What are SEBI guidelines for public issue?

The Securities and Exchange Board of India (SEBI) is the most important department which regulates securities markets in India. SEBI is a regulatory body known worldwide. It has the ability to impose fines on someone who has violated guidelines. Now, let us understand what is public issue/ offering. When a company issues securities to new investor's making them a part of companies share group it is known as Public Issue. If you have watched Shark Tank India you will understand how companies get funding by proving their equity to shareholders. Well, selling equity and buying shares is not that easy. There are certain rules a company has to follow that is stated by SEBI. I will share SEBI guidelines for public issue for listed companies. Check out the top quality real estate projects listed on NoBroker

What are SEBI public issues for listed companies?

1. In case an organisation has changed its name in the last one year, then at least 50% of  its revenue should come from the activities functioning under the new name of the organisation.
2. The size of the issue should not be bigger than five times the pre-issue net with as per the company's audited balance sheet of the last fiscal year.

General SEBI guidelines:

1. Directors, promoters, and other KMPs must be associated with any other company in a similar role.
2. Directors, promoters and other members who have control of the company must be debarred from accessing the primary market.
3. The application to the list of company's shares should be filed with a recognised stock exchange in India.
4. The organisation must not get into legal contracts with a depository.
5. The equity shares that are partly paid-up must be fully paid up.
6. 50% of the Board of directors can be independent investors.
7. Directors or promoters must not be guilty of the economic offence.
8. The promoters or the company directors should not be wilful defaulters.
9. The issuer of a company should disclose the number of shares to SEBI by the time of issue of specified securities.
10. A company has to submit a draft offer document to the regional office of SEBI, in case a company wants to go for a public issue of more than 100 crore.

  There are many guidelines for IPO. But the one I have explained I feel is important. I will explain the other guidelines later. I hope you find my answer on SEBI guidelines for public issue informative. Read more: Investing In REITS Other Than IPO Listing? What is REIT? How to invest in REIT in India

My uncle has a thriving business. One day he told my father that he wanted to take it to the next level by offering shares to the public. But he was not sure of the guidelines of SEBI for the same. So, he asked my father to help him out. 

My father told him that the Securities and Exchange Board of India (SEBI) has established guidelines for companies issuing shares to the public in order to ensure transparency, investor protection, and fair market practices. 

What are the SEBI guidelines for issue of shares to the public?

Here are the key SEBI guidelines for the issue of shares to the public:

• Initial Public Offering (IPO):

  Companies planning to go public must comply with SEBI's guidelines for IPOs. These guidelines require the company to prepare a prospectus containing all the relevant information about the company, its financials, risk factors, and proposed use of funds. 

• Disclosures and Investor Protection:

  This includes disclosing financial statements, future prospects, risks involved, and any other material information that may affect investment decisions. Companies are also required to follow corporate governance practices and appoint independent directors to safeguard the interests of minority shareholders.

• Minimum Public Shareholding:

  As per the guidelines, companies must have a minimum public shareholding of 25%. This ensures that a reasonable portion of the company's shares is available for trading in the open market, promoting liquidity and transparency.

• Book Building Process:

  Under this process, the company and its underwriters determine a price range within which investors can bid for shares. The final price is determined based on the demand and supply dynamics of the shares.

• Timely Disclosures and Reporting:

  This includes submitting quarterly financial results, annual reports, and promptly informing the stock exchanges about any material developments or events that could impact the company's share price.

• Prohibition of Insider Trading:

  Companies must establish robust systems to prevent insider trading and ensure that all employees and related parties are aware of their obligations and comply with insider trading regulations.

Finally my father told my uncle that complying with these SEBI guidelines for public issue of shares, companies issuing shares to the public can maintain market integrity, protect investor interests, and foster a transparent and efficient capital market ecosystem in India. 

I hope I was able to help you understand the guidelines of SEBI.

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On June 11, 1992, SEBI guidelines on public issued that must be followed by businesses issuing capital in order to ensure adequate disclosure by businesses and safeguard investors' interests.

What are the guidelines of SEBI for issue of shares?

• Every application must be filed to SEBI in the format specified.

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• Applications must be submitted with authentic copies of the industrial licence.

• The project's cost and financing plan should be provided.

• The company should issue shares to the general public and list those shares on one or more reputable stock markets.

• The value of equity capital, privately subscribed capital held by promoters and their friends, and the total issued equity capital must equal at least 15% where the issue of equity share capital involves a first-time offer for subscription by the public.

• There is a permissible equity-preference ratio of 3:1.

• Project capital costs should follow established standards and have an acceptable debt-to-equity ratio.

• Shares of a new company cannot be issued at a premium. Preference share dividends must fall within the permitted list.

• Shares cannot be distributed to NRIs without RBI clearance.

I hope now you have understood the SEBI guidelines on public issue. I hope this helps:)

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The SEBI guidelines for listing of securities

are as follows:

The guidelines for a public issue are outlined in the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 (ICDR Regulations).

1. The issuer company must maintain a track record of profitability, net worth, and compliance with applicable laws, before making a public issue.

1. Issuers should appoint merchant bankers, registrar to the issue, and other professionals who will assist in the issue process.

2. A detailed prospectus must be prepared. It includes information about the issuer, the issue, the financials, and filed with SEBI for its approval.

3. There are guidelines regarding the minimum subscription as well as the basis for allotting securities in case of oversubscription.

4. Issuers should apply for securities’ listing on recognized stock exchanges.

5. There are rules regarding the minimum contribution of promoters.

6. Promoters of shareholders are also subject to lock-in requirements.

7. Issuers should make timely disclosures to the stock exchanges and the public after the issue about financial results, material events, and any changes in shareholding.

This is all about

SEBI guidelines for issue of securities

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