had on a subjective basis with the issuer.

6. ISSUER

(a) Key changes

Definition covers only companies and body corporates and does not include LLPs or funds or firms whether incorporated in or outside India.

This definition clarifies now that a selling shareholder is not to be considered as an ‘issuer’ and that only the entity whose shares are being listed is

to be considered as an ‘issuer’



7

7. PROMOTER

(a) Key changes

The definition has been aligned with Section 2(69) of the Companies Act. Accordingly, now the identification of a promoter also has to be based

on the persons identified in the annual return filed by the company.

Threshold for shareholding vis-à-vis certain categories of shareholders has been increased from 10 % to 20 %.

The shareholding linked exemption from being identified as a promoter has been extended to additional categories of investor, i.e., VCFs, AIFs,

FVCIs and insurance companies in addition to financial institution, scheduled commercial bank, foreign portfolio investor other than Category III

foreign portfolio investor, mutual fund (who shall not be deemed to be promoters merely because they hold 20% or more in the issuer).

Consequential changes have been made in various provisions, including, the definition of promoter group.

.

Persons instrumental in formulation of a plan or programme of the offer as promoter has now been removed.

Proviso under the ICDR 2009 in relation to a financial institution, scheduled commercial bank, foreign portfolio investor other than Category III

foreign portfolio investor and mutual funds continuing to be deemed as promoters of the subsidiaries or companies promoted by them or mutual

funds sponsored by them has been deleted.


The proviso to the definition of ‘promoters’ does not carve out other categories of investors under the FDI route.

Since the definition of ‘promoter’ in the ICDR Regulations has been aligned with the provisions of the Companies Act, 2013, as customarily done,

the annual returns of the issuer should be checked to see if any persons in addition to the promoters being identified in the DRHP. Besides this,

other traditional tests have to be done/ questions asked, to correctly determine who is the promoter of the Company.

8. PROMOTER GROUP

(a) Key changes

The threshold vis-à-vis promoter related entities has been increased from 10% to 20% shareholding.

VCFs, AIFs, FVCIs, insurance companies or entities belonging to any other category as specified by SEBI from time to time are exempt from

being identified as a promoter group merely by virtue of the fact that 20% or more of the equity share capital is held by them (except with respect

to such entities’ subsidiaries or companies promoted by them or for the mutual funds sponsored by them). They will need to satisfy the other

conditions prescribed in order to meet the test of a promoter group entity.



8


While the term ‘relative’ has been used in certain places within the definition instead of ‘immediate relative’, for purpose of Promoter Group

identification, the term relatives should be read as ‘immediate relatives’ in line with the intent on the coverage.

9. QUALIFIED INSTITUTIONS PLACEMENT

(a) Key changes

QIPs can now be undertaken through or include an offer for sale by promoters and / or promoter group as well.


Post an IPO, issuers can now meet the minimum dilution requirement as per the SCRR through a QIP as well.

The format and disclosures of a placement documents for QIPs would need to be relooked.

10. SELLING SHAREHOLDERS

(a) Key changes

New definition of ‘selling shareholders’ and corresponding provisions for disclosures and eligibility requirements have been included.

The amendments and inclusions have been made only in context of public issuances (for both Main Board and SME listings), right issues (where

disclosures are made in terms of Part A of Schedule VI) and disclosures in offer documents for issuance of IDRs.


Vis-à-vis confirmations from selling shareholders – Considering that the ICDR 2018 states specific requirements for selling shareholders stated

below is the list of confirmations to be obtained from the selling shareholders as has been agreed to amongst certain counsels and bankers:

(i) If the selling shareholders are not prohibited from accessing the capital market or debarred from buying, selling or dealing in securities under

any order or direction passed by SEBI or any securities market regulator in any jurisdiction or any other authority/court.

(ii) Whether the selling shareholder is a wilful defaulter as per the definition in the ICDR 2018.

(iii) Whether the selling shareholder is a fugitive economic offender (applicability on foreign selling shareholder to be assessed).



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(iv) Whether the selling shareholder has committed any securities law violation in any jurisdiction.

(v) Whether the selling shareholder has complied with the Companies (Significant Beneficial Ownership) Rules, 2018 (“SBO Rules”).

Vis-à-vis confirmation under the SBO Rules

(i) For the purpose of making the above confirmation, including vis-à-vis the issuer, counsels to review forms prescribed under SBO Rules, i.e.,

forms BEN 1, BEN 2 and BEN 3.

(ii) It relation to point (i), above, it should be noted that the MCA has extended the timeline for filing of BEN 1, BEN 2 and BEN 3 until further

notice on account of, inter-alia, clarifications sought by market participants, in relation to applicability of the said rules on certain other

categories of pooled investment vehicles/ investment funds. Therefore, if any DRHPs are filed before such notification on timeline for filing of

the said forms is issued by MCA, compliance with the requirement of the ICDR 2018 in relation to confirmation by selling shareholders with

the SBO Rules may be difficult.

(iii) SBO Rules do not apply to the holding of shares of companies/body corporates, in case of pooled investment vehicles/investment funds such as

mutual funds, AIFs, Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) regulated under SEBI Act. Therefore,

these rules may not apply to every selling shareholder. Accordingly, we may have to assess the applicability on a case to case basis vis-à-vis the

documentation on deals.

As per the ICDR Regulations, the term ‘securities law’ has not been used in the context of a main board listing. Further, the securities law

violation in any jurisdiction is not an eligibility requirement vis-à-vis the issuer, promoter, director or promoter group. While there may have been

instances where investors may have provided this undertaking, it may lead to negotiations at their request.



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PART – B – KEY PROCEDURAL AMENDMENTS

1. ELIGIBILITY FOR PUBLIC ISSUES ON THE MAIN BOARD

(a) Key changes

Eligibility requirements for promoters, directors and selling shareholders:

(i) Debarment of selling shareholders from accessing the capital markets has now been made an eligibility condition. This change, however, is

consistent with the market practice.

(ii) Clarified that restriction shall not apply to the person or entities who were debarred in the past and the period of debarment is already over as

on the date of filing of DRHP with SEBI.

(iii) A new criterion of eligibility in relation to promoters and directors of an issuer not being a fugitive economic offender has been included.

Convertibles linked eligibility:

(i) An issuer is eligible to undertake an initial public offer even if there are outstanding options granted to an employees, irrespective of whether

such person is currently an employee or not, pursuant to an employee stock option scheme or the existing outstanding convertible securities

which are required to be converted on or before the date of filing of the RHP (in case of book built issue). Accordingly, the previous practice of

ensuring that options held by past employees have lapsed or are exercised before the filing of the DRHP, is no longer relevant.

Financial information linked eligibility:

(i) Condition of issue size including the previous issues in same fiscal year, not exceeding five times the net worth has been deleted.

(ii) Average operating profits to be calculated on immediately preceding three years and each preceding year shall have operating profits.

(iii) The ICDR 2018clarifies that the net tangible assets, average operating profits, net worth and revenue has to be calculated on a restated and

consolidated basis.

OFS linked eligibility:

(i) It has been clarified that the offer shares arising from convertible instruments can now be converted before filing of RHP.

General conditions of eligibility:

(i) In line with the provisions of Companies (Prospectus and Allotment of Securities) Third Amendment Rules, 2018 (notified on September 10,



11

2018), the shareholding of the promoters of an issuer shall have to be dematerialized at the DRHP stage.

2. Minimum promoters’ contribution, its eligibility, pledging and certification

(a) Key changes

Who can make the minimum promoters’ contribution? – In addition to the promoters of an issuer, certain regulated entities such as AIF or FVCI

or scheduled commercial banks, or PFIs or insurance companies registered with IRDAI are now permitted to contribute in order to meet the

shortfall in minimum contribution, subject to a limit of 10% of the post issue-capital.

Would the additional categories of shareholders making the minimum promoters’ contribution would be deemed as promoters? - No, subject to the

shareholding linked threshold mentioned in the said definition.

Ineligibility of securities for minimum promoters’ contribution? - Ineligibility conditions have now extended to the securities which are

contributed towards promoters’ contribution by the additional regulated entities identified above, i.e., securities acquired by promoters, AIFs,

FVCIs or scheduled commercial banks or PFIs or insurance companies registered with IRDAI, during the one year at a price lower than the offer

price of the IPO, shall not being eligible for minimum promoters’ contribution.

Pledging – Now the promoters’ contribution and other securities held by the promoters (and locked-in) can also be pledged with NBFC-SI and

housing finance companies.

Effectiveness of lock-in on minimum promoters’ contribution - In line with the ICDR 2009, the ICDR 2018 provides that lock-in on minimum

promoters’ contribution is effective till the later of the date of allotment in the IPO or the date of commencement of commercial production.

However, the definition of the term ‘date of commencement of commercial production’ has been amended to mean the last date of the month in

which commercial production of the ‘project’ in respect of which the IPO proceeds are proposed to be utilized as per the DRHP/ offer documents,

is expected to commence.

Certification for minimum promoters contribution - Statutory auditors and not independent CA, to certify the amount paid as well as credited to

the issuer’s account by each of the promoters.


Change in auditor deliverables to include the certificate on promoters’ contribution. Further, discussions with auditors should be held to obtain

certification instead of agreed upon procedures.

3. Face value of equity shares

(a) Key changes

No specific mechanism or requirement for determining the face-value of equity shares of the issuer.



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4. Price and price band

(a) Key changes

Timeline for announcement of floor price/ price band has been reduced from at least 5 working days before the opening bid to at least 2 working

days before the issue.


Workings and timelines for the price band, including, deliverable timelines from the ad-agency for the floor price/ price band advertisement and

other related points to be worked around the revised timeline.

5. Underwriting

(a) Key changes

Scope of underwriting obligation: Now the scope of the underwriting obligation is for at least 90 % of the offer through the offer document.

Therefore, underwriting can be done only to the extent of minimum subscription for pure fresh issue and to the extent of meeting the public float

requirements, i.e., 10% or 25% in pure OFS. Accordingly, underwriters can limit their obligation to the extent of minimum subscription.


Underwriting obligation only to ensure that the IPO is not a failure.

If OFS shares are not subscribed in addition to the unsubscribed fresh issue shares, such shares would be transferred back to the sellers.

6. Reservation on competitive basis

(a) Key changes

Reservation can be made: For employees (as defined under the ICDR 2018) and shareholders (other than the promoters and promoter group) of

listed subsidiaries or listed promoter companies.

Reservation excludes: New provision excludes, promoter group in addition to promoters, shareholders of listed group companies and persons

associated with the issuer or depositors, bondholders or subscribers to the services with the issuer.


In line with the definition of ‘employee’ under the ICDR 2018, only the following would qualify as employees for the purpose of reservation in the



13

public offer, permanent employee, working in India or outside India, of the issuer or of the promoters or subsidiary company of the issuer, or a

non-independent director of the issuer (who either himself/herself or through their relatives or through any body corporate, directly or indirectly,

does not hold more than 10 % of the outstanding equity shares of the issuer).

Regulation 33 (1) (b), inter-alia, states that reservation can be made for shareholders of a listed promoter companies. Therefore, in case the

promoter is a listed body corporate the interpretation of the present regulation would have to be looked at.

7. Minimum subscription – Timeline for refund and interest

(a) Key changes:

Timeline for refund: Maximum 15 days from issue closure.

Interest rate for delay in refund/ unblocking /allotment: In case of delay in refund, unblocking or allotment, now the interest payable by the issuer

is specified as 15 % per annum.

(b) Key points to be noted:

Timeline of payment of interest is not specified in the aforementioned regulation. Accordingly, the DRHP/ offer document would continue with

similar disclosures to this extent.

The obligation of paying interest on delay in allotment/ unblocking/ refunds continues to be that of the issuer.

8. Subscription period

(a) Key changes

Flexibility for extension of offer period up to 10 working days on account of additional scenarios such as force majeure, banking strike or similar

circumstances.

(b) Implication and analysis:

The additional scenarios under which the offer can be extended shall have to be recorded in writing by the issuer.

9. Oversubscription

(a) Key changes:

Threshold for allotment in case of oversubscription has been reduced to 1 % of the net offer to public from 10 % of the net offer to public.



14

The ICDR 2018 now necessitates an additional involvement of the designate stock exchange by providing for a consultation with them for the said

oversubscription.

10. Responsibility of the lead managers – Timeline

(a) Key changes:

Timeline of responsibility: Responsibility of the lead managers has now been restricted until the issue completion.

Scope of responsibility: Responsibility of the lead managers is now clarified to be only to the issue and issue related matters.


Adequate carve outs in the DRHP/ offer document and offer agreement should be included.

11. Pre-IPO/ Restriction on further capital issues

(a) Key changes:

For further capital issuances between the date of filing the draft offer document and the listing of the specified securities offered, it is required to

disclose details of either the number of securities proposed to be issued or amounts proposed to be raised in the DRHP/ offer document and not

both.


The ICDR 2018 as was the case in the ICDR 2009 contemplates only issuance of securities. However, as was done under the ICDR 2009, the

intent of the said regulation would have to be read to cover pre-IPOs through secondary sales as well.

12. Cap on NII

(a) Key changes

New provision included.

Maximum application by a NII shall not exceed the total number of securities offered in the issue less the total number of securities offered to

QIB.

(b) Implication and analysis

Appropriate language should be factored in the DRHP/ offer documents, particularly in the section “The Offer” and other back-sections.



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ANNEX A

A tabular comparison of the provisions of the ICDR 2018 with the provisions of the ICDR 2009

Sr.

No.

Chapter Provision as per SEBI (Issue of Capital

and Disclosure Requirements)

Regulations, 2009 (“ICDR 2009”)

Provision as per SEBI (Issue of

Capital and Disclosure Requirements)


Remarks

Chapter I – Preliminary

1. Definition of

“Advertisement” Regulation 2 (1) (b)

Defines it to include

1. notices,

2. brochures,

3. pamphlets,

4. show cards,

5. catalogues,

6. hoardings,

7. placards,

8. posters,

9. insertions in newspaper,

10. cover pages of offer documents,

11. pictures, and

12. films in any print media or

electronic media, radio,

television programme.

Regulation 2 (1) (b)

Defines it to include:

1. notices,

2. brochures,

3. pamphlets,

4. show cards,

5. catalogues,

6. hoardings,

7. placards,

8. posters,

9. insertions in newspaper,

pictures, and

10. films in any print media or

electronic media, radio,

television programme.

1. Cover pages of offer

documents has been

deleted from the definition.

2. Definition of

“Associate”

Associate was not defined under the

ICDR 2009. Regulation 2 (1) (e)

Defines a person which is an associate

1. New definition has been

included to align with the

Companies Act.1

1 Section 2(6) of the Companies Act defines associate as follows:

““associate company”, in relation to another company, means a company in which that other company has a significant influence, but which is not a subsidiary company of the

company having such influence and includes a joint venture company.

Explanation.—For the purpose of this clause:

(a) the expression "significant influence" means control of at least twenty per cent. of total voting power, or control of or participation in business decisions under an agreement;

(b) the expression "joint venture" means a joint arrangement whereby the parties that have joint control of the arrangement and have rights to the net assets of the arrangement;”

http://ebook.mca.gov.in/notificationdetail.aspx?acturl=6CoJDC4uKVUR7C9Fl4rZdatyDbeJTqg3uaDT7Vp4Q4+vMA1vId1ejkwPA/oTpJoQnBB4qwSCi/ilecw82bQ6xrw8IXfElNL1+UfIyw+uMlw=



16

Sr.

No.







Remarks

of the issuer and as defined under the

Companies Act, 2013 (“Companies

Act”).

2. The ICDR 2018 provides

the definition of associate

only in the context of an

issuer.

3. Companies Act vis-à-vis

ICDR 2018 - The

Companies Act defines

‘associate companies’, i.e.,

the definition applies to

companies only (including

joint ventures). However,

while the ICDR 2018

refers to the Companies

Act in the context of the

meaning of ‘associate’, the

language of the definition

appears to be agnostic to

the nature in which an

associate is incorporated,

i.e., whether such associate

is a company or body

corporate or firm or

partnership or LLP.

Further, while the ICDR

2018 defines the term

‘associate’ and the

Companies Act defines the

term ‘associate

companies’, in the context

of the disclosures in the

offer document it should be

discussed whether the two

definitions should be read

harmoniously in line with



17

Sr.

No.







Remarks

the practice thus far, i.e., to

include entities irrespective

of the way in which they

are incorporated.

4. Companies Act vis-à-vis

Ind-AS - The term

‘Associate’ is also defined

under the Accounting

Standard (IND AS-28),

which is broader than

definition under the

Companies Act. Further,

under the IND-AS,

‘Significant Influence’ is

the power to participate in

the financial and operating

policy decisions of the

investee, and influence is

presumed to be significant

if the shareholding

threshold reaches 20%,

which is similar to

Companies Act. Further,

on account of the

difference between the

Companies Act and Ind-

AS, there may be a

disconnect in the

‘associates’ disclosed

under the financial

statements vis-à-vis the

general disclosures in the

other sections of the offer

document.



18

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Remarks

3. Definition of “Book

Building” Regulation 2 (1) (f)

Defines it as a process undertaken to elicit

demand and to assess the price for

determination of the quantum or value of

specified securities or Indian Depository

Receipts, as the case may be, in

accordance with these regulations.

Regulation 2 (1) (g)

Defines it as a process undertaken to

elicit demand and to assess the price for

determination of the quantum or value

or coupon of specified securities or

Indian Depository Receipts, as the case

may be, in accordance with these

regulations.

1. Insertion of the coupon is

relevant with respect to

Indian Depository Receipts

and debt securities.

4. Definition of “Lead

Manager”/ “Book

Runner”

Regulation 2 (1) (g)

Defines it as a merchant banker appointed

by the issuer to undertake the book

building process.

Regulation 2 (1) (cc)

Defines it as a merchant banker

registered with the Board and appointed

by the issuer to manage the issue and in

case of a book built issue, appointed by

the issuer to act as the book running lead

manager(s) for the purposes of book

building.

1. Definition of lead manager

has been inserted in place

of book runner.

5. Definition of “Control” Regulation 2 (1) (i)

It shall have same meaning as assigned to

it under clause (c) of sub-regulation (1) of

regulation 2 of the Securities and

Exchange Board of India (Substantial

Acquisitions of Shares and Takeovers)

Regulations, 1997.

Regulation 2 (1) (i)

It shall have the same meaning as

assigned to it under the Securities and

Exchange Board of India (Substantial

Acquisitions of Shares and Takeovers)

Regulations, 2011

1. Reference to erstwhile

takeover code has been

replaced with extant

takeover code.

6. Definition of

“Designated Stock

Exchanges”

Regulation 2 (1) (l)

Defines it as a recognised stock exchange

in which securities of an issuer are listed

or proposed to be listed and which is

chosen by the issuer as a designated stock

exchange for the purpose of a particular

issue of specified securities under these

Regulation 2 (1) (l)

Defines it as a recognised stock

exchange having nationwide trading

terminals chosen by the issuer on which

securities of an issuer are listed or

proposed to be listed for the purpose of a

particular issue of specified securities

–



19

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Remarks

regulations:

Provided that where one or more of such

stock exchanges have nationwide trading

terminals, the issuer shall choose one of

them as the designated stock exchange:

Provided further that subject to the

provisions of this clause, the issuer may

choose a different recognised stock

exchange as a designated stock exchange

for any subsequent issue of specified

securities under these regulations.

under these regulations:

Provided that, the issuer may choose a

different recognised stock exchange as a

designated stock exchange for any

subsequent issue of specified securities.

7. Definition of “Draft

Letter of Offer”

Draft Letter of Offer was not defined

under the ICDR 2009. Regulation 2 (1) (m)

“Draft Letter of Offer” means the draft

letter of offer filed with Securities and

Exchange Board of India (“SEBI”) in

relation to a rights issue under these

regulations

New insertion.

8. Definition of “Draft

Offer Document”

Draft Offer Document was not defined

under the ICDR 2009. Regulation 2 (1) (n)

“draft offer document” means the draft

offer document filed with the Board in

relation to a public issue under these

regulations

New insertion.

9. Definition of

“Employee” Regulation 2 (1) (m)

Defines it as:

(a) permanent and full-time

employee,

(b) working in India or abroad, of

Regulation 2 (1) (o)

Defines it as:

(a) permanent employee,

(b) working in India or outside

India, of the issuer or of the

1. This change aligns the

definition under the

Companies (Share Capital

and Debentures) Rules,

2014.

2. A proviso has been

included to distinguish



20

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Remarks

the issuer or of the holding

company or subsidiary company

or of that material associate(s) of

the issuer whose financial

statements are consolidated with

the issuer’s financial statements

as per Accounting Standard 21,

(c) or a director of the issuer,

whether whole time or part time,

and

Does not include (i) promoters and (ii) an

immediate relative of the promoter (i.e.,

any spouse of that person, or any parent,

brother, sister or child of that person or of

the spouse).

promoters or subsidiary

company of the issuer, or a

director of the issuer, whether

whole-time or not.

Does not include (i) promoters, (ii) a

person belonging to the promoter group;

or (iii) a director who either

himself/herself or through their relatives

or through any body

corporate, directly or indirectly, holds

more than ten per cent. of the

outstanding equity shares of the issuer.

between the definition

applicable for general

disclosures (ICDR 2018

applies) vis-à-vis the

definition for stock option

scheme (SEBI (Share

Based Employee Benefits)

Regulations, 2014 apply).

In this context, it should be

noted that, the definition of

‘employee’ under the

ICDR 2018 and the SEBI

(Share Based Employee

Benefits) Regulations,

2014has almost been

aligned.

3. Requirement of employees

being ‘full-time’ has been

deleted.

4. Scope of the definition has

been narrowed vis-à-vis the

ICDR 2009 to exclude: (i)

employees of material

associates of the issuer;

and (ii) directors who

either directly or indirectly

hold more than 10% of the

issuer’s share capital.

Further, the amended

definition also includes

certain language changes,

including, replacing the

term ‘immediate relatives

of the promoters’ with

‘promoter group’ and

‘holding company’ with



21

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Remarks

‘promoter’.

5. While the definition of

‘employees’ under the

ICDR 2018 as well as the

SEBI (Share Based

Employee Benefits)

Regulations, 2014 refer to

‘permanent employees’, it

should be noted that

Regulations 5(2)

(exemption for outstanding

stock options from

eligibility requirements)

and 17(a) (exemption from

one year lock-up) has been

clarified to include

employees who are not

currently on the pay-roll of

the issuer. While this

clarification does not have

any bearing to the extent of

reservation and pricing,

this is a welcome change

for extending the benefits

of outstanding stock

options/ equity shares from

such options on employees

who are no longer on the

payrolls of the issuer.

6. The excluded categories

will no longer be eligible

for employee reservation

and differential pricing.

7. On account of alignment in



22

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Remarks

the said definition with the

one under the SEBI (Share

Based Employee Benefits)

Regulations, 2014, i.e.,

exclusion of employees of

associates and directors

holding above 10%, there

should not be a disconnect

between employees

eligible for employee

reservation as well as

employees under the ESOP

disclosure. Further,

outstanding options held by

such a director or

employee of material

associate will not be

exempted under:

a. Regulation 5(2) of the

ICDR 2018 (

exemption to

outstanding stock

options from

conversion ); and

b. Regulation 17(a) of the

ICDR 2018

(exemption from one

year lock-in to shares

resulting from stock

options).

8. Unlike the ICDR 2009,

now definition of employee

refers to employee of

“promoter” and not

“holding company.”



23

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Remarks

10. Definition of “fugitive

economic offender”

The concept of a fugitive economic

offender was not there in the ICDR 2009. Regulation 2(1) (p)

Defines it as an individual who is

declared a fugitive economic offender

under Section 12 of the Fugitive

Economic Offenders Act, 2018.

1. An issuer is not eligible to

make an initial public

offer, if any of its

promoters or directors is a

fugitive economic

offender. Similar eligibility

requirement has been

included for all other forms

of issuances pursuant to the

ICDR 2018.

2. Please also see ‘Entities

not eligible to make an

Initial Public Offer’ at

serial number 37 below.

11. Definition of “General

Corporate Purposes” Regulation 2 (1) (na)

Defines it as purposes for which no

specific amount is allocated or any

amount so specified towards General

Corporate Purpose or any such purpose

by whatever name called, in the draft

offer document filed with SEBI:

Provided that any issue related expenses

shall not be considered as a part of

General Corporate Purpose merely

because no specific amount has been

allocated for such expenses in the draft

offer document filed with SEBI.

Regulation 2 (1) (r)

Defines it as purposes for which no

specific amount is allocated or any

amount so specified towards general

corporate purpose or any such purpose

by whatever name called, in the draft

offer document, draft letter of offer, or

the offer document:

Provided that any issue related expenses

shall not be considered as a part of

general corporate purpose merely

because no specific amount has been

allocated for such expenses in the draft

offer document, draft letter of offer or

the offer document.

1. The ICDR 2018 now

specifically includes draft

letter of offer and offer

document for the general

corporate purpose.

12. Definition of “Group

Companies” Schedule VIII

Regulation 2 (1) (t)

1. Unlike under the earlier

regime, now the

identification has to be



24

Sr.

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Remarks

It was defined as:

(i) such companies as covered under

the applicable accounting

standards, and

(ii) other such companies as

considered material by the board

of the issuer.

Defines it as:

(i) such companies (other than

promoter(s) and

subsidiary/subsidiaries) with

which there have been related

party transactions, during the

period for which financial

information is disclosed, as

covered under the applicable

accounting standards, and

(ii) other such companies as

considered material by the

board of the issuer.

done on the basis of last

three years’ financials and

stub period.

2. Transactions between the

dates as on which related

party schedule is included

in the DRHP and till the

date of filing of DRHP,

shall also be procured from

issuer.

3. Earlier, there were

conflicting views on

whether promoter(s) and

subsidiaries should be

included within the

definition of Group

Companies and if the

corresponding disclosure is

to be made for these

entities. However, the

ICDR 2018, specifically

excludes promoter(s) and

subsidiaries.

4. Earlier, there were

conflicting views on

whether group companies

should be determined only

on the basis of related party

transactions or to be

considered from the entire

list of group companies.

However, the ICDR 2018

specifies clearly that the

identification has to be



25

Sr.

No.







Remarks

done only on the basis of

related party transactions.

5. All the entities covered in

the related party schedule

of the restated financial

statements and/or in the

audit reports and with

which there have been/ are

transactions, shall be

covered under the ambit of

group companies. This

could end up being a very

extensive list and all

entities may not be

relevant. For example, if a

company with which the

issuer had related party

transaction in the second

last year and not in the last

year, disclosure and

certificates for that entity

may become tricky.

6. Further, if any entity with

which issuer had

transactions in disclosed

related party schedule, but

now has been wound-up or

is pending strike-off or its

relationship with issuer has

been extinguished then the

lead manager on the deal

may file an exemption

application before SEBI for

excluding such company

from being disclosed in the



26

Sr.

No.







Remarks

document.

7. One item that still needs to

be analyzed is the

inclusion/ exclusion of

selling shareholder from

this definition too and the

approach that needs to be

followed.

13. Definition of “Housing

Finance Company”

Housing Finance Company was not

defined under the ICDR 2009

Regulation 2 (1) (u)

“Housing Finance Company” means a

deposit taking housing finance company

registered with the National Housing

Bank for carrying on the business of

housing finance.

1. Definition of housing

finance company (“HFC”)

has been included in line

with changes in regulation

governing pledge of

locked-in specified

securities by promoters.

Please see “Pledge of

locked-in specified

securities” at serial number

46.

14. Definition of

“Infrastructure Sector” Regulations 26, 31 and 33 read with

Schedule X

Regulation 2 (1) (v) 1. No change in inclusion of

facilities/services.

15. Definition of “Issue

Size” Regulation 2 (1) (q)

Defines it as offer through offer document

and promoters’ contribution

Regulation 2 (1) (z)

Defines it as offer through offer

document and promoters’ contribution

brought in as part of the issue.

–

16. Definition of “Issuer” Regulation 2 (1) (r)

Defines it as any person making an offer

of specified securities.

Regulation 2 (1) (aa)

Defines it as a company or a body

corporate authorized to issue specified

securities under the relevant laws and

1. The new definition clarifies

that a selling shareholder is

not to be considered as an

‘issuer’ and that only the

entity whose shares are



27

Sr.

No.







Remarks

whose specified securities are being

issued and/or offered for sale in

accordance with the ICDR 2018 and

does not include LLPs or funds or firms

whether incorporated in or outside India.

being listed is to be

considered as an ‘issuer’.

This definition has been

amended to bring it in line

with market practice.

17. Definition of “Key

managerial personnel” Regulation 2 (1) (s)

It contained similar definition except it

included “officer with vested executive

power.”

Regulation 2 (1) (bb)

Defines it as:

(i) officer or personnel of the

issuer who are members of the

issuer’s core management team

(excluding board of directors)

which includes members of

management;

(ii) one level below the executive

directors of the issuer;

(iii) functional heads and ‘key

managerial personnel’ as

defined under the Companies

Act; or

(iv) any other person whom the

issuer may declare as a key

managerial personnel;

1. The definition has been

broadened to include:

(i) functional heads of the

issuer; and

(ii) KMP as per Section 2(51)

of the Companies Act.2

2. Further, the persons vested

with executive powers was

also a parameter for KMP

identification under ICDR

2009, whereas the ICDR

2018, inter-alia, states that

persons of the core

management team shall be

identified as KMPs.

3. One of the major changes

vis-à-vis KMP under the

ICDR 2018 is that

agreements entered into by

2 Section 2(51) of the Companies Act defines key managerial personnel as follows:

““key managerial personnel”, in relation to a company, means—

(i) the Chief Executive Officer or the managing director or the manager;

(ii) the company secretary;

(iii) the whole-time director;

(iv) the Chief Financial Officer;

(v) such other officer, not more than one level below the directors who is in whole-time employment, designated as key managerial personnel by the Board; and

(vi) such other officer as may be prescribed;”



28

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Remarks

KMP with any shareholder

or any other third party

with regard to

compensation or profit

sharing in connection with

dealings in the securities of

the issuer is categorized as

a material agreement

which would now have to

be made available for

inspection. Thus, the list of

material contracts would

be fairly lengthy now.

18. Definition of “Listed

Issuer” Regulation 2 (1) (t)

Defines it as an issuer whose equity

shares are listed on a recognised stock

exchange.

Regulation 2 (1) (dd)

Defines it as an issuer whose equity

shares are listed on a recognised stock

exchange having nationwide trading

terminals.

–

19. Definition of “Net Offer” Regulation 2 (1) (u)

Defines it as an offer of specified

securities to the public but does not

include reservations

Regulation 2 (1) (ff)

Defines it as an offer of specified

securities to the public but does not

include reservations and promoters’

contribution brought in as part of the

issue.

1. Under the ICDR 2009, net

offer excluded only the

reservations. Under the

ICDR 2018, promoters’

contribution brought in as

part of the issue is also

excluded in addition to the

reservations. By

implication, such

promoters’ contribution is

also excluded from the

ambit of offer through

offer document.

20. Definition of “Net Regulation 26 Explanation Regulation 2 (1) (gg) –



29

Sr.

No.







Remarks

Tangible Assets”

Defines it as the sum of all net assets of

the issuer, excluding intangible assets as

defined in Accounting Standard 26 (AS

26) issued by the Institute of Chartered

Accountants of India

Defines it as the sum of all net assets of

the issuer, excluding intangible assets as

defined in Accounting Standard 26 (AS

26) or Indian Accounting Standard (Ind

AS) 38, as applicable, issued by the

Institute of Chartered Accountants of

India.

21. Definition of “Net

Worth” Regulation 2 (1) (v)

It was defined as:

(i) aggregate of the paid up share capital,

share premium account;

(ii) reserves and surplus (excluding

revaluation reserve) as reduced by the

aggregate of miscellaneous

expenditure (to the extent not

adjusted or written off); and

(iii) the debit balance of the profit and

loss account.

Regulation 2 (1) (hh)

Defines it as:

(i) aggregate value of the paid-up

share capital and all reserves

created out of the profits and

securities premium account;

(ii) debit or credit balance of profit

and loss account, after

deducting the aggregate value

of the accumulated losses,

deferred expenditure; and

(iii) miscellaneous expenditure not

written off, as per the audited

balance sheet;

But does not include reserves created

out of revaluation of assets, write-back

of depreciation and amalgamation.

1. The definition is aligned

with Section 2(57) of the

Companies Act.

22. Definition of “Offer

Document” Regulation 2 (1) (x)

Defines it as red herring prospectus,

prospectus or shelf prospectus and

information memorandum in terms of

Regulation 2 (1) (kk)

Defines it as red herring prospectus,

prospectus or shelf prospectus, as

applicable, referred to under the

1. Information memorandum

has been deleted from the

definition, since the

disclosure requirement has

now been deleted under the



30

Sr.

No.







Remarks

section 60A of the Companies Act, 1956

in case of a public issue and letter of offer

in case of a rights issue.

Companies Act, in case of a public

issue, and a letter of offer in case of a

rights issue.

Companies Act too.

23. Definition of “Offer

through Offer

Document”

Regulation 2 (1) (y)

It contained similar definition except that

the definition of net offer did not exclude

promoter contribution.

Regulation 2 (1) (ll)

Defines it as net offer and reservations.

1. Offer through offer

document excludes

promoters’ contribution

brought in as part of the

issue, consequent to

exclusion of such

promoters’ contribution in

the definition of net offer.

24. Definition of “Promoter” Regulation 2 (1) (za)

It was defined to include:

(i) the person or persons who are in

control of the issuer;

(ii) the person or persons who are

instrumental in the formulation

of a plan or programme pursuant

to which specified securities are

offered to public; and

(iii) the person or persons named in

the offer document as promoters.

Regulation 2 (1) (oo)

Defines to include a person:

(i) who has been named as such in

a draft offer document or offer

document or is identified by the

issuer in the annual return

referred to in Section 92 of the

Companies Act; or

(ii) who has control over the affairs

of the issuer, directly or

indirectly whether as a

shareholder, director or

otherwise; or

(iii) in accordance with whose

advice, directions or

instructions the board of

directors of the issuer is

accustomed to act: except

person acting in professional


aligned with Section 2(69)

of the Companies Act.

2. Now the identification of a

promoter also has to be

based on the person

identified in the annual

return filed by the

company.

3. On the deals where annual

return includes persons in

addition to the promoters,

MGT-7 should either be

refiled, if possible, and the

issuer should clarify the

same in the resolution

passed for identification of

promoters.



31

Sr.

No.







Remarks

capacity.

Promoter contribution does not include:

(i) Person mentioned in Regulation

(iii) acting in professional

capacity, and

(ii) financial institution, scheduled

commercial bank, foreign

portfolio investor other than

Category III foreign portfolio

investor, mutual fund, venture

capital fund, alternative

investment fund, foreign venture

capital investor, insurance

company registered with the

Insurance Regulatory and

Development Authority of India or

any other category as specified by

the SEBI from time to time,

wherein twenty per cent. or more

of the equity share capital of the

issuer is held by such person

unless such it satisfies other

requirements prescribed under

ICDR 2018.

4. The requirement of

identifying persons

instrumental in formulation

of a plan or programme as

Promoter has now been

removed. This is a

welcoming change since

the identification was a

very subjective exercise

and in case the person was

not part of the issuer

anymore, it would render

this requirement aimless.

5. Threshold for shareholding

under second proviso has

been increased from 10%

to 20%. Further, exemption

is extended additionally to

VCFs, FVCIs and

insurance companies.

However, this exemption

does not cover the

investors who have

invested under FDI route

or domestic private equity

investors.

6. The following entities,

although can now

contribute for promoters’

contribution, they are

exempted from being

identified as promoters:

i. Alternative investment



32

Sr.

No.







Remarks

funds,

ii. Foreign venture capital

investors,

iii. Scheduled commercial

banks,

iv. Public financial

institutions, and

v. Insurance companies

registered with the


Development Authority of

India.

25. Definition of “Promoter

Group” Regulation 2 (1) (zb)

It contained similar definition except that

the shareholding threshold which was

earlier 10% under the ICDR 2009 has

now been increased to 20%..

Regulation 2 (1) (pp)

It is defined as:

(i) the promoter;

(ii) an immediate relative of the

promoter (i.e. any spouse of that

person, or any parent, brother, sister

or child of the person or of the

spouse); and

(iii) wherein promoter is a body

corporate, it will include:

(a) a subsidiary or holding

company of such body

corporate;

(b) any body corporate in wherein

the promoter holds 20%. or

more of the equity share

capital;

(c) and/or any body corporate

1. The threshold has been

increased from 10% to

20% shareholding.

2. “Relative” means a relative

as defined under the

Companies Act, 2013

which is broader than

‘immediate relative’. For

the purpose of Promoter

Group identification, the

term relatives should be

read as ‘immediate

relatives’.

3. Insurance companies or

entities belonging to any

other category as specified

by SEBI from time to time

are exempt from being

identified as a Promoter

Group merely by virtue of



33

Sr.

No.







Remarks

which holds twenty per cent. or

more of the equity share capital

of the promoter;

(d) any body corporate wherein a

group of individuals or

companies or combinations

thereof acting in concert, which

hold 20%. or more of the equity

share capital in that body

corporate and such group of

individuals or companies or

combinations thereof also holds

twenty percent. or more of the

equity share capital of the

issuer and are also acting in

concert; and

(iv) in case the promoter is an

individual:

(a) any body corporate in which

20%. or more of the equity

share capital is held by the

promoter or an immediate

relative of the promoter or a

firm or Hindu Undivided

Family in which the promoter

or any one or more of their

relative is a member;

(b) any body corporate in which a

body corporate as provided in

(a) above holds twenty per

cent. or more, of the equity

share capital; and

(c) any Hindu Undivided Family

or firm in which the aggregate

the fact that 20% or more

of the equity share capital

is held by them (except

with respect to such

entities’ subsidiaries or

companies promoted by

them or for the mutual

funds sponsored by them).

They will need to satisfy

the other conditions

prescribed in order to meet

the test of a promoter

group entity.


amended to increase the

shareholding requirement

for the purposes of being

classified as a promoter

group entity.

5. However, insurance

companies or entities

belonging to any other

category as specified by

SEBI from time to time are

exempted from being

identified as a Promoter

Group merely by virtue of

the fact that 20% or more

of the equity share capital

is held by them (except

with respect to such

entities’ subsidiaries or

companies promoted by

them or for the mutual



34

Sr.

No.







Remarks

share of the promoter and their

relatives is equal to or more

than twenty per cent. of the

total capital.

(v) all persons whose shareholding is

aggregated under the heading

"shareholding of the promoter

group" wherein financial institution,

scheduled bank, foreign portfolio

investor other than Category III

foreign portfolio investor, mutual

fund, venture capital fund,

alternative investment fund, foreign

venture capital investor, insurance

company registered with the


Development Authority of India or

any other category as specified by

SEBI from time to time, shall not be

deemed to be promoter group

merely by virtue of the fact that

twenty per cent. or more of the

equity share capital of the promoter

is held by such person or entity:

Further financial institution, scheduled

bank, foreign portfolio investor other

than Category III foreign portfolio

investor, mutual fund, venture capital

fund, alternative investment fund and

foreign venture capital investor

insurance company registered with the

Insurance Regulatory and Development

Authority of India or any other category

as specified by SEBI from time to time

funds sponsored by them).

They will need to satisfy

the other conditions

prescribed in order to meet

the test of a promoter

group entity.



35

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No.







Remarks

shall be treated as promoter group for

the subsidiaries or companies promoted

by them or for the mutual fund

sponsored by them.

26. Definition of “Qualified

Institutions Placement” Regulation 81 (b)

Defines it as an allotment of eligible

securities by a listed issuer to qualified

institutional buyers on private placement

basis in terms of these regulations.

Regulation 2 (1) (tt)

Defines it as an issue of eligible

securities by a listed issuer to qualified

institutional buyers on a private

placement basis and includes an offer

for sale of specified securities by the

promoters and/or promoter group on a

private placement basis, in terms of

these regulations.

ICDR 2018 allows QIP to be

done through OFS.

27. Definition of “Scheduled

commercial bank”

Scheduled commercial bank was not

defined under the ICDR 2009.

Regulation 2 (1) (zz)

“scheduled commercial bank” means

scheduled commercial banks as included

in the second schedule to the Reserve

Bank of India Act, 1934.

–

28. Definition of “Selling

Shareholder(s)”

Selling shareholder(s) was not defined

under the ICDR 2009. Regulation 2 (1) (bbb)

Defines it as any shareholder of the

issuer who is offering for sale the

specified securities in a public issue in

accordance with ICDR 2018.

1. Following are the

confirmations which are to

be obtained from Selling

Shareholders:

(i) Whether they are debarred

from buying, selling or

dealing in securities under

any order or direction

passed by SEBI or any

securities market regulator

in any jurisdiction,



36

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Remarks

(ii) Whether they are declared

as a wilful defaulter.

(iii) Whether they are fugitive

economic offender, only in

respect to individuals.

(iv) Whether they have

committed any securities

law violation in any

jurisdiction.

(v) Whether they have

complied with the

Companies (Significant

Beneficial Ownership)

Rules, 2018

2. Earlier, under the ICDR

2009, one of the views

taken in the market was to

extend the eligibility

conditions that were

applicable to the issuer to

the selling shareholder(s).

However, pursuant to the

definition of the selling

shareholder, there are now

corresponding

confirmations, disclosures

and eligibility that are

specifically applicable to

the selling shareholder(s).

29. Definition of “securities

law”

Securities law was not defined under the

ICDR 2009. Regulation 2(1)(ccc)

1. The scope and

interpretation of the term



37

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Remarks

Defines it as:

the Securities Contracts (Regulation)

Act, 1956, the Depositories Act, 1996,

and the rules and regulations made

thereunder and the general or special

orders, guidelines or circulars made or

issued by SEBI thereunder and the

provisions of the Companies Act or any

previous company law and any

subordinate legislation framed

thereunder, which are administered by

SEBI.

“securities law” varied for

various confirmations that

were required from various

parties. Pursuant to the

insertion of the definition

under the ICDR 2018 the

compliance with securities

law would mean to read

strict compliance with the

laws that are included

therein.

2. The term “securities law”

has been referred to in the

following disclosures:

(i) Pursuant to Regulation

23(8), an issuer is now

required to appoint a

compliance officer, among

others, for monitoring the

compliance of securities

law in case of, among

others, rights issue, further

public offer;

(ii) Pursuant to Regulation

99(i) (Fast Track Issue), the

issuer, promoter, promoter

group or director of the

issuer should not have

settled any alleged

violation of securities laws

through the consent or

settlement mechanism with

SEBI during three years

immediately preceding the

reference date.

3. Further, under ICDR 2009,



38

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Remarks

a disclosure with respect to

the violation of the

securities laws was

required to be included

under the section “Risk

Factors”. However, the

same has been deleted

under the ICDR 2018.

30. Definition of “Stock

Exchange”

Stock Exchange was not defined under

the ICDR 2009. Regulation 2 (1) (ggg)

“stock exchange” means any recognised

stock exchange having nationwide

trading terminals chosen by the issuer on

which securities of an issuer are listed or

proposed to be listed for the purpose of a

particular issue of specified securities

under these regulations, other than an

SME

Exchange.

–

31. Definition of “Syndicate

Member” Regulation 2 (1) (zl)

Defines it as an intermediary registered

with SEBI and who is permitted to carry

on the activity as an underwriter.

Regulation 2 (1) (hhh)

Defines it as an intermediary registered

with SEBI and who is permitted to

accept bids, applications and place

orders with respect to the issue and carry

on the activity as an underwriter.

–

32. Definition of

“Systemically important

non-banking financial

companies”

Regulation 2 (1) (zla)

Defines it as a non-banking financial

company registered with the Reserve

Bank of India and having a net-worth of

more than five hundred crore rupees as

per the last audited financial statements.

Regulation 2 (1) (iii)

Defines it as a non-banking financial

company registered with the Reserve

Bank of India and recognised as

systemically important non-banking

financial company by the Reserve Bank

of India.

–



39

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Remarks

33. Definition of “Valuer” Regulation 70

Defines it as a person who is registered

under section 247 of the Companies Act

and the relevant Rules framed thereunder:

Provided that till such date on which

section 247 of the Companies Act and the

relevant rules come into force, valuer

shall mean an independent merchant

banker registered with SEBI or an

independent chartered accountant in

practice having a minimum experience of

ten years

Regulation 2 (1) (kkk)

Defines it as a person who is registered

under section 247 of the Companies Act

and the relevant rules framed thereunder

or as specified by SEBI.

1. Section 247 of the

Companies Act came into

force on October 18, 2017.

34. Definition of “Wilful

Defaulter” Regulation 2 (1) (zn)

Defines it as an issuer who is categorized

as a wilful defaulter by any bank or

financial institution or consortium thereof,

in accordance with the guidelines on

wilful defaulters issued by the Reserve

Bank of India and includes an issuer

whose director or promoter is categorized

as such.

Regulation 2 (1) (lll)

Defines it as a person or an issuer who

or which is categorized as a wilful

defaulter by any bank or financial

institution (as defined under the

Companies Act) or consortium thereof,

in accordance with the guidelines on

wilful defaulters issued by the Reserve

Bank of India.

–

35. Definition of “Working

Day”

“working day” was not defined under the

ICDR 2009.

Regulation 2 (1) (mmm)

Defines “working day” as all days on

which the commercial banks in the city

(as specified in the offer document) are

open for business.

Also, for the purpose of announcement

1. A distinction has been

made for the days that

constitute working days

with respect to (i) the

announcement of the price

band and the issue period,

and (ii) for the period

between issue closing and

listing.



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Remarks

of price band and bid/ issue period,

working day shall exclude Saturdays,

Sundays and public holidays.

For the purpose of calculating the time

period between the bid/ issue closing

date and the listing on the stock

exchanges, working day shall include all

trading days of the stock exchanges,

excluding Sundays and bank holidays,

as per circulars issued by the SEBI.

2. For (i) above, Saturdays,

Sundays and public

holidays are not working

days, and for (ii) above, all

trading days excluding

Sundays and bank holidays

are working days.

36. Applicability of the

regulations Regulation 3

Contained similar provisions. However,

the ICDR 2009 was applicable to a rights

issue where the aggregate value of the

issue is fifty lakh rupees or more.

Further, the ICDR 2009 did not have any

provisions for (a) an initial public offer by

a small and medium enterprise, or (b) a

listing on the institutional trading

platform through an issue or without an

issue.

Regulation 3

The ICDR 2018 is applicable to (a) an

initial public offer; (b) a rights issue

(where the aggregate value of the issue

is ten crore rupees or more, from the

previous threshold of fifty lakhs); (c) a

further public offer; (d) a preferential

issue; (e) a qualified institutions

placement; (f) an initial public offer of

Indian depository receipts; (g) a rights

issue of Indian depository receipts; (h)

an initial public offer by small and

medium enterprise; (i) a listing on the

institutional trading platform through an

issue or without an issue; and (j) a bonus

issue.

For rights issues of less than ten crore

rupees, the issuer is required to prepare

the letter of offer in accordance with the

ICDR 2018 and file it with SEBI for

information and dissemination on

While the ICDR 2018 specifies

the date on which the said

regulations would be effective,

it does not clarify the

applicability on offer

documents to be filed in

relation to deals for which

DRHPs have already been

cleared by SEBI.



41

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Remarks

SEBI’s website.

Chapter II - INITIAL PUBLIC OFFER ON MAIN BOARD

37. Entities not eligible to

make an initial public

offer

Regulation 4 (2) (a)

Contained similar provision, however,

debarment of selling shareholders has

now been included and debarment of

‘persons in control’ has now been

removed.


The ICDR 2018 provides that an issuer

will not be eligible to make an initial

public offer if the issuer, any of its

promoters, promoter group or directors

or selling shareholders are debarred

from accessing the capital markets by

SEBI. Further, the restriction does not

apply to persons or entities, which were

debarred in the past and the period of

debarment is already over as on the date

of filing of the draft offer document.

1. Debarment of selling

shareholders from

accessing the capital

markets has now been

made an eligibility

condition. This change,

however, is consistent with

the market practice.

2. Instances of debarment

from accessing capital

market, before the date of

the draft red herring

prospectus, will no longer

impact eligibility of an

issuer, provided that period

of debarment is over.


The ICDR 2009 provided that an issuer

will not be eligible to make an issue of

specified securities if any of the

promoters, directors or persons in control

of the issuer was or also is a promoter,

director or person in control of any other

company which is debarred from

accessing the capital market.



will not be eligible to make an initial

public offer if any of the promoters or

directors of the issuer is a promoter or

director of any other company which is

debarred from accessing the capital

market by SEBI. Further, the restriction

does not apply to persons or entities,

which were debarred in the past and the

period of debarment is already over as

on the date of filing of the draft offer

1. It has been clarified that

instances of debarment

from accessing capital

market, which expired

before the date of the draft

red herring prospectus, will

no longer impact eligibility

of an issuer.



42

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Remarks

document.

There was no provision under the ICDR

2009. Regulation 5 (1) (d)

An issuer will not be eligible to make an

initial public offer if any promoter or

director is a fugitive economic offender.

1. If any promoter or director

is a fugitive economic

offender, the issuer will not

be eligible to make an

initial public offer.

2. Please see “Definition of

“Fugitive Economic

Offender”” at serial

number 10.

Regulation 26 (5)

Contained similar provisions.

The ICDR 2009 provided that the

provision are not applicable to

outstanding options granted to employees

pursuant to an employee stock option

scheme framed in accordance with the

relevant Guidance Note or Accounting

Standards, issued by the Institute of

Chartered Accountants of India.

Regulation 5 (2)

Provides that an issuer is not eligible to

make an initial public offer if there are

any outstanding convertible securities or

any other right which would entitle any

person with any option to receive equity

shares of the issuer.

The provision is not applicable to

outstanding options granted to

employees, whether currently an

employee or not, pursuant to an

employee stock option scheme in

compliance with the Companies Act, the

relevant Guidance Note or accounting

standards, if any, issued by the Institute

of Chartered Accountants of India or

pursuant to the Companies Act, in this

regard.

1. An issuer is eligible to

undertake an initial public

offer if the existing

outstanding convertible

securities or option to

receive equity shares are

options granted to an

employee, irrespective of

whether such person is

currently an employee or

not, pursuant to an

employee stock option

scheme in compliance with

the Companies Act, the

relevant Guidance Note or

accounting standards, if

any, issued by the Institute

of Chartered Accountants

of India or pursuant to the

Companies Act.

Accordingly, the previous



43

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Remarks

practice of ensuring that

options held by past

employees lapse or are

exercised before the filing

of the Draft Red Herring

Prospectus, is no longer

relevant.

2. Further, pursuant to the

new definition of

employee, this exemption

will not apply to following

persons since they are not

considered as employees:

(a) an employee who is a

promoter or a person

belonging to the

promoter group, or

(b) a director who either

himself or through his

relative or through any

body corporate,

directly or indirectly,

holds more than 10%

of the outstanding

equity shares of the

issuer.

38. Lock-in of specified

securities held by

persons other than the

promoters

Regulation 37

Contained a similar provision. However,

the provision was not applicable to equity

shares allotted to employees under an

employee stock option or employee stock

purchase scheme of the issuer prior to the

initial public offer, if the issuer has made

Regulation 17

The ICDR 2018 provides that the entire

pre-issue capital held by persons other

than the promoters is required to be

locked-in for a period of one year from

the date of allotment in the initial public

offer.

1. Clarification has been

given that existing as well

as past employees are

exempted from this

provision.

This is significantly

different from the ICDR



44

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Remarks

full disclosures with respect to such

options or scheme in accordance with Part

A of Schedule VIII.

However, the provision is not applicable

to equity shares allotted to employees or

an employee stock option trust or

transferred to the employees by an

employee stock option trust pursuant to

exercise of options by the employees,

whether currently an employee or not,

under an employee stock option or

employee stock purchase scheme of the

issuer prior to the initial public offer, if

the issuer has made full disclosures with

respect to such options or scheme in

accordance with Part A of Schedule VI.

2009. Irrespective of

whether a person is an

employee of an issuer

during the period of the

lock-in, the exemption

from the lock-in will apply

as long as such a person

was issued equity shares

under an employee stock

option or purchase scheme

prior to the initial public

offer.

2. Previously, while there was

no requirement under the

ICDR 2009, it was a

practice to include a

provision under the

employee stock option

scheme that upon

termination of

employment, options

granted to an employee

would either be vested or

cancelled. Therefore, under

the ICDR 2009, any person

who ceased to be an

employee was not exempt

from lock-in.

39. Eligibility requirements

for an initial public offer


The ICDR 2009 was silent on the manner

of calculation of net tangible assets and

did not state that it needed to be



shall be eligible to make an initial public

offer only if it has net tangible assets of

1. The ICDR 2018 clarifies

that the net tangible assets,

average operating profits,

net worth and revenue has

to be calculated on a

restated and consolidated



45

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Remarks

calculated on a restated and consolidated

basis.

at least three crore rupees, calculated on

a restated and consolidated basis, in

each of the preceding three full years, of

which not more than fifty percent are

held in monetary assets.

basis.


The ICDR 2009 contained similar

provisions, however the issuer was

eligible basis the three most profitable

years out of the immediately preceding

five years. This has now been changed to

preceding three years (of twelve months

each), with operating profit in each of

these preceding three years.



shall be eligible to make an initial public

offer only if it has an average operating

profit of at least fifteen crore rupees,

calculated on a restated and consolidated

basis, during the preceding three years

(of twelve months each), with operating

profit in each of these preceding three

years.

1. Average operating profits

to be calculated on

immediately preceding

three years and each

preceding year.

2. The ICDR 2009 provided

an issuer the liberty to

select the three most

profitable years out of the

immediately preceding five

years. This has now been

changed to include only

three years and such three

years should have the

required operating profit

for the issuer.

Regulation 26 (1) (d)

The ICDR 2009 provided that an initial

public offer can be made if the aggregate

of the proposed issue and all previous

issues made in the same financial year in

terms of issue size does not exceed five

times its pre-issue net worth as per the

audited balance sheet of the preceding

financial year.

No specific provision.

1. Condition of issue size

including the previous

issues in same fiscal year

not exceeding five times

the net worth has been

deleted.



46

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Remarks

Regulation 27

The ICDR 2009 provided that an issuer

may make a further public offer if (a) the

aggregate of the proposed issue and all

previous issues made in the same

financial year in terms of issue size does

not exceed five times its pre-issue net

worth as per the audited balance sheet of

the preceding financial year; and (b) if it

has changed its name within the last one

year, at least fifty per cent. of the revenue

for the preceding one full year has been

earned by it from the activity indicated by

the new name.

Further, if the above two conditions are

not satisfied, a further public offer can be

made if the issue is made through the

book building process and the issuer

undertakes to allot, at least seventy five

per cent. of the net offer to public, to

QIBs, and to refund full subscription

money if it fails to make the said

minimum allotment to QIBs.

Regulation 103 (1)

Under the ICDR 2018, an issuer may

make a further public offer, if it has

changed its name within the last one

year, at least fifty per cent. of the

revenue for the preceding one full year

has been earned by it from the activity

indicated by its new name.

-

40. General conditions Regulation 4

The ICDR 2009 was silent on the

condition with respect to securities held

by the promoters in dematerialized form.

Regulation 7 (c)

In addition to the existing general

conditions, the ICDR 2018 provides an

additional condition with respect to the

securities held by the promoters, which

shall be in dematerialized form prior to

the filing of the offer document.

1. This is in line with the

Companies (Prospectus

and Allotment of

Securities) Third

Amendment Rules, 2018

(notified on September 10,

2018), which provide that

entire holding of securities

of, inter alia, the promoters

has to be in dematerialized



47

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Remarks

form.

41. Additional conditions for

an offer for sale Regulation 26 (6)

Contained similar provisions, however,

under the ICDR 2018, it has been

clarified that full disclosures are required

to be made regarding conversion or

exchange of fully paid-up compulsorily

convertible securities.

Regulation 8

Provides that only such fully paid-up

equity shares may be offered for sale to

the public, which have been held by the

sellers for a period of at least one year

prior to the filing of the draft offer

document. However, in case the equity

shares received on conversion or

exchange of fully paid-up compulsorily

convertible securities including

depository receipts are being offered for

sale, the holding period of such

convertible securities, including

depository receipts, as well as that of

resultant equity shares together is

required to be considered for the

purpose of calculation of one year

period.

It also provides that such holding period

of one year is required to be complied

with at the time of filing of the draft

offer document.

Further, the ICDR 2018 provides an

explanation that the conversion or

exchange should be completed prior to

filing of the offer document (i.e. red

herring prospectus in the case of a book

built issue and prospectus in the case of

a fixed price issue), provided full

disclosures of the terms of conversion or

exchange are made in the draft offer

1. This is a significant change

as previously, under the

ICDR 2009, while

conversion of convertible

instruments was allowed

till the filing of the RHP,

conversions of convertible

instruments at DRHP stage

were required to the extent

of any resultant equity

shares which were intended

to be a part of the offer for

sale in an IPO.

2. The ICDR 2018 now allow

even such conversion or

exchange (resulting in

equity shares to be offered

in the offer for sale) to be

done by the time of filing

of the Red Herring

Prospectus, subject to full

disclosures of the terms of

conversion or exchange

being made in the DRHP.



48

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Remarks

document.

42. Minimum promoters’

contribution Regulation 32 (1)

The ICDR 2009 provided that only

alternative investment funds could

contribute towards meeting the shortfall

in minimum contribution as specified for

the promoters, subject to a maximum of

10% of the post issue capital.

Regulation 14 (1)

In case the post issue shareholding of

the promoters is less than 20%,

alternative investment funds, foreign

venture capital investors, scheduled

commercial banks, public financial

institutions or insurance companies

registered with Insurance Regulatory

and Development Authority of India

may contribute to meet the shortfall in

minimum contribution as specified for

the promoters, subject to a maximum of

10% of the post issue capital, without

being identified as promoter(s).

1. In addition to alternative

investment funds which

was included in the ICDR

2009, certain regulated

entities such as FVCIs,

scheduled commercial

banks, or public financial

institutions or insurance

companies registered with

IRDA are permitted to

contribute in order to meet

the shortfall in minimum

contribution, subject to a

limit of 10% of the post

issue-capital, without being

classified as a promoter.

43. Securities ineligible for

minimum promoters’

contribution

Regulation 33 (1)

Contained a similar provision, however, it

did not include specific provisions for

ineligibility of securities acquired by

foreign venture capital investors or

scheduled commercial banks or public

financial institutions or insurance

companies registered with Insurance

Regulatory and Development Authority

of India, for the computation of minimum

promoters’ contribution.

Regulation 15 (1)

The ICDR 2018 provides that, for the

computation of minimum promoters’

contribution, the following specified

securities shall not be eligible:

(a) specified securities acquired during

the preceding three years, if these are:

(i). acquired for consideration other

than cash and revaluation of

assets or capitalisation of

intangible assets is involved in

such transaction; or

(ii). resulting from a bonus issue by

utilisation of revaluation reserves

or unrealised profits of the issuer

-



49

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Remarks

or from bonus issue against

equity shares which are ineligible

for minimum promoters’

contribution;

(b) specified securities acquired by the

promoters and alternative investment

funds or foreign venture capital

investors or scheduled commercial

banks or public financial institutions or

insurance companies registered with

Insurance Regulatory and Development

Authority of India, during the preceding

one year at a price lower than the price

at which specified securities are being

offered to the public in the initial public

offer.

Regulation 33 (2)

Included similar provision, however, the

ICDR 2009 only included such securities

which are acquired pursuant to a scheme

which has been approved under sections

391 to 394 of the Companies Act, 1956,

to be eligible for computation of

promoters’ contribution.

Regulation 15 (2)

The specified securities referred to in

Regulation 15(1)(a) above will be

eligible for computation of promoters’

contribution if such securities are

acquired pursuant to a scheme approved

by:

(a) a High Court (under sections 391 to

394 of the Companies Act, 1956);

or

(b) a tribunal; or

(c) the Central Government (under

sections 230 to 234 of the Act).

1. To align with the

Companies Act.

44. Face value of equity

shares Regulation 31 (1)

Deleted from ICDR 2018. 1. The face value of the

securities has no bearing



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Remarks

Under the ICDR 2009, an issuer making

an initial public offer could determine the

face value of the equity shares in the

following manner, subject to the

provisions of the Companies Act, 1956,

the SEBI Act, and the ICDR 2009:

(a) if the issue price per equity share was

five hundred rupees or more, the

issuer had the option to determine the

face value at less than ten rupees per

equity share: Provided that the face

value could not be less than one

rupee per equity share; or

(b) if the issue price per equity share was

less than five hundred rupees, the

face value of the equity shares was

required to be ten rupees per equity

share.

on the valuation or

investment decision of the

securities or its price per

share. After listing, there is

no such requirement

applicable. Hence, the


deleted.

45. Lock-in of specified

securities held by the

promoters

Regulation 36

The ICDR 2009 provided for the time

period for which promoters contribution

shares made by Promoters and AIFs are

locked-in.

Further, it defined ‘date of

commencement of commercial

production’ as the last date of the month

in which commercial production in a

manufacturing company is expected to

commence as stated in the offer

document.

Regulation 16

The ICDR 2018 additionally provides

for the lock-in requirements for the

promoters contribution made by foreign

venture capital investors or scheduled

commercial banks or public financial

institutions or insurance companies

registered with Insurance Regulatory

and Development Authority of India.

Further, the term ‘date of

commencement of commercial

production’ has been amended to have

its meaning specifically to a ‘project’ (as

per the definition of the ICDR 2018) in

respect of which the IPO proceeds are

proposed to be utilized as per the

-



51

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Remarks

DRHP/ offer documents

46. Pledge of locked-in

specified securities. Regulation 39

Contained similar provision, however, the

ICDR 2009 did not include that securities

can be pledged with a systemically

important non-banking finance company

or a housing finance company.

Additionally, the ICDR 2009 did not

provide for continuation of the lock-in

with respect to the transferee where the

promoters had pledged their shares which

were locked-in and such pledge was

invoked.

Regulation 21

The ICDR 2018 provides that the

specified securities held by the

promoters and locked-in can be pledged

as a collateral security for a loan granted

by a scheduled commercial bank or a

public financial institution or a

systemically important non-banking

finance company or a housing finance

company, subject to the following:

(a) if the specified securities are

locked-in pursuant to the

requirement of the minimum

promoters’ contribution, the loan

has been granted to the issuer

company or its subsidiaries for the

purpose of financing one or more of

the objects of the issue and the

pledge of specified securities is one

of the terms of sanction of the loan;

or

(b) if the specified securities are

locked-in for a period of one year in

terms of clause (b) of regulation 16

and the pledge of specified

securities is one of the terms of

sanction of the loan.

The ICDR 2018 also provides that such

lock-in shall continue pursuant to the

invocation of the pledge and such

transferee shall not be eligible to transfer

the specified securities till the lock-in

1. Promoters’ locked-in

shares may additionally be

pledged to SI-NBFC and

HFC. Such lenders/pledgee

can now further invoke the

pledge, however the shares

will continue to locked-in

the hands of transferee to

whom shares are

transferred by

lender/pledgee on aforesaid

invocation.

2. Currently, there is an

ambiguity as to whether,

upon invocation of a

pledge, the lock-in will be

applicable to the person in

favour of whom the shares

are pledged or to such

person to whom the shares

are transferred by a person

in favour of whom the

shares are pledged.



52

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Remarks

period stipulated in the ICDR 2018 has

expired.

47. Filing of the draft offer

document and offer

document

Regulation 8 (2) (d)

The ICDR 2009 required the certificate in

relation to the promoters contribution,

which is to be submitted by the lead

managers, to be obtained from a chartered

accountant.

Regulation 25 (9) (d) and Regulation

123 (9) (d)

The ICDR 2018 requires the certificate

in relation to the promoters contribution,

which is to be submitted by the lead

managers, to be obtained from a

statutory auditor.

1. In ICDR 2009, in relation

to IPOs it was Independent

Chartered Accountant who

certifies the promoters’

contribution but in ICDR

2018 it will be certified by

statutory auditor.

2. Further, both for IPOs and

FPOs, the certificate shall

now have to state the

amount paid as well as

credited.

48. Draft offer document and

offer document to be

available to public

Regulation 9 (3)

Included a similar provision, however, the

issuer was required to make a public

announcement either on the date of filing

the draft offer document or on the next

day.

Regulation 26 (2)

The ICDR 2018 provides that, within

two days of filing of the draft offer

document, an issuer is required to make

a public announcement in newspapers

disclosing the fact of filing of the draft

offer document, inviting the public to

provide their comments.

1. The time period for making

a public announcement in

the newspapers has now

been increased to two days.

49. Disclosure about the face

value of equity shares

Regulation 31 (2)

Included similar provision, however, the

ICDR 2009 also provided for inclusion of

a statement about the issue price being

‘X’ times of the face value.

Additionally, the provision related to the

Regulation 27

The ICDR 2018 provide that the

disclosure about the face value of equity

shares is required to be made in the draft

offer document, offer document,

advertisements and application forms,

along with the price band or the issue

1. Since both the face value

and price band are

disclosed through the

advertisement, disclosure

of this sentence is deleted.

However, requirement of

disclosure of face value

along with price is being

retained in the



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manner in which the issuer could

determine the face value of equity shares

based on the issue price has been deleted.

price in identical font size. advertisement.

50. Price and price band Regulation 30 (2)

Required the issuer to announce the floor

price or price band five working days

before the opening of the bid (in case of

an initial public offer) and at least one

working day before the opening of the bid

(in case of a further public offer), in all

the newspapers in which the pre-issue

advertisement was released.

Regulation 29 (4)

1. The floor price or the price band is

now required to be announced two

working days before the opening of the

issue.

2. Further, it can be done in the same

newspapers in which the pre-issue

advertisement was released or together

with the pre-issue advertisement in the

format prescribed under the ICDR 2018.

1. This change entails that the

issuer now has a reduced

time frame for announcing

the price band from five

working days to two

working days prior to the

opening of the issue, giving

the issuer more flexibility

to fix the price band.

2. Further, the ICDR 2018

now allows the issuer to

make this announcement

along with the pre-issue

advertisement, which is

issued after registering the

red herring prospectus (for

book built issues) or

prospectus (for fixed

issues).

51. Underwriting Regulation 13 (8)

The underwriting obligation to the extent

of entire hundred per cent of the offer

through offer document in case hundred

per cent of the offer was underwritten, is

deleted.

Regulation 40

The requirement for underwriting to the

extent of minimum subscription, which

is at least ninety per cent of the offer

through the offer document, except in

case of an offer for sale of specified

securities is retained.

1. Underwriting can now be

done only to the extent of

minimum subscription for

pure fresh issue and to the

extent of meeting the

public float requirements,

i.e., 10% or 25%. Thus,

underwriters do not need to

underwrite the entire offer

and can limit their



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obligation to the extent of

minimum subscription.

52. Reservation on

competitive basis Regulation 42

The provision was similar, except that the

issuer could also make a reservation on

competitive basis in favour of the

following categories of persons:

shareholders (other than promoters) of:

listed group companies, in case of an

existing issuer.

Regulation 33

The issuer is now required to make

reservations on a competitive basis out

of the issue size excluding promoters’

contribution in favour of the following

categories of persons:

a) employees;

b) shareholders (other than promoters

and promoter group) of listed

subsidiaries or listed promoter

companies.

1. Unlike the ICDR 2009,

now employee refers

employee of “promoter”

and not “holding

company”.

2. Further, for the purposes

of reservation,

(i) shareholders of listed

group companies, and

persons associated with the

issuer or depositors,

bondholders or subscribers

to the services with the

issuer, have been

excluded, and (ii) the

shareholders of listed

subsidiaries have been

included.

3. Additionally, the

competitive reservation

under the ICDR 2018 does

not exclude net offer and

distinguish between new

issuer and old issuer.

53. Public advertisement Regulation 60

The provisions to be complied are the

same, except that currently, it is covered

in a separate schedule.

Regulation 42 (read with Schedule IX)

All public communication, publicity

materials, advertisements and research

reports shall comply with the provisions

of Schedule IX.

-



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54. Minimum subscription Regulation 14 (2)

In the event of non-receipt of minimum

subscription, all application monies

received were required to be refunded to

the applicants, but not later than:

(a) fifteen days of the closure of the issue,

in case of a non-underwritten issue; and

(b) seventy days of the closure of the

issue, in the case of an underwritten issue

where minimum subscription including

devolvement obligations paid by the

underwriters not received within sixty

days of the closure of the issue.

Regulation 45 (2)

In the event of non-receipt of minimum

subscription, all application monies

received are now required to be

refunded to the applicants not later than

fifteen days from the closure of the

issue.

1. This change has been

made to align the period of

refund in case of non-

receipt of minimum

subscription with Rule 11

of the Companies

(Prospectus and Allotment

of Securities) Rules, 2014

without distinguishing

between underwritten and

non-underwritten issues

and uniformly provides for

15 days for any public

issue.

55. Period of subscription Regulation 46

(1) The requirement was the same, except

that the computation of ten days included

the days for which the issue is kept open

in case of revision in price band.

(2) The requirement is the same, except

that a proviso that the total bidding period

shall not exceed ten working days,

existed.

Regulation 46

(1) An initial public offer is now

required to be kept open for at least

three working days and not more than

ten working days.

(2) In case of a revision in the price

band, the issuer shall extend the bidding

(issue) period disclosed in the red

herring prospectus, for a minimum

period of three working days, subject to

the above.

(3) In case of force majeure, banking

strike or similar circumstances, the

issuer may, for reasons to be recorded in

writing, extend the bidding (issue)

period disclosed in the red herring

prospectus (in case of a book built issue)

or the issue period disclosed in the

1. Taking into consideration

that the period of

subscription may be

required to be extended due

to other factors such as force

majeure, banking strike,

bandh, etc. Accordingly, the

same is added as one of the

reasons under Regulation

46(3) for extension of period

of subscription irrespective

of change in price band.



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prospectus (in case of a fixed price

issue), for a minimum period of three

working days, subject to the provisions

of sub-regulation (1).

56. Application and

minimum application

value

This provision was not included in the

ICDR 2009. Regulation 47 (1)

The maximum application by non –

institutional investor cannot exceed the

total number of securities offered in the

issue less the securities offered to

qualified institutional buyers.

-

57. Oversubscription Regulation 15

Provided a similar flexibility, except that

the upper limit was fixed at ten per cent of

the net offer.

Regulation 49 (2)

The issuer is not allowed to make any

allotment in excess of the specified

securities offered through the offer

document except in case of

oversubscription for the purpose of

rounding off to make allotment, in

consultation with the designated stock

exchange. In case of oversubscription,

an allotment of not more than one per

cent of the net offer to public may be

made for the purpose of making

allotment in minimum lots.

1. The provision for making

oversubscription is reduced

in the ICDR 2018 from

10% to 1% of the net offer

to the public only for the

purpose of making

allotment in minimum lots.


necessitates an additional

involvement of the stock

exchanges by providing for

a consultation with them

for the said

oversubscription.

58. Allotment, refund and

payment of interest

Regulation 18 (2)

The ICDR 2009 required the issuer to pay

the issuer interest at such rate as specified

in the offer document.

Regulation 50 (3)

The ICDR 2018 requires the issuer to

pay an interest at the rate of fifteen per

cent per annum where the specified

securities are not allotted and/or

-



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application monies are not refunded or

unblocked within the prescribed time.

59. Responsibility(ies) of

Lead Merchant

Banker(s)

Regulation 64 (4)

The responsibility of the lead merchant

banker was required to continue even

after the completion of issue process.

Regulation 52 (1)

The responsibility of the lead

manager(s) will continue until

completion of the issue process and for

any issue related matter thereafter.

1. The position is the same

and consistent with the

market practices. It is

more clarificatory under

the ICDR 2018. Adequate

carve outs in the draft red

herring prospectus / offer

document and offer

agreement should be

included.

60. Restriction on further

capital issues

Regulation 19

The requirement was the same, except

that it included a carve out for a fast track

issue and other issues. A fast track issue,

during the period between the date of

registering the red herring prospectus (in

case of a book built issue) or prospectus

(in case of a fixed price issue) with the

Registrar of Companies or filing the letter

of offer with the designated stock

exchange and the listing of the specified

securities offered through the offer

document or refund of application

monies.

Regulation 56

An issuer is not allowed to make any

further issue of specified securities in

any manner, except pursuant to an

employee stock option scheme, between

the date of filing the draft offer

document and the listing of the specified

securities offered, unless full disclosures

regarding the total number of specified

securities or amount proposed to be

raised are made.


requires disclosure of

either the total number of

specified securities or the

amount proposed to be

raised in the pre-IPO

placement, which avoids

the disclosure of valuation

at draft red herring

prospectus stage.

2. The ICDR 2018 has carved

out issues made pursuant to

an employee stock option

scheme from the restriction

on further issues between

the date of filing the draft

offer document and listing

of the specified securities

offered through the offer

document or refund of

application monies.

3. Also, the ICDR 2018 has

moved the carve out for



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fast track issues and other

issues under the relevant

chapters of the ICDR 2018.

3. Reference date -

Regulation 60

An issuer offering specified securities of

aggregate value of ten crore rupees or

more through a rights issue is required

to satisfy the conditions of Chapter III at

the time of filing the draft letter of offer

with SEBI and also at the time of filing

the final letter of offer with the stock

exchanges, as the case may be.

1. The ICDR 2018 has

clarified that the issuer is

required to comply with

the conditions in Chapter

III at both stages at the

time of offering specified

securities of an aggregate

value of ten crore rupees or

more through a rights

issue, i.e., at the time of

filing the draft letter of

offer with SEBI and also at

the time of filing the final

letter of offer with the

stock exchanges as

compared to the ICDR

2009, which did not

specify the said



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requirement for rights

issue.

61. Rights Issue – Record

Date Regulation 52 (1)

The requirement was the same, except

that the same did not align with the

Securities and Exchange Board of India

(Listing Obligations and Disclosure

Requirements) Regulations, 2015.

Regulation 68 (1)

The issuer is required to announce a

record date for the purpose of

determining the shareholders eligible to

apply for specified securities in the

proposed rights issue for such period as

may be specified in the Securities and

Exchange Board of India (Listing

Obligations and Disclosure


1. The requirement of

opening a rights issue for

subscription for a

minimum period of ten

days has been aligned with

the Securities and

Exchange Board of India

(Listing Obligations and

Disclosure Requirements)

Regulations, 2015 in the

ICDR 2018.

62. Rights Issue –

Underwriting Regulation 13 (1)

The requirement is the same, except that

the condition for the issue to be

underwritten only to the extent of

entitlement of shareholders other than the

promoters and promoter group was not

included.

Regulation 81 (1)

If the issuer entails to have the issue

underwritten, it is required to appoint

underwriters in accordance with the


(Underwriters) Regulations, 1993,

provided that the issue can be

underwritten only to the extent of

entitlement of shareholders other than

the promoters and promoter group.


clarified that a rights issue

can be underwritten only to

the extent of entitlement of

public shareholders and not

for the entitlement of the

promoters and promoter

group, which is consistent

with market practice.

63. Rights Issue – Fast Track

Issue Regulation 6 (1)

The issuer was required to file a draft

letter of offer with SEBI, irrespective if

the rights issue was a fast track issue or

not, along with fees as specified in

Regulation 71 (1)

Prior to making a rights issue, the issuer,

except in case of a fast track issue, is

required to file a draft letter of offer,

with the concerned regional office of the

1. The ICDR 2018 has now

clarified that filing of draft

letter of offer with SEBI is

not required in case of a

fast track rights issue,

although the fee will still

be required to be paid to



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Schedule IV. Board under the jurisdiction of which

the registered office of the issuer

company is located, in accordance with

Schedule IV, along with fees as

specified in Schedule III, with the Board

and with the stock exchange(s), through

the lead manager(s).

the stock exchanges. The

requirement for filing a due

diligence checklist or cover

letter along with the filing

fees is still being discussed.

64. Rights Issue – ASBA Regulation 58 (5)

The regulation was the same, except that

it included an additional provision for

qualified institutional buyers and non-

institutional investors who could submit

their bids applications using the ASBA

facility only and the Retail individual

investors could either apply through

ASBA facility or make payment through

cheque or demand draft.

Regulation 76

The issuer is required to provide the

ASBA facility in the manner specified

by the Board where not more than one

payment option is provided, provided

that the applicants in a rights issue shall

be eligible to make applications through

ASBA facility only if such applicant:

(i) is holding equity shares in

dematerialised mode; (ii) has not

renounced entitlement in part or in full;

and (iii) is not a renouncee. Further,

payment for application for any reserved

portion outside the issue period can be

through electronic banking modes.

1. It is clarified in the ICDR

2018 that applicants in a

rights issue are required to

make applications only

through ASBA facility, if

they are holding equity

shares in dematerialized

mode, have not renounced

entitlement in part or in full

and are not renouncees.

2. Further, as per the ICDR

2018, payment for

application for any

reserved portion outside the

issue period can be through

electronic banking mode as

compared to ICDR 2009

wherein the retail

individual investors could

either apply through ASBA

facility or make payment

through cheque or demand

draft.

65. Rights Issue – Fast Track

Issue – Eligibility

conditions

Regulation 10 (1)(f)

The issuer was eligible to undertake a fast

Regulation 99 (m)

The provisions of “Filing of offer

1. Under the ICDR 2018, a

company to be eligible to

make a fast track rights



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track issue if the impact of auditors’

qualifications on the audited accounts of

the issuer in respect of those financial

years for which such accounts wee

disclosed in the offer document did not

exceed five per cent of the net profit or

loss after tax of the issuer for the

respective years.

document”, “Security Deposit” and

“Documents to be submitted before

opening of the issue” will not be

applicable to a public issue or rights

issue if the issuer satisfies the following

condition:

There are no audit qualifications on the

audited accounts of the issuer in respect

of those financial years for which such

accounts are disclosed in the letter of

offer.

issue should not have any

audit qualifications, as

compared to the ICDR

2009 wherein such audit

qualifications were allowed

if they did not exceed 5%

of the net profit or loss

after tax of the issuer for

the respective financial

years.

66. Eligibility for qualified

institutions placement

Regulation 82

The only eligibility criterion for

undertaking a qualified institutions

placement was that a special resolution

approving the same be passed by its

shareholders, wherein it would specify

that the allotment is proposed to be made

through qualified institutions placement.

Regulation 172

A listed issuer is eligible to make a

qualified institutions placement of

eligible securities if it satisfies the

following conditions:

a) a special resolution approving the

qualified institutions placement has been

passed by its shareholders, however the

same would not be required in case the

qualified institutions placement is

through an offer for sale by promoters or

promoter group for compliance with

minimum public shareholding

requirements specified in the Securities

Contracts (Regulation) Rules, 1957;

b) The said allotment will have to be

completed within a period of 365 days

from the date of passing of the

resolution.

1. The ICDR 2018 removes

the requirement of

passing a special

resolution in case QIP is

through an offer for sale

by promoters or promoter

group for compliance

with minimum public

shareholding

requirements.

2. Further, an additional

eligibility criterion has

been included that none

of the promoters or

directors of the issuer is a

fugitive economic

offender.



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c) An issuer shall be eligible to make a

qualified institutions placement if any of

its promoters or directors is not a

fugitive economic offender.

67. Conditions for offer for

sale by promoters for

compliance with

minimum public

shareholding

requirements specified in

the Securities Contracts

(Regulation) Rules, 1957

- Regulation 173

The promoters and members of the

promoter group may make an offer for

sale of fully paid up equity shares,

through a qualified institutions

placement, for the purpose of achieving

minimum public shareholding in terms

of the Securities Contracts (Regulation)

Rules, 1957, subject to the terms and

conditions specified therein.

1. Offer for sale by promoters

and members of promoter

group for compliance with

minimum public

shareholding requirements

has been added in the

ICDR 2018.

68. Appointment of

merchant banker - Regulation 174

It is now required that at least one lead

manager to the issue will not be an

associate (as defined under the


(Merchant Bankers) Regulations, 1992)

of the issuer and in case it is, the same

shall be disclosed and its role shall be

limited to marketing of the issue.

1. The ICDR 2018 aligns

Regulation 21A of the

Securities and Exchange

Board of India (Merchant

Bankers) Regulations, 1992

by adding this additional

provision of at least one

lead manager not being an

associate of the issuer.

69. Placement Document Regulation 84

There was ambiguity as regards the said

obligation under Regulations 83(2) and

Regulation 174

The lead manager(s), while seeking in-

principle listing approval for the eligible


combined Regulations

83(2) and 84(3) of the

ICDR 2009 and clarified

that the responsibility is



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84(3) of the ICDR 2009. securities, is required to furnish to each

stock exchange on which the same class

of equity shares of the issuer are listed, a

due diligence certificate, and also

furnish a copy of the preliminary

placement document along with any

other document required by the stock

exchange.

on the lead manager(s).

The lead manager(s) may

now require back-to-back

letters and the said

change will be required to

be addressed in the cover

letter and the auditor

certificates.

70. Due diligence Regulation 83(1)

A qualified institutions placement shall be

managed by merchant banks registered

with SEBI who shall exercise due

diligence.

Regulation 175(1)

The lead managers to a qualified

institutions placement shall exercise due

diligence and shall satisfy themselves

with all aspects of the qualified

institutions placement including the

veracity and adequacy of disclosures in

the offer document.

-

71. Pricing – Regulation 176(1)

No shareholders’ approval will be

required in case of a qualified

institutions placement made through an

offer for sale by promoters for

compliance with minimum public

shareholding requirements specified in

the Securities Contracts (Regulation)

Rules, 1957.

1. This is in line with the

exemption from obtaining

shareholders’ approval for

qualified institutions

placements through offer

for sale by promoters /

promoter group to meet

minimum public

shareholding requirements.

72. Application and

Allotment Regulation 86

The restriction of downward revision was

not included.

Regulation 179

The applicants in qualified institutions

placement are not allowed to withdraw

or revise downwards their bids after the

closure of the issue.

1. An additional restriction on

downward revision of bids

has been inserted in the

ICDR 2018.



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73. Qualified institutions

placement - Restrictions

on amount raised

Regulation 89

The aggregate of the proposed qualified

institutions placement and all previous

qualified institutions placements made by

the issuer in the same financial year could

not exceed five times the net worth of the

issuer as per the audited balance sheet of

the previous financial year.

No specific provision 1. Companies suffer losses for

a variety of reasons

including slowdown in

their sectors, which leads to

erosion of their net worth.

These companies, in the

process of turning around,

are unable to raise funds

through qualified

institutions placement 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.

Qualified institutional

buyer investors are in a

better position to evaluate

such opportunities and

qualified institutional

buyers also are not required

to be given any protection.

The said requirement is

deleted in the ICDR 2018.


placement - Minimum

number of allottees

Regulation 87 (2)

The term ‘same group’ was not defined.

Regulation 180 (2)

The term ‘same group’ is defined in the

explanation.

1. Given that the Companies

Act does not have

corresponding provisions

for Section 372 of the

Companies Act, 1956, the

definition of ‘same group’

has been added to bring

more clarity.



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placement - Financial

Statements

Schedule XVIII (12)

The audited consolidated and standalone

financial statements are required to be

disclosed.

Schedule VII Clause (11)

The audited consolidated and standalone

financial statements for last three

financial years are required to be

disclosed. In addition, the latest

reviewed financials disclosed to the

stock exchanges have to be disclosed as

well.

1. The ICDR 2018 have

added that the latest

reviewed financials

disclosed to the stock

exchanges have to be

disclosed as well and has

specified that the audited

consolidated and

standalone financial

statements are required to

be disclosed for a period of

three years.


placement - Legal

proceedings

Schedule XVIII (19)

Legal proceedings

Schedule VII Clause (19)

Legal proceedings to be disclosed in

accordance with the materiality policy

framed under the Securities and

Exchange Board of India (Listing



1. SEBI has clarified that

legal proceedings are

required to be disclosed in

accordance with the

materiality policy

determined by the

Company.

77. Institutional Placement

Programme

CHAPTER VIII-A: INSTITUTIONAL

PLACEMENT PROGRAMME

No specific provision -

Schedule

78. Formats of Due

Diligence Certificates

The ICDR 2009 required five due

diligence certificates to be submitted by

the lead managers to SEBI in a period of

15-20 days at the following stages:

(i) Filing of the DRHP;

(ii) Issue opening;

The ICDR 2018 requires submission of

three due diligence certificates at the

following stages:

(i) Filing of the DRHP;

(ii) Registration of the offer document;

and

1. Since, the time gap

between filing of RHP,

opening and closing of

issue is too small, only if

there is any material

update during this period,

then only fresh due



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(iii) Issue closing;

(iv) Filing of the prospectus; and

(v) Post-issue.

Accordingly, the requirement of

submission of certificates at issue opening

and issue closing stages have been deleted

in the ICDR 2018.

(iii) Post-issue.

In the event there is any significant

material development between the filing

of the offer document and the allotment

of securities, an additional due diligence

certificate is required to be submitted.

diligence certificate is

required.

2. In terms of the ICDR 2009,

five due diligence

certificates were required

to be submitted at the time

of a) filing of the DRHP,

b) issue opening and c)

issue closing, d) filing of

the prospectus and e) post-

issue.

3. However, under the ICDR

2018, only three due

diligence certificates are

required to be submitted at

the a) filing of the DRHP,

b) registration of the offer

document; and c) post

issue stages.

4. Further, in the event there

is any significant material

development between the

filing of the offer

document and the

allotment of securities, an

additional due diligence

certificate is required to be

submitted.

79. FORM A - Format of

due diligence certificate

to be given by the lead

manager(s) along with

draft offer document or

draft letter of offer

The ICDR 2009 required an enclosure of

a statement on price information of past

issues handled by merchant bankers

responsible for the issue to be included in

the due diligence certificate to be

submitted by the merchant bankers

alongwith the draft offer document.

The requirement for the statement on

price information of past issues handled

by the merchant bankers as part of the

due diligence certificate to be submitted

at the draft offer document stage has

been deleted under the ICDR 2018.

1. This requirement has been

deleted in order to avoid

duplication of submission

required in view of the

same being already

disclosed in the draft offer

document under Other

Regulatory and Statutory



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Disclosures.

80. The ICDR 2009 required a certification

stating that the profits from related party

transactions have arisen from legitimate

business transactions of the issuer.

The ICDR 2018 requires the lead

managers to include the certification in

relation to related party transactions to

form part of the note explaining the due

diligence process exercised by the lead

managers. The note is required to state

that the related party transactions for the

period disclosed in the offer document

have been entered into by the issuer in

accordance with applicable law.

1. The requirement to obtain

a certificate has been

deleted in view of the

following:

(i) each RPT need not

result into profits for

the company; and

(ii) detailed disclosures

on RPTs are already

made in the offer

document in the

financial statements

of the company;

additional disclosures

on related parties are

included in the offer

document as they are

considered group

companies.

Schedule VIII - DISCLOSURES IN

OFFER DOCUMENT, ABRIDGED

PROSPECTUS AND ABRIDGED

LETTER OF OFFER

Schedule VI - DISCLOSURES IN

THE OFFER DOCUMENT,

ABRIDGED PROSPECTUS AND

ABRIDGED LETTER OF OFFER

81. Risk factors Clause IV (H) (1)

The ICDR 2009 required a disclosure of

any criminal charges under the Indian

penal Code and violation of securities

law, which has now been deleted.

- -

82. Clause IV (H) (6) - -



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Remarks

The ICDR 2009 required a disclosure of

in case the industry segment for which the

issue is proposed has contributed to less

than twenty five percent of the revenues

of the issuer in the previous three fiscals,

which has now been deleted.

83. Clause IV (H) (2)

The ICDR 2009 required disclosure of

risk relating to all statutory clearances and

approval that are yet to be received by the

issuer. This has now been amended to

include only the material statutory

clearances and approvals.

Clause 5 (G) (1)

Material statutory clearances and

approval that are yet to be received by

the issuer;

The ICDR 2009 required

disclosure of risk relating to all

statutory clearances and

approval that are yet to be

received by the issuer. This has

now been amended to include

only the material statutory

clearances and approvals. This

change is consistent with the

section ‘Government

Approvals’, where the

disclosures are provided for

material approvals.


The ICDR 2009 required the risk relating

to lack of experience to be disclosed only

in relation to the promoters of the issuer.

Clause 5 (G) (6)

Lack of significant experience of the

issuer or its promoters in the industry

segment for which the issue is being

made.

The ICDR 2018 now requires

the risk relating to lack of

experience for the issuer as

well.

85. - Clause 5 (G) (7)

If the issuer has incurred losses in the

last three financial years.

-


Similar provision under the ICDR 2009,

Clause 5 (G) (9)

Refusal of listing of any securities of the

This risk factor is now limited

to the issuer, its subsidiaries

and group companies, and does



69

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however this has now been limited to a

period of ten years and only to the issuer,

its subsidiaries and group companies


issuer or any of its subsidiaries or group

companies during last ten years by any

of the stock exchanges in India or

abroad.

not cover associates now.

Further, disclosure of historical

refusal of listing has been done

away with and now refusal of

listing in last 10 years is

required to be disclosed.



however this has now been limited to

issuer and its subsidiaries under the ICDR

2018. The disclosure for such risk for

promoter, group companies and

associated has now been deleted.

Clause 5 (G) (13)

Unsecured loans, if any, taken by the

issuer and its subsidiaries that can be

recalled at any time.

Under ICDR 2018, this risk

factor covers only (i) the issuer;

and (ii) its subsidiaries. ICDR

2009 required additional

coverage of promoter, group

companies and associates.



however this has now been clarified to be

included only for the issuer and its

subsidiaries under the ICDR 2018.

Clause 5 (G) (13)

Default in repayment of deposits or

payment of interest thereon by the issuer

and subsidiaries, and the roll over of

liability, if any.

The scope of the risk factor has

been clarified.


The ICDR 2009 did not prescribe any

specific time period of the risk factor

relating to the shortfall in performance

vis-à-vis the objects stated in any of the

previous issues, quantifying such

shortfalls or delays. Such risk was

required to be disclosed for the previous

issues of the issuer and group companies.

Clause (5) (G) (16) & (17)

The risk factor relating to the shortfall in

performance vis-à-vis the objects stated

in any of the issues made by for the

listed issuer or listed subsidiaries for ten

years and any of the listed promoters or

listed subsidiaries for five years,

quantifying such shortfalls or delays.

[AZB: Clause (5) (G) (16) sets out that

such risk is required to be disclosed for

the past ten years for the listed

1. A ten year time frame (for

listed issuer or listed

subsidiaries) or five years

(for listed subsidiaries or

listed promoters) for

disclosure of information

relating to previous issues

which have been

undertaken has been set

bearing in mind that the

information beyond that

period might not be

relevant to the prospective



70

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subsidiary and Clause (5) (G) (17) sets

out that such risk is required to be

disclosed for the past five years. Thus

there is a discrepancy in the regulations

which needs to be clarified.]

investors.

2. Further, group companies

have been excluded from

the ambit of the risk factor

and its now limited to

listed subsidiaries, listed

promoters and listed issuer

only.

3. The risk factor does not

cover group companies

now but limited to listed

issuer, listed subsidiaries

and listed promoter(s).

4. The risk factor specifies a

time period for analysis

and disclosure of any

shortfall in performance

vis-à-vis objects, i.e. 10

years in case of listed

issuers and five years in

case of listed subsidiaries

or listed promoter(s).

Notably, the time period

prescribed under the

section “Other Regulatory

and Statutory Disclosures”

is not aligned with the risk

factor. In the back section,

following disclosure

requirement is prescribed:

(a) all issues by issuer in

last five years; and

(b) last one issue by listed

subsidiaries and listed

promoters in last five



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Remarks

years.



however this has now been limited to

promoter, directors or key managerial

personnel of the issuer under the ICDR

2018. The disclosure for such risk for


personnel of the group companies has

now been deleted.

Clause (5) (G) (19)

Any portion of the issue proceeds that is

proposed to be paid by the issuer to the


personnel of the issuer.

-

91. Clause (IV)(H)(24)

A summary of the outstanding litigations,

disputes, non-payment of statutory dues,

overdues to banks or financial

institutions, defaults against banks or

financial institutions, contingent liabilities

not provided for, the details of

proceedings initiated for economic

offences or civil offences (including the

past cases, if found guilty), any

disciplinary action taken by the SEBI or

recognized stock exchanges, etc.,

pertaining to the issuer, promoter and

wholetime directors of the issuer and

group companies, along with the nature of

the litigation, quantum of funds involved,

with a cross reference to the page where

the detailed disclosures have been made

in the offer document. If any the above-

mentioned litigations, etc., arise after the

filing the draft offer document, the facts

shall be incorporated appropriately in the

offer document.

Clause (5)(G)(24)

Summary of all outstanding litigations

and other matters disclosed in the

section titled ‘Outstanding Litigations

and Material Developments’ in a tabular

format along with amount involved,

where quantifiable. Issuer shall also

separately highlight any criminal,

regulatory or taxation matters which

may have any material adverse effect on

the issuer.

1. Disclosures pertaining to

litigation under risk factor

are consolidated and

aligned with the Litigation

chapter under Schedule VI

of ICDR 2018.

2. Certain line items were

deleted from Litigation

chapter vide SEBI (Issue

of Capital and Disclosure

Requirements) (Fourth

Amendment) Regulations,

2015. However,

corresponding changes

were not made under Risk

Factors under Schedule

VIII of ICDR 2009.

3. The ICDR 2009 required a

disclosure of any criminal

charges under the Indian

penal Code and violation

of securities law, which

has now been deleted.

4. The ICDR 2009 required a



72

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Clause (IV)(H)(31)

All disputed or contested tax demands

and other government claims, along with

the disclosures of amount, period for

which such demands or claims are

outstanding, financial implications and

the status of the case.

disclosure of any criminal

charges under the Indian

penal Code and violation

of securities law, which

has now been deleted.

5. Further, under the ICDR

2018, any criminal,

regulatory or taxation

matter which may have

any material adverse effect

on the issuer are required

to be separately disclosed.



however this has now been limited to a

period of three financial years under the

ICDR 2018.

Clause (5) (G) (27)

Negative cash flow from operating

activities in the last three financial

years.

1. Risk factor on negative

cash flow has been

restricted to operating

activities for last three

years.


The ICDR 2009 required this disclosure

to be made in relation to any land which

is not registered in the name of the issuer.

Clause (5) (G) (28)

If the land proposed to be acquired from

proceeds of the issue is not registered in

the name of the issuer.

[AZB: The intent of the amended risk

factor is not clear as any land which is

proposed to be acquired will not be

registered in the name of the issuer as of

the date of the document]

1. Land proposed to be

acquired from issue

proceeds will not be

registered in the name of

the issuer till completion of

transaction. Thus, this risk

factor may be required to

be disclosed in every such

case.

2. Earlier, all other properties

which were not material

for business or operation

were required to be

disclosed under risk

factors, if not owned by the

issuer and are taken on

lease. Now the scope of the



73

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Remarks

risk factor has been

restricted to properties

proposed to be acquired

from issue proceeds.

94. Clause IV (H)(29)

The ICDR 2009 required a risk factor in

relation to the lack of arrangement in

terms of borrowings or working capital

requirements from banks or financial

institutions to be disclosed.

The risk factor has been deleted. -



however, it has been clarified that such

disclosure is to be made only for the

issuer, listed subsidiaries and top 5 listed

group companies by market

capitalization. The ICDR 2009 required

this to be disclosed for the issuer and

other listed companies under the same

management within the meaning of

section 370 (1B) of the Companies Act,

1956.

Clause (5) (G) (30)

Existence of a large number of pending

investor grievances against the issuer,

listed subsidiaries and top 5 listed group

companies by market capitalisation.

It has been clarified that such

disclosure is to be made only

for the issuer, listed

subsidiaries and top 5 listed

group companies by market

capitalization.

96. Offer Document

Summary

Clause (V)

The section on “Prominent Notes” has

been deleted. However, similar

disclosures have been covered under

various sections of the ICDR 2018 which

are stated below:

a. Net worth for the past three years (as

per the restated consolidated

Clause (4)

The section “Prominent Notes” has been

deleted and a new section, “Offer

Document Summary”, has been included

in the ICDR 2018 which requires the

issuer to set out a summary of the

following, additional information, as

applicable:

1. The new section "Offer

Document summary"

provides a summary of

the important information

for investors to take an

informed decision.

2. The ICDR 2009 required

the networth to be

disclosed before the issue

and issue size as per the



74

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Remarks

financial statements) and stub period

is required to be disclosed under

“Offer document summary”.

b. Cost of acquisition of share for

promoter and selling shareholder.

c. Business interest of group

companies in the issuer and the

amount of commercial business that

the said company has or proposed to

have with the issuer is required to be

disclosed under “Information with

respect to group companies”.

d. Summary of related party

transactions for last three years and

cross-reference to related party

transactions as disclosed in the

restated financial statements is

required to be disclosed under

“Offer document summary”.;

e. Details of change in name are

required to be disclosed in the offer

document and a cross reference to

the same is required to be disclosed

on the cover page.

f. Disclosure pertaining to financing

arrangements for purchase of

securities of the issuer for the period

of six months immediately

preceding the date of the draft offer

document/ offer document is

required to be disclosed under “offer

document summary”.

The following disclosure from prominent

notes has been deleted:

Disclosure to the effect that the investors

1. Primary business of the issuer and

the industry in which it operates, in

not more than 100 words each;

2. Names of the promoters;

3. Size of the issue disclosing

separately size of the fresh issue

and offer for sale;

4. Objects of the issue in a tabular

format;

5. Aggregate pre-issue shareholding

of the promoter and promoter

group, selling shareholder(s) as a

percentage of the paid-up share

capital of the issuer;

6. Following details as per the

restated consolidated financial

statements for past 3 years and

stub period in tabular format:

a. Share capital;

b. Net worth;

c. Revenue;

d. Profit after tax;

e. Earnings per share;

f. Net asset value per equity share;

and

g. Total borrowings (as per balance

sheet).

7. Auditor qualifications which have

not been given effect to in the

restated financial statements.

audited financial

statements. This has now

been broadened to

include networth for past

three years and the stub

period.


the cost per share to

promoters and book value

to be disclosed. This has

now been limited to the

average cost of

acquisition. Further, this

disclosure is now

required to be given for

the selling shareholder as

well.


that the related party

transactions with group

companies and

subsidiaries to be

disclosed for the last year.

This has now been

extended to include all

related party transactions

for the last three years.


a separate disclosure for

change in name of the

issuer, the reason for such

change alongwith any

corresponding changes to

the objects clause of the

memorandum of

association to be included

under prominent notes.



75

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Remarks

may contact any of the merchant bankers

who have submitted the due diligence

certificate to the Board, for any complaint

pertaining to the issue".

8. Summary table of outstanding

litigations and a cross-reference to

the section titled ‘Outstanding

Litigations and Material

Developments’.

9. Cross-reference to the section

titled ‘Risk Factors’.

10. Summary table of contingent

liabilities and a cross-reference to

contingent liabilities of the

issuer as disclosed in restated

financial statements.

11. Summary of related party

transactions for last 3 years and

cross-reference to related party

transactions as disclosed in

restated financial statements.

12. Details of all financing

arrangements whereby the

promoters, members of the

promoter group, the directors of

the company which is a promoter

of the issuer, the directors of the

issuer and their relatives have

financed the purchase by any other

person of securities of the issuer

other than in the normal course of

the business of the financing entity

during the period of six months

immediately preceding the date of

the draft offer document/offer

document.

This has deleted as the

same is already included

under “History and

corporate structure of the

issuer”.

6. Sub-section “Prominent

Notes” deleted and a new

section giving a summary

of the offer document has

been added.

7. Disclosure of cost of

acquisition for selling

shareholders is

mandatory now.

8. Now, in addition to the

cost of acquisition,

weighted average price at

which specified security

was acquired by each of

the promoters and selling

shareholders in the last

one year is also required

to be disclosed.



76

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Remarks

13. Weighted average price at which

specified security was acquired by

each of the promoters and selling

shareholders in the last one year.

14. Average cost of acquisition of

shares for promoter and selling

shareholders.

15. Size of the pre-IPO placement and

allottees, upon completion of the

placement

16. Any issuances of equity shares

made in the last one year for

consideration other than cash.

17. Any split/consolidation of equity

shares in the last one year.

97. Green Shoe Option Clause VI (C) (3)

The ICDR 2009 required the issuer to

disclose the period for which the issuer

proposes to avail of the stabilisation

mechanism.

Clause 7 (Q) (c)


disclose the maximum period for which

the issuer proposes to avail of the

stabilization mechanism and in case the

issuer proposes to close the stabilisation

mechanism prior to the maximum

period, a disclosure to that effect is

required to be made.

1. The provision has been

altered and provides

flexibility to an issuer to

close the stabilisation

earlier in the event it

believes that the price has

already stabilised and no

further intervention is

required.

98. Capital structure Clause (VI) (D)(o)(i)

The ICDR 2009 required the issuer to

disclose the ten largest shareholders as on

the date of registering the offer document

Clause 8 (B) (f) (i)


disclose the names of the shareholders of

the issuer holding 1% or more of the

1. To align it with the

requirements under the

SEBI LODR Regulations.

2. Disclosure of major

shareholders is on the basis



77

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Remarks

with the Registrar of Companies.

paid-up capital of the issuer as on the

date of filing of the draft offer

document/ or end of last week from the

date of draft letter of offer and the offer

document, as the case may be, provided

that details of shareholding aggregating

at least 80% of capital of company are

disclosed.

of persons holding 1% or

more of the paid-up capital

instead of top 10

shareholders.

99. There was no requirement of disclosure of

the exercise price under the ICDR 2009. Clause 8 (B) (p) (iv)


disclose the exercise price in relation to

options granted to employees in

pursuance of any employee stock option

scheme prior to the initial public offer,

which are outstanding at the time of the

initial public offer.


requires a disclosure of the

exercise price of the

options granted. The

disclosures in relation to

ESOPs aligned with the

applicable accounting

standards for ESOPs/

guidance note from ICAI.

100. Similar provision under the ICDR 2008.

However, options granted to senior

management personnel were required

instead of key managerial personnel.

Further, the intention of holders of equity

shares to sell equity shares which have

been allotted pursuant to exercise of

options within three months after listing

has now been limited to key managerial

personnel and whole-time directors only.

Clause 8 (B) (p) (x)


disclose the details of options granted

and shares issued to key managerial

personnel. The ICDR 2018 also requires

the issuer to disclose the intention of key

managerial personnel and whole time

directors to sell their equity shares

within three months after the date of

listing.

1. The disclosures in relation

to ESOPs aligned with the

applicable accounting

standards for ESOPs/

guidance note from ICAI.

101. Clause (VI) (D)(r)(xiii)

The ICDR 2009 required disclosure of the

weighted average exercise prices and

weighted average fair values of options

whose exercise price either equals or

- 1. The ICDR 2018 have

omitted the disclosure in

relation to weighted

average exercise prices and

weighted average fair

values of options whose



78

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Remarks

exceeds or is less than the market price of

the stock, which has now been deleted.

exercise price either equals

or exceeds or is less than

the market price of the

stock. The disclosures in

relation to ESOPs aligned

with the applicable

accounting standards for

ESOPs/ guidance note

from ICAI.

102. Business Strategy Clause VIII (B) (2)(b)

The issuer was required to disclose a brief

statement about future prospects under the

ICDR 2009.

- 1. The ICDR 2018 has

omitted this disclosure.

103. History and Certain

Corporate Structure of

the Issuer

Clause VIII (D) (1) (a)

Similar provision under the ICDR 2009.

Clause 10 (D) (1) (c)

Main objects as set out in the in the

memorandum of association of the

issuer and dates on which the

memorandum of association was

amended, citing the details of such

amendments for the last ten years.

1. Disclosure of amendments

in MOA has been

restricted to last 10 years

(as opposed to disclosure

of the same since

incorporation).

104. Clause VIII (D) (1) (G)

Similar provisions under the ICDR 2009.

Clause 10 (D) (1) (c)

Details regarding material acquisitions

or divestments of business /

undertakings, mergers, amalgamation,

any revaluation of assets etc., if any, in

the last ten years.

1. ICDR 2018 requires

disclosure of material

acquisitions or divestments

of business / undertakings,

mergers, amalgamation,

any revaluation of assets

etc., if any.

2. Aforesaid disclosure is

subject to time cap of last

ten years.

3. Disclosures related to

divestments were not



79

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Remarks

required under the ICDR

2009.

105. Clause (VIII)(D)(1)(c)and (3)

The ICDR 2009 required complete details

of the subsidiaries and holding company,

if applicable, to be disclosed.

Further, the following details of the

subsidiary of the issuer were required to

be disclosed.

(a) Name of the subsidiary;

(b) nature of business;

(c) capital structure;

(d) shareholding of the issuer;

(e) amount of accumulated profits or

losses of the subsidiary(ies) not accounted

for by the issuer;

Clause (10)(D)(3)

The following details of the joint

ventures in addition to the details of the

holding company,

subsidiary/subsidiaries are required to be

disclosed under the ICDR 2018 -

(a) Name of the holding

company/subsidiary/joint venture;

(b) nature of business;

(c) capital structure;

(d) shareholding of the issuer;

(e) amount of accumulated profits or

losses of the subsidiary(ies) not

accounted for by the issuer.

In addition to subsidiaries, the

details of joint ventures is also


106. Shareholders'

agreements and other

agreements

Clause VIII (D) (4)

Similar disclosure requirements under the

ICDR 2009.

Clause 10 (E) (b):


disclose key terms of shareholders’

agreements, agreements entered into by

key managerial personnel or director or

promoter or any other employee of the

issuer with any shareholder or third

party with regard to compensation or

profit sharing in connection with

dealings in the securities of the issuer,

guarantees given by promoter offering

its shares in the proposed offer for sale

and material agreements including with

strategic partners, joint venture partners

and/or financial partners, entered into,

other than in the ordinary course of

1. The ICDR 2009 did not

require disclosure of

agreements entered into by

a key managerial personnel

or director or promoter or

any other employee of the

issuer, either by

themselves or on behalf of

any other person, with any

shareholder or any other

third party with regard to




the issuer.

2. This disclosure




80

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Remarks

business of the issuer. inserted to align with the

requirements under SEBI

LODR Regulations, which

require board and

shareholders’ approval for

entering into such an

agreement.

3. This will impact the

arrangements typically

between Promoters and

Investors, wherein profits

or compensation are made

dependent on dealings in

the securities, which were

also generally being

disclosed under the section

‘History and Certain

Corporate Matters’.

4. If any such arrangement

persists on listing of

equity, then board and

shareholders’ approval

shall be obtained post

listing.

5. Agreements entered into

by a KMP with any

shareholder or any other

third party for




the issuer is categorized as

a material agreement,

which would now have to

be made available for

inspection.



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107. Clause (VIII)(D)(5)

The ICDR 2009 required the details of

every other material contract (not entered

into the ordinary course of business for

more than two years before the date of

filing the offer document) such as date,

parties and general nature to be

disclosed.

Clause (10)(E)(d)

ICDR 2018 requires the disclosure of

key terms of the subsisting material

agreements, in addition to the dates,

parties to and general nature of the

contract, entered into other than in the

ordinary course of business of the issuer,

including with strategic partners, joint

venture partners and/or financial

partners.

1. Details of all subsisting

material agreements (not in

the ordinary course of

business) will require to be

disclosed, instead of

agreements entered in two

years under ICDR 2009.

2. The disclosure on material

contracts should only be

restricted to the standard

practice of including

shareholder specific and/or

business rearrangement

agreements, including,

shareholders’ agreement,

short summary of share

purchase agreements, joint

venture agreement and

business transfer

agreements.

108. – Clause (10)(G)(j)

Brief details of material guarantees, if

any, given to third parties by the

promoters with respect to specified

securities of the issuer.

1. In addition to disclosure of

guarantees given by the

promoter selling

shareholders, the ICDR

2018 required disclosure of

details of material

guarantees given to third

parties by the promoters

with respect to specified

securities of the issuer

irrespective of whether the

promoters are selling

shares in the IPO.

109. Management Clause (VIII) (E) (4) (a) (ii)

Clause (10) (F) (d) (i)

1. The ICDR 2018 requires

the issuer to disclose the



82

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Remarks

Similar disclosures were required under

the ICDR 2009.

The ICDR 2018 requires disclosure of

the nature and extent of interest, if any,

of every director in the issuer, including

in any property acquired or proposed to

be acquired of the issuer or by the issuer

or in the promotion or formation of the

issuer.

interest of directors in

property acquired by the

issuer. The ICDR 2009 had

prescribed a period of two

years preceding the date of

the offer document in

relation to this disclosure

which has now been

deleted.

110. Clause VIII (E) (7)

Previously under ICDR 2009, a disclosure

stating that the statement of compliance

has been made in accordance with the

Listing Agreement was to be included.

Previously, the details such as names of

the members and the terms of reference of

the stakeholders’ relationship committee

and the risk management committee (if

applicable) were not required to be

disclosed in addition to the audit

committee and remuneration committee.

Clause 10 (F) (g)

A statement that the issuer has complied

with the requirements of corporate

governance relating to the composition

of its board of directors, constitution of

committees such as audit committee,

nomination and remuneration

committee, stakeholders relationship

committee, as provided under Securities

and Exchange Board of India (Listing


Requirements) Regulations, 2015

(“SEBI LODR Regulations”) is

required to be included.

The details of stakeholder’s relationship

committee and risk management

committee have to be mentioned

additionally along with the audit

committee and remuneration committee.

1. The names of the members

and the terms of reference

of the stakeholders’

relationship committee and

the risk management

committee are required to

be disclosed in addition to

the audit committee and

remuneration committee.

2. SEBI has now clarified

that details of only

committees as required

under the SEBI LODR

Regulations are required to

be disclosed. The practice

earlier, in some occasions,

was to extend the

disclosures to other board

of directors appointed

committees as well.

111. Promoters / principal

shareholders

Clause (F) (1) (a)

In addition to the other disclosures, the

voter id number of the Promoter was

required to be disclosed under the ICDR

Clause (G) (a) (i)

The following details in relation to the

promoter have to be disclosed under

ICDR 2018:

1. The ICDR 2018 has deleted

the disclosure in relation to

voter id number of the

Promoter.



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Remarks

2009.

i) Permanent Account Number;

ii) Aadhaar card number;

iii) Complete profile (including name,

date of birth, age, personal address,

educational qualifications,

experience in business, positions

held in past, directorship held, other

ventures of promoter, special

achievement, business and financial

activities);

iv) Photograph; and

vii) Driving license number.

112. Clause (F) (8)

The requirement to disclose the nature

and extent of interest of the promoters,

directors and group companies in any

property acquired by the issuer was

limited to the preceding two years under

the ICDR 2009.

Clause (G) (h)

The nature and extent of interest of the

promoters, directors and group

companies in any property acquired by

the issuer in the preceding three years is


2018.


increased the period for the

disclosure in relation to the

interest of the promoters,

directors and group

companies in any property

acquired by the issuer from

two to three years.

However, the section

Management does not

prescribe any time cap on

this disclosure vis-à-vis

directors.

113. The disclosure pertaining to the list of

promoter group individual and entities

was not required to be disclosed under the

ICDR 2009.

Clause (G) (k)

A list of all individuals and entities

forming part of the promoter group has

to be disclosed under the ICDR 2018.

1. In certain cases, where

such disclosure was not

included in the draft offer

document or the offer

document, it was included

in the SEBI cover letter

filed at the time of

submitting the draft offer

document with SEBI.

SEBI has now instructed



84

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that this information be

included in the draft offer

document and the offer

document itself.

114. Objects of the Issue - Clause 9 (A)(2)

If one of the objects of the issue is loan

repayment:

(a) details of loan proposed to be repaid

such as name of the lender, brief

terms and conditions and amount

outstanding;

(b) certificate from the statutory auditor

certifying the utilization of loan for

the purpose availed.

1. ICDR 2018 provide for a

new requirement for

disclosure of details of

loan proposed to be repaid

of issue proceeds.

2. Requirement of obtaining a

certificate is specified to be

from statutory auditors,

which earlier was obtained

from Independent CA.

115. Clause (VIII) (B)(6)(a)

In ICDR 2009, the names of the entities

from whom the land has been acquired/

proposed to be acquired along with the

cost of acquisition, relation, if any, of

such entities to any promoter or director

of the issuer was required to be disclosed.

Clause (9)(A)(6)

In ICDR 2018, a similar disclosure is

required in the event of proceeds from

the issue being utilized for the

acquisition of land.

1. ICDR 2018 provides for

disclosure regarding

acquisition of land if in

case the proceeds of the

issue are being utilized for

acquisition of land.

116. Clause (VIII)(B) (5)

ICDR 2009 required the following

disclosures in relation to the purchase of

property –

(a) In respect of any property referred to

in sub-clause (b):

i) the names, address, descriptions

and occupations of the vendors;

ii) the amount paid in cash, shares

Clause (9)(A)(8)

ICDR 2018 provides for similar line

items as included in ICDR 2009, except

for exceptions which are now deleted

under ICDR 2018.

1. Disclosure for all the

properties to be acquired

from issue proceeds shall

be disclosed in the offer

documents.



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Remarks

or debentures to the vendor

specifying the amount paid or

payable for goodwill;

iii) the nature of the title or interest

in property;

iv) details of the transaction

alongwith the relating to the

property completed within the

two preceding years;

(b) the property to which sub-clause (a)

is applicable to the property

purchased or acquired by the issuer

which is to be paid for wholly or

partly out of the proceeds of the issue

offered for subscription by the offer

document or the purchase or

acquisition of which has not been

completed at the date of issue of the

offer document other than property:

(i) the contract for the purchase or

acquisition whereof was entered into

in the ordinary course of the issuer’s

business, the contract not being made

in contemplation of the issue nor the

issue in consequence of the contract;

or

(ii) as respects which the amount of

the purchase money is not material.

a. for the purpose of this clause,

where a vendor is a firm, the

members of the firm shall not be

treated as separate vendors;

b. if the issuer proposes to acquire a

business which has been carried

on for less than three years, the



86

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length of time during which the

business has been carried.

117. Clause (IX)(B)(4) and (5)

The following criteria were applicable if

the proceeds of the issue of the shares or

debentures were to be applied in the

purchase of business and in the purchase

of any interest in any business –

(i) the profits or losses of the business of

each of the five financial years

immediately preceding the issue of the

offer document; and

(ii) the assets and liabilities of the

business at the last date to which the

accounts of the business were made up,

being a date not more than one hundred

and twenty days before the date of the

issue of the offer document.

Clause (11)(I)(B)(ii)

The ICDR 2018 modified the criteria for

the utilisation of issue proceeds for

acquisition of one or more material

businesses or entities as follows –

(i) audited balance sheets, profit and

loss, cash flow for the latest three

fiscals and stub period (if available)

prepared as per framework

applicable to the business or

subsidiary proposed to be acquired,

in the offer document.

(ii) the proposed acquisition (covering

all businesses or subsidiaries

proposed to be acquired) shall be

considered material if it will make

20% or more contribution in

aggregate to either turnover, or net

worth or profit before tax of the

issuer, on a consolidated basis, as

per the latest financial information.

-

118. Particulars of Issue Clause (VII)(L)

Tax Benefits: Any special tax benefits for

the issuer and its shareholders.

Clause (9)(L)

Any special tax benefits (under direct

and indirect tax laws) for the issuer and

its shareholders and its material

subsidiaries identified in accordance

with the Securities and Exchange Board

of India (Listing Obligations and

Disclosure Requirements) Regulations,

2015.

1. ICDR 2018 requires

inclusion of special tax

benefits to the material

subsidiaries in addition to

the issuer and its

shareholders.



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119. Clause (VII)(K)(1)

The ICDR 2009 required the disclosure in

relation to the basis for issue price, floor

price or price band.

Clause (9)(K)(1)

The ICDR 2018 now requires the

disclosure in relation to the basis for

issue price, floor price or price band on a

consolidated basis.

-

120. Dividend Policy Clause (H)

The precise disclosures related to

dividend were not provided under the

ICDR 2009.

Clause (H)

Details of the policy such as mode of

payment of dividend, dividend paid in

last three financial years and stub period

along with the dividend paid in the

period between the last audited period

and date of filing the draft offer

document / draft letter of offer and offer

document is required to be disclosed.

1. Under ICDR 2018,

dividends only for the last

three years and stub period

prior to the date of the

document are to be

disclosed.

121. Financial Statements

Clause (IX) (B) (1)

Financial statements for five years and

stub period (if applicable) had to be

disclosed under ICDR 2009.

Clause (11) (I) (A) (i)

Consolidated financial statements for

three years and stub period (if

applicable) have to be disclosed under

the ICDR 2018.

In accordance with Ind AS 34, complete

consolidated financial information shall

be provided for stub period but the

issuer is exempt from presenting

comparatives for the stub period but has

an option to present the comparatives for

the stub period as well.

1. SEBI has now stated clearly

that the determination is

done purely on the basis of

consolidated financial

statements. Earlier, there

was no clarity and,

conservatively, analysis

would happen on both

standalone and consolidated

basis.

2. The disclosure requirements

under ICDR 2018 in

relation to the financial

statements have been

limited to a period of three

years and stub period, if

applicable.



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122. Clause (IX) (B) (23)

The proforma financial statements under

ICDR 2009, were required to be prepared

if the total book value of the assets of the

acquired / divested entity amounted to

more than 20% of the pre – acquisition /

pre – divestment book value of the assets

or the total income of the acquired /

divested entity amounted to more than

20% of the pre – acquisition / pre –

divestment of the total income of the

company.

Clause (11) (I) (B) (iii)

The proforma financial statements are

required to be prepared under ICDR

2018, if the acquired / divested business

or subsidiary in aggregate contributes to

20% or more of turnover, networth or

profit before tax in the latest annual

consolidated financial statements of the

company.


changed the criteria for the

preparation of proforma

financial statements to now

include turnover, networth

or profit before tax in the

latest annual consolidated

financial statements of the

company.

2. SEBI has now stated clearly

that the determination is

done purely on the basis of

consolidated financial

statements. Earlier, there

was no clarity and,

conservatively, analysis

would happen on both

standalone and consolidated

basis.

3. Earlier, proforma test had to

be done on the basis of

acquisition or divestment

made after the end of the

latest annual financial

results, even if stub period

thereafter was being

included in the DRHP.

ICDR 2018 now applies the

test only if such acquisition

or divestment is done post

the financial statements

disclosed in the

DRHP/RHP.



89

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4. SEBI has now specifically

allowed companies to

voluntarily add pro forma

statements even where it

not triggered.

5. Further, in case of non-

material acquisitions /

divestments disclosures in

relation to the fact of the

acquisition / divestment,

consideration paid/received

and mode of financing shall

be certified by the statutory

auditor of the issuer

company.

6. The ICDR 2018 expressly

permits inclusion of

comparatives for stub

period also in the offer

document (on an optional

basis), thereby providing

the flexibility to include

discussion on the stub

period in the MD&A as

well.

123. Outstanding

Litigations and

Material Developments

The ICDR 2009 did not require a separate

disclosure in relation to penalty imposed

or action outstanding by SEBI or stock

exchanges against the promoters in the

last five financial years. However, the

disclosure of outstanding actions by SEBI

or stock exchanges was required to be

disclosed under actions by statutory or

regulatory authorities.

Clause (12) (A) (1) (iii)

The litigation involving issuer, director,

promoter, group companies,

subsidiaries.

The following litigation for the above

parties is required to be disclosed:

1. Earlier the disclosure

requirement was required

for issuer, its directors,

promoters, group

companies and

subsidiaries. ICDR 2018

has deleted the requirement

for group companies and

now litigation disclosure



90

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Remarks

a. Criminal proceedings;

b. All actions by regulatory and

statutory authorities;

c. Disciplinary actions including

penalty imposed by SEBI or stock

exchanges against the promoters in

the last five financial years;

d. Tax proceedings;

e. Other pending litigation as per the

materiality policy of the issuer.

for group companies is

restricted to outstanding

litigations which have a

material impact on the

issuer.


included an additional

disclosure in relation to the

disciplinary action

including the penalty

imposed or action

outstanding by SEBI or

stock exchanges against the

promoters in the last five

financial years. This

requirement was in the risk

factor section in the ICDR

2009, which did not

prescribe any time frame

and was required for issuer,

promoters, whole time

directors and group

companies.

124. Clause (X) (A) (2) (iii)

Similar disclosures were required under

ICDR 2009. However, only the

outstanding dues to the creditors were

required to be disclosed on the website of

the issuer.

Clause (12) (A) (2) (iii)

ICDR 2018 requires the following

details to be disclosed:

a. The consolidated number of

creditors and the aggregate amount

involved based on the materiality

policy of the issuer;

b. Outstanding dues to micro, small

and medium enterprises and other

creditors;

c. The complete details of the

1. The requirement to disclose

details of outstanding dues

on the website of the issuer

has been reduced to

outstanding overdues to

material creditors.

2. The disclosure requirement

in the offer documents is

for outstanding dues

whereas the disclosure

requirement on the website

is for outstanding overdues.



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Remarks

outstanding overdues to material

creditors alongwith the name and

amount involved with a link to the

website of the company.

125. Government Approvals Clause (X) (B)

All the government and other approvals

including the technical approvals were


2009.

Clause (12) (B) (2)

The government and other approvals

which are material for the company and

for its material subsidiaries are required

to be disclosed including investment

approvals, letters of intent or industrial

licenses, declarations from statutory or

regulatory authorities about the non-

responsibility of financial soundness or

correctness of the statements.

1. The scope of related to

government approvals has

now been reduced to

material approvals for the

company and only for its

material subsidiaries.

126. Information with

respect to the group

companies

Clause (IX) (C)

The financial information was required to

be given for every group company which

had become sick industrial company or

was under winding up or had negative

networth under ICDR 2009.

Clause (13)

Financial information of sick group

company, company under winding up or

company with negative networth is not

required to be disclosed under ICDR

2018.

-

127. Clause (IX) (C) (i)

ICDR 2009 required disclosure of the

highest and lowest market price of shares

of listed group companies, the change in

capital structure during the period and the

market value on the date of registering the

offer document with the Registrar of

Companies.

Clause (13) (A) (ix)

ICDR 2018 requires an issuer to disclose

only the highest and lowest market price

of shares during the preceding six

months for listed group companies.

-



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128. Clause (IX) (C) (j)

Under the ICDR 2009, if a group

company had made any public or rights

issue in preceding three years, the issue

price of the security, the current market

price, particulars of changes in the capital

structure, if any, since the date of issue

and a statement regarding the cost and

progress of implementation of the project

in comparison with the cost and

implementation schedule was required to

be disclosed.

Clause 13(A) (x)

The ICDR 2018 requires disclosure of

only the issue price of the security and

the current market price of the securities

of the listed group company who had

made public or rights issue.

1. The disclosure pertaining

to the particulars of

changes in the capital

structure since the date of

issue and a statement

regarding the cost and

progress of implementation

of the project in

comparison with the cost

and implementation

schedule is no longer

applicable.

129. Clause (IX) (C) (5)

Sales or purchases between the group

companies / subsidiaries / associate

companies exceeding 10% in aggregate of

the total sales or purchases of the

company was required to be disclosed.

There is no requirement under the ICDR

2018 to disclose the sales or purchases

between group companies / subsidiaries

/ associate companies exceeding in

aggregate 10% of the total sales or

purchases of the company.

-

130. Clause (X) (A) (1)

Litigations involving the group

companies were required to be disclosed

in the same manner as required in relation

to the issuer under ICDR 2009.

Clause (13) (D)

ICDR 2018 requires only the litigations

having material impact on the company

to be disclosed.

1. The requirement to

disclose litigation in

relation to group

companies has been

reduced to such litigation

which has a material

impact on the issuer.

131. Other Regulatory and

Statutory Disclosures

Clause (XI) (B)

The disclosure pertaining to prohibition

from accessing the capital markets or the

debarment from buying, selling or dealing

in securities under any order or direction

passed by the SEBI or any securities

market regulator in any other jurisdiction

Clause (14) (B)

The disclosure pertaining to prohibition

from accessing the capital markets or the

debarment from buying, selling or

dealing in securities under any order or

direction passed by the SEBI or any

securities market regulator in any other


extended the disclosure

pertaining to the

debarment of the

company, promoter,

promoter group, directors

and persons in control of

the company to selling



93

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Remarks

or any other authority/court was limited

only to the company, promoter, promoter

group, directors and persons in control of

the company.

jurisdiction or any other authority/court

of the company, promoter, promoter

group, directors and persons in control

of the company has now been extended

to selling shareholders as well.

shareholders as well.

132. The disclosure with respect to Companies

(Significant Beneficial Ownership) Rules,

2018 was not required to be included.

Clause (14)(C)

The disclosure pertaining to the

compliance by the promoters, promoters

group or selling shareholders with the

Companies (Significant Beneficial

Ownership) Rules, 2018 is required to

be included.

1. In ICDR 2009, the

disclosure with respect to

Companies (Significant

Beneficial Ownership)

Rules, 2018 was not


However the same has

been added in ICDR 2018.

2. It may be noted that in

terms of Rule 8 of the SBO

Rules, the said rules do not

apply to the holding of

shares of companies/body

corporates, in case of

pooled investment

vehicles/investment funds

such as Mutual Funds,

Alterative Investment

Funds (AIFs), Real Estate

Investment Trusts (REITs)

and Infrastructure

Investment Trusts (InvITs)

regulated under SEBI Act.

Therefore, these rules may

not apply to every selling

shareholder.

133. Clause (XI) (C)

The confirmation with respect to the

association of the directors with the

Clause (14) (D)


association of the directors with the

1. In the ICDR 2018, the

confirmation with respect

to the association of the

directors with the



94

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securities market business and

outstanding action initiated against them

was not limited to any time period.

securities market business and

outstanding action initiated against them

by SEBI has now been restricted to five

years.

securities market business

and outstanding action

initiated against them by

SEBI has now been

restricted to five years.

134. Clause (XI) (E)

The confirmation pertaining to wilful

defaulters by the issuer, promoters, group

companies, the relatives of promoters and

group companies was required to be

provided.


wilful defaulter is not required under this

chapter.

1. The confirmation with

respect to the wilful

defaulter is not required to

be given under ICDR 2018

in this chapter. However,

the same still remains to be

an eligibility requirement

under regulation 5 of the

ICDR 2018.

135. Clause (XI) (L)

The address of Registrar of Companies

and SEBI were required to be disclosed

The disclosure pertaining to the address

of the Registrar of Companies and of

SEBI is not required to be provided.


to the address of the

Registrar of Companies

and SEBI where the offer

document is registered has

been excluded under the

ICDR 2018.

136. Clause (XI) (K)

Previously, the disclaimer clause of only

Reserve Bank of India and Insurance and

Regulatory Development Authority of

India was required to be disclosed.

Clause (14) (J)

The ICDR 2018 requires the disclaimer

clause of Reserve Bank of India and

Insurance and Regulatory Development

Authority of India and other relevant

regulatory authority to be disclosed.

-

137. Clause (XI) (H)

The disclosure in relation the caution was


The disclosure requirement of caution

has been removed.

-



95

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Remarks

138. Clause (XI) (Q)

For previous public or rights issue (during

last five years), the said disclosure had to

be included.

Clause (14) (N)

The disclosure pertaining to the amount

paid or payable by premium, date and

proposed dates of issue and shares have

been or are to be issued at a premium

and other shares of the same class at a

lower premium, or at par or at a

discount, the reasons for the

differentiation and how any premiums

received have been or are to be disposed

of for the previous public or rights issue

is not required to be disclosed.

1. In the ICDR 2018, the

disclosure pertaining to the

amount paid or payable by

premium, date and

proposed dates of issue and

shares have been or are to

be issued at a premium and

other shares of the same

class at a lower premium,

or at par or at a discount,

the reasons for the

differentiation and how

any premiums received

have been or are to be

disposed of for the

previous public or rights

issue is not required to be

disclosed.

139. Clause (XI) (Q)

Similar disclosure was required under

ICDR 2009, however, no period was

prescribed.

Clause 14 (O)

The disclosure in relation to the

commission or brokerage on previous

issues has been restricted to five years

under ICDR 2018.

1. The ICDR 2018 restricts

the disclosure for

commission and brokerage

on previous issued to five

years.

140. There was no such format prescribed for

disclosing the past price issues handled by

lead managers.

Clause 14 (R)

The format for the past price issues

handled by the lead managers has been

provided.

1. The ICDR 2018 provides a

format for the past price

issues handled by the lead

managers.

141. Clause (XI) (U)

The list of public / rights issues made by

Clause (14) (Q)

The time period for the list of public /

1. The time period for listing

of public / rights issues is

limited to five years and



96

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Remarks

the company during ten years was

required to be disclosed. Additionally,

disclosure pertaining to the objects

mentioned in last three issues were met

was required to be given.

rights issues is limited to five years and

the disclosure with respect to the objects

mentioned in the offer document of last

three issues is not required to be

disclosed.

the disclosure with respect

to the objects mentioned in

the offer document of last

three issues is not required

to be disclosed under the

ICDR 2018. Under ICDR

2018, promise v.

performance disclosures is

not required for listed

group companies and listed

associates.

142. Clause (XI) (V)

The disclosure with respect to the

outstanding debentures or bonds and

redeemable preference shares and other

instruments issued by the company

outstanding as on the date of offer

document and terms of issue was required

to be included.

The disclosure pertaining to the

outstanding debentures or bonds and

redeemable preference shares and other

instruments issued by the issuer

outstanding as on the date of offer

document and terms of issue is not



to the outstanding

debentures or bonds and

redeemable preference

shares and other

instruments issued by the

issuer outstanding as on

the date of offer document

and terms of issue is not

required to be included in

the ICDR 2018.

143. Offering Information Clause (XII) (B) (2)

ICDR 2009 had the option to subscribe to

the securities in physical and demat form.

However, this requirement was

inapplicable in accordance with the

Companies Act.

Clause (15) (B) (2)

The ICDR 2018 clarifies that the

disclosure pertaining to the option to

subscribe in the issue only in

dematerialized form in terms of

Companies Act is required to be

included.

-

144. Clause (XII) (B) (4)

The escrow mechanism under ICDR 2009

was through the escrow account of the

Clause (15) (B) (3)

Under ICDR 2018, the escrow

mechanism is restricted to only the

-



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Remarks

company and the syndicate member.

However, all applications except anchor

investors are required to make through

ASBA mechanism.

escrow account of the company, for

subscription by anchor investors.

145. Clause (XII) (B) (15)

The payment instructions for payment

into escrow account of the syndicate

members under the ICDR 2009 is no

longer applicable.

Clause (15) (B) (14)

The payment mechanism under ICDR

2018, is now restricted through the

escrow account of the company and

through ASBA.

-

146. Clause XII (B) (18)

The ICDR 2009 required a disclosure

pertaining to the application form

containing space for indicating number of

specified securities in demat and physical

form.

-

1. This instruction


deleted under the ICDR

2018.


The ICDR 2009 contained instructions

with respect to separate applications for

demat and physical shares and the

applications for physical shares were

treated as multiple shares.

- 1. This instruction


deleted under the ICDR

2018.


The instructions with respect to partial

allotment in demat option and balance, if

any, in physical form has been deleted.

- -


Clause (15) (B) (28)

1. The disclosure was

restricted only to non –



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Remarks

The disclosure in relation to the foreign

ownership was required only for non –

resident Indians and foreign portfolio

investors under ICDR 2009.

The restrictions on foreign ownership of

Indian securities now require disclosure

with respect to other non-residents, in

addition to non – resident Indians and

foreign portfolio investors.

resident Indians and

foreign portfolio investors




99

ANNEX B

Comparison of the index/ format of ICDR 2018 with the provisions of the ICDR 2009

Serial Number Particulars Page Number Places where these particulars appear in the SEBI

(ICDR) 2009

I Regulations

1 Chapter I - Preliminary 1 Chapter I - Preliminary

2 Chapter II - Initial Public Offer on Main Board 8

2.1 Part I: Eligibility Requirements 8 Chapter III – Provisions as to Public Issue

Part I – Eligibility Requirements

2.2 Part II: Issue of Convertible Debt Instruments and Warrants 11 Chapter II – Common conditions for Public Issues and

Rights Issues

2.3 Part III: Promoters’ Contribution 12 Chapter III – Provisions as to Public Issue

Part III – Promoters’ Contribution

2.4 Part IV: Lock-in and Restrictions on Transferability 14

Chapter III – Provisions as to Public Issue

Part IV – Restriction on Transferability (Lock-in) of

Promoters’ Contribution, etc.

2.5 Part V: Appointment of Lead Managers, other

Intermediaries and Compliance Officer 16

Chapter II – Common conditions for Public Issues and

Rights Issues

2.6 Part VI: Disclosures in and Filing of Offer Documents 17 Chapter V – Manner of Disclosures in the Offer Documents

2.7 Part VII - Pricing 19 Chapter III – Provisions as to Public Issue

Part II – Pricing in Public Issue

2.8 Part VIII: Issuance Conditions and Procedure 20 Chapter III – Provisions as to Public Issue

Part V – Minimum Offer to Public, Reservations, etc.

2.9 Part IX: Miscellaneous 26


Rights Issues

&



3 Chapter III - Rights Issue 28

3.1 Part I: Eligibility Requirements 28 Chapter II – Common conditions for Public Issues and

Rights Issues


Rights Issues



100


(ICDR) 2009

3.3 Part III: Record Date 31 Chapter IV – Rights Issue

3.4 Part IV – Appointment of Lead Managers, other



Rights Issues

3.5 Part V: Disclosures in and Filing of Letters of Offer 32 Chapter V – Manner of Disclosures in the Offer Documents

3.6 Part VI: Pricing 33 Chapter IV – Rights Issue

3.7 Part VII: Issuance Conditions and Procedure 34


Rights Issues

&

Chapter IV – Rights Issue

3.8 Part VIII: Miscellaneous 39 Chapter II – Common conditions for Public Issues and

Rights Issues

3.9 Part IX: Fast Track Rights Issue 39 Chapter II – Common conditions for Public Issues and

Rights Issues

4 CHAPTER IV - FURTHER PUBLIC OFFER 41

4.1 Part I: Eligibility Requirements 41


Rights Issues &




Rights Issues










Rights Issues

4.6 Part VI: Disclosures in and Filing of Offer Documents 48 Chapter V – Manner of Disclosures in the Offer Documents



4.8 Part VIII: Issuance Conditions and Procedure 51 Chapter III – Provisions as to Public Issue


4.9 Part IX: Miscellaneous 57 Chapter II – Common conditions for Public Issues and

Rights Issues

4.10 Part X: Fast Track Further Public Offer 59 Chapter II – Common conditions for Public Issues and

Rights Issues



101


(ICDR) 2009

5 Chapter V – Preferential Issue 61

5.1 Part I: Issuers ineligible to make a Preferential Issue 62 Chapter VII – Preferential Issue

5.2 Part II: Conditions for Preferential Issue 63 Chapter VII – Preferential Issue

5.3 Part III: Disclosures to Shareholders 64 Chapter VII – Preferential Issue

5.4 Part IV: Pricing 64 Chapter VII – Preferential Issue

5.5 Part V: Lock-in and Restrictions on Transferability 66 Chapter VII – Preferential Issue

5.6 Part VI: Consideration and Allotment 67 Chapter VII – Preferential Issue

6 Chapter VI – Qualified Institutions Placement 69

6.1 Part I: Conditions for Qualified Institutions Placement 69 Chapter VIII – Qualified Institutions Placement

6.2 Part II: Appointment of Lead Managers 70 Chapter VIII – Qualified Institutions Placement

6.3 Part III: Placement Document 70 Chapter VIII – Qualified Institutions Placement

6.4 Part IV: Pricing 71 Chapter VIII – Qualified Institutions Placement

6.5 Part V: Tenure of Convertible Securities 71 Chapter VIII – Qualified Institutions Placement

6.6 Part VI: Transferability 71 Chapter VIII – Qualified Institutions Placement

6.7 Part VII: Application and Allotment 72 Chapter VIII – Qualified Institutions Placement

7 Chapter VII - Initial Public Offer of Indian Depository

Receipts 72

7.1 Part I: Eligibility Requirements 72 Chapter X – Issue of Indian Depository Receipts

7.2 Part II: Appointment of Lead Managers, other

Intermediaries and Compliance Officer 73 Chapter X – Issue of Indian Depository Receipts

7.3 Part IV: Disclosures in and Filing of Offer Documents 74 Chapter X – Issue of Indian Depository Receipts

7.4 Part V - Pricing 75 Chapter III – Provisions as to Public Issue


7.5 Part VI: Issuance Conditions and Procedure 76


Rights Issues

&

Chapter X – Issue of Indian Depository Receipts

8 Chapter VIII - Rights Issue of Indian Depository

Receipts 81 Chapter XA of Indian Depository Receipts

9 Chapter IX - Initial Public Offer by Small and Medium

Enterprises 84

9.1 Part I: Eligibility Requirements 84 Chapter III – Provisions as to Public Issue



102


(ICDR) 2009


&

Chapter XB – Issue of Specified Securities by Small and

Medium Enterprises


Rights Issues










Rights Issues

9.6 Part VI: Disclosures in and Filing of Offer Documents 91

Chapter V – Manner of Disclosures in the Offer Documents

&


Medium Enterprises



9.8 Part VIII: Issuance Conditions and Procedure 93



&


Medium Enterprises

9.9 Part IX: Miscellaneous 100


Rights Issues

&



10 Chapter X - Institutional Trading Platform 102

10.1 Part I: Applicability 102 Chapter XC – Listing on Institutional Trading Platform

10.2 Part II: Listing without a Public Issue 102 Chapter XC – Listing on Institutional Trading Platform

10.3 Part III: Listing pursuant to an Initial Public Offer 103 Chapter XC – Listing on Institutional Trading Platform

10.4 Part IV: General Conditions 104 Chapter XC – Listing on Institutional Trading Platform

11 Chapter XI - Bonus Issue 105 Chapter IX – Bonus Issue



103


(ICDR) 2009

12 Chapter XII - Miscellaneous 106 Chapter XII - Miscellaneous

II Schedules

1 Schedule I – Lead Managers’ Inter-se Allocation of

Responsibilities 107 Schedule I - Inter-se Allocation of Responsibilities

2 Schedule II - Contents of Agreement between Lead

Manager(s) and Issuer 108

Schedule II - Format of Agreement between Lead

Merchant Bankers to the Issue and Issuer/Issuing

Company

3 Schedule III - Fees to be paid along with Draft Offer

Document/ Draft Letter of Offer or Offer Document 110 Schedule IV - Fees to be paid along with Offer Document

4 Schedule IV – Filing of Offer Documents with the Board 111 Not Present

5 Schedule V - Formats of Due Diligence Certificates 112 Schedule VI- Formats Of Due Diligence Certificates

5.1

Form A - Format of due diligence certificate to be given by

the lead manager(s) along with draft offer document or draft

letter of offer

112 Form A - Format of Due Diligence Certificate to be given by

Merchant Banker along with Draft Offer Document

5.2 Form B - Format of due diligence certificate to be given by

the debenture trustee along with draft offer document 114

Form B - Format of Due Diligence Certificate to be given by

Debenture Trustee along with Draft Offer Document

5.3

Form C - Format of due diligence certificate to be given by

the lead manager(s) at the time of registering offer

document/filing letter of offer

115

Form C - Format of Due Diligence Certificate to be given

by Merchant Banker at the time of registering Offer

Document with the Registrar of Companies/filing Letter of

Offer with the Designated Stock Exchange

5.4

Form D - Format of due diligence certificate to be given by

the lead manager(s) in the event of disclosure of material

events after the filing of the offer document

116 Not Present

5.5.

Form E - Additional confirmations/ certification to be given

by the lead manager(s) in the due diligence certificate to be

given along with the offer document/ letter of offer for a fast

track issue

116

Form F - Additional Confirmations/ Certification to be given

by Merchant Banker in Due Diligence Certificate to be

given along with Offer Document for Fast Track Issue

5.6 Form F - Format of due diligence certificate to be given by

the lead manager(s) along with the final post-issue report 117

Form G - Format of Due Diligence Certificate to be given by

Merchant Banker along with Final Post Issue Report



104


(ICDR) 2009

5.7

Form G - Additional confirmations/ certification to be given

by the lead manager(s) in due diligence certificate to be

given along with offer document regarding issues on the

SME exchanges

117

Form H - Additional Confirmations/Certification to be given

by Merchant Banker in Due Diligence Certificate to be

given along with Offer Document regarding SME Exchange

5.8 Form H - Format of the due diligence certificate to be filed

by the lead manager for IDR issues 118

Schedule XIX - Disclosures in Prospectus and Abridged

Prospectus for Issue of Indian Depository Receipts - Part

C - Format of the due diligence certificate to be filed by the

lead manager for IDR issues

6 Schedule VI - Disclosures in the Offer Document,

Abridged Prospectus and Abridged Letter of Offer 120

Schedule VIII - Disclosures in Offer Document,

Abridged Prospectus and Abridged Letter of Offer

6.1 Part A – Disclosures in offer document/letter of offer 120 Part A - Disclosures in Red Herring Prospectus, Shelf

Prospectus and Prospectus

6.1.1 Cover pages 120

Part A – Cover pages 6.1.1.1 Front cover pages 120

6.1.1.2 Back cover pages 122

6.1.2 Table of Contents 122 Part A – Table of Contents

6.1.3 Definitions and abbreviations 122 Part A –Definitions and Abbreviations

6.1.4 Offer Document Summary 122 Part A – Prominent Notes

6.1.5 Risk Factors 123 Part A –Risk Factors

6.1.6 Introduction 125 Part A –Introduction

6.1.7 General information 125 Part A – Introduction - General Information

6.1.8 Capital Structure 127 Part A – Introduction -Capital Structure

6.1.9 Particulars of the issue 131 Part A –Particulars of the Issue

6.1.10 About the Issuer 136 Part A – About the Issuer

6.1.10.1 Industry Overview 136



105


(ICDR) 2009

6.1.10.2 Business Overview 136

6.1.10.3 Key Industry-Regulations (is applicable) 137

6.1.10.4 History and Corporate Structure of the issuer 137

6.1.10.5 Shareholders’ agreements and other agreements 137

6.1.10.6 Management 138

6.1.10.7 Promoters/principal shareholders 140

6.1.10.8 Dividend policy 142

6.1.11 Financial Statements 142 Part A – Financial Statements

6.1.11.1

Requirements in case Indian Accounting Standards (Ind AS)

is applicable in the latest period presented in Restated

Financial Information

142 Not Present

6.1.11.2 Requirements in case Indian GAAP is applicable in the

latest period presented in Restated Financial Information 147 Not Present

6.1.11.3 Financial Information of the Issuer in further public offers 152

Financial Statements – Financial Information of the Issuer -

Alternative Financial Information of the issuer in further

public offers

6.1.12 Legal and Other Information 154

Part A – Legal and Other Information 6.1.12.1 Outstanding Litigations and Material Developments 154

6.1.12.2 Government approvals 155

6.1.13 Information with respect to group companies 155 Dispersed

6.1.14 Other Regulatory and Statutory Disclosures 156 Part A –Other Regulatory and Statutory Disclosures

6.1.15 Offering Information 160

Part A –Offering Information 6.1.15.1 Terms of the Issue 160

6.1.15.2 Issue Procedure 161

6.1.16 Any other material disclosures, as deemed necessary 166 Part A – Any other material disclosures, as deemed

necessary

6.1.17 In case of a fast track issue, the disclosures specified in this

Part, which have been indicated in Part B, need not be made 166

Part A – In case of a fast track issue, the disclosures

specified in this Part, which have been indicated in Part B,

need not be made



106


(ICDR) 2009

6.1.18 Other Information 166 Part A –Other Information

6.2 Part B - Disclosures in a letter of offer 166 Part E –Disclosures in letter of Offer

6.2.1 Cover Pages 167

Part E – Cover Pages

6.2.2 Back cover pages 168

6.2.3 Table of contents 168 Part E –Table of Contents

6.2.4 Definitions and abbreviations 168 Part E –Definitions and Abbreviations

6.2.5 Letter of offer summary 169 Part E – Prominent Notes

6.2.6 Risk factors 169 Part E –Risk Factors

6.2.7 Introduction 170

Part E –Introduction 6.2.7.1 Summary 170

6.2.7.2 General Information 170

6.2.7.3 Capital Structure 171

6.2.8 Particulars of the Issue 171 Part E –Particulars of the Issue

6.2.9 History and Corporate Structure of the issuer 175 Part E –History and Corporate Structure about the Issuer

6.2.10 Management (Board of Directors) 175 Part E –Management (Board of Directors)

6.2.11 Financial Information of the issuer 176 Part E –Financial Information of the Issuer

6.2.12 A statement to the effect that the price has been arrived at in

consultation between the issuer and the lead manager(s) 177

Part E – A statement to the effect that the price has been

arrived at in consultation between the issuer and the

Merchant banker

6.2.13 Disclosures pertaining to wilful defaulters 177 Not Present

6.2.14 Outstanding Litigations and Defaults 178 Part E –Outstanding Litigations and Defaults



107


(ICDR) 2009

6.2.15 Government Approvals or Licensing Arrangements 178 Part E – Government Approvals or Licensing Arrangements

6.2.16 Material Developments 178 Part E –Material Developments

6.2.17 Other Regulatory and Statutory Disclosures 178 Part E – Other Regulatory and Statutory Disclosures

6.2.18 Offering Information 180 Part E – Offering Information

6.2.19 Undertakings by the issuer in connection with the issue 181 Part E – Undertakings by the issuer in connection with the

issue

6.2.20 Utilization of Issue Proceeds 182 Part E – Utilization of Issue Proceeds

6.2.21 Restrictions on foreign ownership of Indian securities, if any 182 Part E –Restrictions on foreign ownership of Indian

securities, if any

6.2.22 Statement regarding minimum subscription clause 183 Part E –Statement regarding minimum subscription clause

6.2.23 Statutory and other information 183 Part E –Statutory and other information

6.2.24 Any other material disclosures, as deemed necessary 183 Part E –Any other material disclosures, as deemed necessary

6.2.25 Declaration 183 Part E –Declaration

6.3 Part C - Certain disclosures not mandatory in case of a

further public offer 183

Part C - Certain disclosures not mandatory in case of a

further public offer

6.4 Part D - Certain disclosures not mandatory in case of a fast

track public issue 184

Part E - Certain disclosures not mandatory in case of a fast

track public issue

6.5 Part E - Disclosures in an abridged prospectus 184 Part D - Disclosures in an abridged prospectus

6.6 Part F - Disclosures in an abridged letter of offer 193 Part F - Disclosures in an abridged letter of offer

7 Schedule VII - Disclosures in a Placement Document 193 Schedule XVIII - Disclosures in Placement Document

8 Schedule VIII - Disclosures in Offer Document and 195 Schedule XIX - Disclosures in Prospectus and Abridged



108


(ICDR) 2009

Abridged Prospectus and Letter of Offer for Issue of

Indian Depository Receipts

Prospectus for Issue of Indian Depository Receipts

8.1 Part A - Disclosures in offer document for issue of Indian

depository receipts 195

Part A - Disclosures in Prospectus for Issue of Indian

Depository Receipts

8.1.1 General instructions with respect to contents of the offer

document 195

Part A - General instructions with respect to contents of the

Prospectus

8.1.2 The issue 196 Part A -The issue

8.1.3 Forward-looking statements 196 Part A -Forward-looking statements

8.1.4 General Information 196 Part A - General Information

8.1.5 Risk Factors 197 Part A - Risk Factors and Management Perception, if any

8.1.6 Recent Developments 198 Part A - Recent Developments

8.1.7

Exchange-wise market price information and other

information concerning the shares in the domestic market of

the issuing company

198

Part A -Market price information and other information

concerning the shares in the domestic market of the issuing

company

8.1.8 Dividends 198 Part A - Dividends

8.1.9 Exchange rates 198 Part A - Exchange rates

8.1.10 Foreign investment and exchange controls of the country of

incorporation/where the shares are listed 198

Part A - Foreign investment and exchange controls of the

country of incorporation/where the shares are listed

8.1.11 Objects of the issue/use of proceeds 198 Part A - Objects of the issue/use of proceeds

8.1.12 Interim use of funds 199 Part A - Interim use of funds

8.1.13 Capitalization statement 199 Part A - Capitalization statement

8.1.14 Capital Structure 199 Part A - Capital Structure



109


(ICDR) 2009

8.1.15 Financial information 199 Part A - Financial information

8.1.16

Statement on material developments subsequent to the date

of the last financial statements as disclosed in the offer

document

201

Part A -Statement on material developments subsequent to

the date of the last financial statements as disclosed in the

Prospectus

8.1.17

Management discussion and analysis of the financial

statements (by comparing the recent financial year with the

previous three financial years)

201

Part A - Management discussion and analysis of the

financial statements (by comparing the recent financial year

with the previous three financial years)

8.1.18 Industry and business overview 202 Part A - Industry and business overview

8.1.19 Details of the issuing company 202 Part A - Details of the issuing company

8.1.20 Subsidiaries and associates of the issuing company 202 Part A - Subsidiaries and associates of the issuing company

8.1.21 Management 202 Part A - Management

8.1.22 Securities market of the country of incorporation where the

shares are listed 203

Part A - Securities market of the country of incorporation

where the shares are listed

8.1.23 Description of the IDR and rights of IDR holders 203 Part A - Description of the IDR and rights of IDR holders

8.1.24 Provisions regarding transfer of shares and depository

receipts 203

Part A - Provisions regarding transfer of shares and

depository receipts

8.1.25 Information relating to the depository - Indian and

international 203

Part A - Information relating to the depository - Indian and

international

8.1.26 Approvals of the government/regulatory authorities 203 Part A - Approvals of the government/regulatory authorities

8.1.27 Taxation framework in India and the country of

incorporation/ where shares are listed 204

Part A - Taxation framework in India and the country of

incorporation/ where shares are listed

8.1.28 Outstanding litigations and defaults 204 Part A - Outstanding litigations and defaults



110


(ICDR) 2009

8.1.29 Basis of issue price 204 Part A - Basis of issue price

8.1.30 Main provisions of articles of association/main charter of

the issuing company 204

Part A - Main provisions of articles of association/main

charter of the issuing company

8.1.31 Material contracts and documents for inspection 204 Part A - Material contracts and documents for inspection

8.1.32 Other information 205 Part A - Other information

8.2 Part B - Disclosures in an abridged prospectus for Indian

depository receipts 205

Part B - Disclosures in an abridged prospectus for issue of

Indian depository receipts

8.2.1 General Information 205 Part B - General Information

8.2.2 Capital Structure of the Issuing Company 206 Part B - Capital Structure of the Issuing Company

8.2.3 Terms of the Present Issue 206 Part B - Terms of the Present Issue

8.2.4 Instructions for Applicants 206 Part B - Instructions for Applicants

8.2.5 Particulars of the Issue 207 Part B -

8.2.6 Description of the IDRs and Rights of IDR Holders 207 Part B -

8.2.7 Business Model/ Business Overview and Strategy 207 Not Present

8.2.8 Exchange-wise stock market data 207 Part B – Company, Management and Project

8.2.9 Internal Risk Factors 207 Not Present

8.2.10 Outstanding Material Litigations and Defaults 207 Part B - Outstanding Material Litigations and Defaults

8.2.11 Material Developments 208 Part B - Material Development

8.2.12 Board of Directors 208 Part B – Company, Management and Project

8.2.13 Financial Performance of the Issuing company for the last 208 Part B – Financial Performance of the Issuing company for



111


(ICDR) 2009

three years the last three years

8.2.14 Disclosure on Investor Grievances and Redressal System 208 Part B – Disclosure on Investor Grievances and Redressal

System

8.2.15 Information relating to relevant provisions of taxation law,

tax treaties and their impact for IDR holders 208

Part B – Information relating to relevant provisions of

Taxation law, Tax Treaties and their impact for IDR holders

8.2.16 Brief details of the domestic depository, overseas custodian

bank and depository agreement 208

Part B – Brief details of the Domestic Depository, Overseas

Custodian Bank and Depository Agreement

8.2.17 Signatories to the Prospectus 208 Part B – Signatories to the Prospectus

8.3 Part C - Disclosures in the addendum to an offer document

for rights issue of Indian depository receipts 208

Schedule XXI – Part A - Disclosures in the addendum to an

offer document for rights issue of Indian depository receipts

8.3.1 Cover page 208 Part A - Cover page

8.3.2 Instructions for applicants 209 Part A - Instructions for applicants

8.3.3 General information 210 Part A - General information

8.3.4 Management (Board of Directors) 211 Part A - Management (Board of Directors)

8.3.5 Financial information of the issuer 211 Part A - Financial information of the issuer

8.3.6 Risk factors 211 Part A - Risk factors and Management Perception, if any

8.3.7 Capital structure 212 Part A - Capital Structure

8.3.8 Particulars of the issue 212 Part A - Particulars of the Issue

8.3.9 Market price information and other information concerning

the shares/ IDRs 212

Part A - Market price information and other information

concerning the shares/ IDRs

8.3.10 Exchange rates 213 Part A - Exchange Rates



112


(ICDR) 2009

8.3.11 Material litigations and defaults 213 Part A - Material Litigations and Defaults

8.3.12 Material development 213 Part A - Material Development

8.3.13 Material contracts and documents for inspection 213 Part A - Material Contracts and Documents for Inspection

8.3.14 Other regulatory and statutory disclosures 213 Part A - Other Regulatory and Statutory Disclosures

8.3.15 Undertakings by the issuer in connection with the issue 215 Part A - Undertakings by the issuer in connection with the

issue

8.3.16 Utilisation of issue proceeds 215 Part A - Utilisation of Issue Proceeds

8.3.17 Restrictions on foreign ownership of Indian securities, if any 215 Part A - Restrictions on foreign ownership of Indian

securities, if any

8.3.18 Any other material disclosures 215 Part A - Any other material disclosures

8.3.19 Declaration 215 Part A - Declaration

8.4 Part D - Disclosures in an abridged letter of offer for rights

issue of Indian depository receipts 216

Part B - Disclosures in an abridged letter of offer for rights

issue of Indian depository receipts

8.4.1 Instructions for applicants 216 Part B - Instructions for applicants

8.4.2 General information 216 Part B - General Information

8.4.3 Capital structure of the issuing company 217 Part B - Capital Structure of the issuing company

8.4.4 Terms of the present Issue 217 Part B - Terms of the Present Issue

8.4.5 Particulars of the issue 217 Part B - Particulars of the Issue

8.4.6 Company, management and project 217 Part B - Company, Management and Project

8.4.7 Outstanding material litigations and defaults 218 Part B - Outstanding Material Litigations and Defaults (in a

summarized tabular form)



113


(ICDR) 2009

8.4.8 Material development 218 Part B - Material Development

8.4.9 Time and Place of Inspection of material contracts 218 Part B - Time and Place of Inspection of material contracts

8.4.10

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

218

Part B - 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

8.4.11 Disclosure on Investor Grievances and Redressal System 218 Part B - Disclosure on Investor Grievances and Redressal

System

8.4.12 Brief details of the Domestic Depository, Overseas

Custodian Bank and Depository Agreement 218

Part B - Brief details of the Domestic Depository, Overseas

Custodian Bank and Depository Agreement

8.4.13 Signatories to the Letter of offer 218 Part B - Signatories to the Letter of offer

9 Schedule IX – Public Communications and Publicity

Materials 218 Not Present

10 Schedule X - Formats of Advertisements for a Public

Issue 221

Schedule XIII - Formats of Advertisements for a Public

Issue

10.1 Part A - Format of pre-issue advertisement for a public issue 221 Part A - Format of pre-issue advertisement for a public issue

(Fixed price/ Book built)

10.2 Part B - Format of issue opening advertisement for a public

issue 223

Part B - Format of issue opening advertisement for a public

issue (Fixed price/ Book built)

10.3 Part C - Format of issue closing advertisement for a public

issue 225

Part C - Format of issue closing advertisement for a public

issue (Fixed price/ Book built)

10.4 Part D - Format of billboards and banners 226 Not Present

10.5 Part E - Compliance certificate in respect of news reports 227 Part D - Compliance certificate in respect of news reports



114


(ICDR) 2009

11 Schedule XI - Format of Report to be submitted by the

Monitoring Agency 228

Schedule IX - Format of Report to be submitted by

Monitoring Agency

12 Schedule XII – Mandatory Collection Centres 231 Schedule III – Mandatory Collection Centres

13 Schedule XIII - Book Building Process 231 Schedule XI - Book Building Process

13.1 Part A – Book building process 231 Part A

13.1.1 Lead Manager(s) 231 Part A – Lead Book Runner

13.1.2 Syndicate Member(s) 231 Part A – Syndicate Members

13.1.3 Underwriting 231 Part A – Underwriting

13.1.4 Agreement with the stock exchanges 231 Part A – Agreement with the stock exchange

13.1.5 Appointment of stock brokers as bidding/collection centres 232 Part A – Appointment of stock brokers as bidding/collection

centres

13.1.6 Price not to be disclosed in the draft red herring prospectus 232 Part A – Price not to be disclosed in the draft red herring

prospectus

13.1.7 Floor price and price band 232 Part A – Floor Price and Price Band

13.1.8

The manner and contents of the bid-cum-application form

and revision form (accompanied with abridged prospectus)

shall be as specified by the Board

233

The manner and contents of Application-cum-Bidding Form

and Revision Application-cum-Bidding Form (accompanied

with abridged prospectus) shall be as specified by the Board

through Circular.]

13.1.9 Extension of issue period 233 Part A – Floor Price and Price Band

13.1.10 Anchor Investors 233 Part A – Anchor investors

13.1.11 Margin money 235 Part A – Margin Money

13.1.12 Bidding process 235 Part A – Bidding process



115


(ICDR) 2009

13.1.13 Determination of price 236 Part A – Determination of price

13.1.14 Registering of prospectus with the Registrar of Companies 236 Part A – Registering of prospectus with the Registrar of

Companies

13.1.15 Manner of allotment/ allocation 236 Part A – Manner of Allotment/ Allocation

13.1.16 Maintenance of records 236 Part A – Maintenance of Books and Records

13.1.17 Applicability to Fast Track Issues 236 Part A – Applicability to fast track issues

13.2 Part B - Format of bid data displayed on stock exchange 236 Part B - Format of bid data displayed on stock exchange

13.2.1 Details of Allocation to the Anchor Investors 236 Part B – Details of Allocation to the Anchor Investors

13.2.2 Details of Allocation to Investors other than Anchor

Investors 237

Details of Allocation to Investors Part B – other than Anchor

Investors

13.3 Part C - Illustration regarding allotment to qualified

institutional buyers other than anchor investors 237

Part C - Illustration regarding allotment to qualified

institutional buyers other than anchor investors

13.3.1 Issue Details 237 Part C - Issue Details

13.3.2 Details of QIB Bids 238 Part C - Details of QIB Bids

13.3.3 Details of Allotment to QIB Bidders/Applicants 238 Part C - Details of Allotment to QIB Bidders/Applicants

13.4 Part D - Alternate method of book building 239 Part D - Alternate method of book building

14 Schedule XIV - Illustration explaining the procedure of

Allotment 240

Schedule XV - Illustration explaining procedure of

Allotment

14.1 Part A - Illustration explaining the procedure of allotment 240 Schedule XV – A. - Illustration explaining procedure of

allotment

14.2 Part B - Illustration explaining minimum application size 242 Schedule XIV - Illustration explaining minimum



116


(ICDR) 2009

application size

15 Schedule XV - Format of Report for Green Shoe Option 242 Schedule XII - Format of Report for Green Shoe Option

16 Schedule XVI - Nature of changes in the Offer

Document requiring filing of updated Offer Document 243

Schedule XVI - Nature of updation/changes in the Offer

Document and consequent steps therein requiring filing

of updated Offer Document

16.1 Changes which require fresh filing of the draft offer

document with the Board, along with fees 243

Changes which require fresh filing of the draft offer

document with the Board, along with fees

16.2 Changes which require filing of the updated offer document

with the Board, along with fees 243

Changes which require filing of the updated offer document

with the Board, along with fees

16.3 Changes which require filing of the updated offer document

with the Board, without fees 244

Changes which require filing of the updated offer document

with the Board, without fees

17 Schedule XVII - Formats of Post-Issue Reports 244 Schedule XVI - Formats of Post-Issue Reports

17.1 Part A - Format of final post-issue report for a public issue 244 Part C - Format of final post-issue report for a public issue

17.1.1 In case of a subscribed Issue 244 Part C - In case of subscribed Issue

17.1.2 In case of under subscribed Issue 245 Part C - In case of under subscribed Issue

17.2 Part B - Format of initial post-issue report for a rights issue 246 Part B - Format of initial post-issue report for a rights issue

17.3 Part C - Format of final post-issue report for a rights issue 247 Part D - Format of final post-issue report for a rights issue

17.3.1 In case of a subscribed Issue 247 Part D - In case of subscribed Issue

17.3.2 In case of under-subscribed Issue 248 Part D - In case of under subscribed Issue

18 Schedule XVIII - Format of Underwriting Devolvement

Statement 249

Schedule XVIII - Format of Underwriting Devolvement

Statement

19 Schedule XIX - Listing of Securities on Stock Exchanges 249 Chapter XI - Listing of Securities on Stock Exchanges



117


(ICDR) 2009

20 Schedule XX - Conditions/ manner of providing exit

opportunity to Dissenting Shareholders 250

Chapter VI-A – Conditions and manner of providing exit

opportunity to Dissenting Shareholders



118

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119

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