10-04-2017, 08:16 PM
PORTFOLIO MANAGEMENT
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1) SEBI Guidelines for the Primary & Secondary Market:
The Securities and Exchange Board of India was established on April 12, 1992 in accordance with the provisions of the Securities and Exchange Board of India Act, 1992. The Preamble of the Securities and Exchange Board of India describes the basic functions of the Securities and Exchange Board of India as
"..to protect the interests of investors in securities and to promote the development of, and to regulate the securities market and for matters connected therewith or incidental thereto"
PRIMARY MARKET:
Not all company's can issue shares to the public. SEBI has provided a list of requirements that need to be met by a company if they wish to go public. A company that wishes to go public needs to meet all of the below mentioned criteria:
a) Entry Norms I or EN I:
1. Net Tangible assets of atleast Rs. 3 crores for 3 full years
2. Distributable profits in atleast 3 years
3. Net worth of atleast 1 crore in 3 years
4. If there was a change in name, atleast 50% of the revenue in the preceeding year should be from the new activity
5. The issue size should not exceed 5 times the pre-issue networth of the company
To provide sufficient flexibility and also to ensure that genuine companies do not suffer on account of rigidity of the above mentioned rules, SEBI has provided 2 alternate routes to company's that do not satisfy the criteria for accessing the primary market. They are as follows:
Entry Norms II or EN II:
1. Issue shall be only through the book building route with atleast 50% allotted mandatorily to Qualified Institutional Buyers (QIBs)
2. The minimum post issue face value capital shall be Rs. 10 crores or there shall be a compulsory market-making for atleast 2 years
b) Entry Norms II or EN II:
1. The "Project" is appraised and participated to the extent of 15% by FI's/Scheduled Commercial Banks of which atleast 10% comes from the appraiser(s).
2. The minimum post issue face value capital shall be Rs. 10 crores or there shall be a compulsory market-making for atleast 2 years
3. In addition to the above mentioned 2 points, the company shall also satisfy the criteria of having atleast 1000 prospective allotees in future.
c) Promoters contribution in any issue shall be in accordance with the
Following provisions as on
(i) The date of filing red herring prospectus (in case of a book built issue)
or prospectus (in case of a fixed price issue) with ROC or letter of offer
with Designated Stock Exchange, as the case may be, in case of a fast
track issue; and
(ii) The date of filing draft offer document with the Board, in any other
Case.)
4.1 Promoters Contribution in a Public Issue by Unlisted Companies
4.1.1 In a public issue by an unlisted company, the promoters shall
contribute not less than 20% of the post issue capital.
d) An issuer company proposing to issue capital through book building
shall comply with the following:
A) 75% Book Building Process
11.2 In an issue of securities to the public through a prospectus the option
for 75% book building shall be available to the issuer company subject
to several conditions.
d) Disclosures:
1. Disclaimer to the effect that the Memorandum relates to an issue
made to Qualified Institutional Buyers under Chapter XIIA and that
no offer is being made to the public or any other class of investors.
2. Glossary of Terms/Abbreviations
3. [Financial Statements Contained Herein]
4. Merchant Bankers/Managers to the placement and other advisors
5. Summary of the Offering and Instrument
6. Risk Factors
7. Market Price Information
8. Use of proceeds
9. Capitalization Statement
10. Dividends
11. Selected Financial and Other Information
12. Management s Discussion and Analysis of Financial Condition and
Results of Operations
13. Industry Description
14. Business Description
15. Organizational Structure and Major Shareholders
16. Board of Directors and Senior Management
17. Taxation Aspects relating to the Instrument
18. Legal Proceedings
19. Accountants
20. General Information
21. Such Other information as is appropriate to enable the investor to make an
informed decision.)
Other guidelines relate to Allocation of shares & Market Intermediaries.