ASSIGNMENT 02

Initial Public Offerings Process

Initial Public Offer (IPO) is a process by which an unlisted Company can get listed on the stock exchange by offering its securities to public in the primary market. The objective of an IPO may be connected to expansion of existing activities of the firm or setting up of new projects or any other object which may be specified by the Company in its offer prospectus.
The Initial Public Offer Process

The IPO process consists of the following steps:

Appointment of merchant banker and other intermediaries Registration of offer document with SEBI Marketing and promotion of the issue Post- issue activities

Appointment of merchant banker and other intermediaries When any company wishes to go for public offerings, its 1st step is to choose an investment bank which can advise the company and also perform underwriting functions related to an issue of offering. The selection of an investment banker depends upon the bankers reputation and expertise in research coverage in the companys specific industry. Often , the selection involves two way affairs, reputed investment banker choose its clients carefully as like a company choose its investment banker. A merchant banker should be a valid registration to be appointed as a banker of the company. A merchant banker can be lead manager, co- manager, advisor for the issue or underwriter.
Other Intermediaries Registrar to the Issue:

To take the responsibility as a registrar and transfer agent for share, its must have to be registered with SEBI. It provides an administrative support to the initial issue process. The registrar helps the lead manager in selection of Banker to an issue and collection centre for preparing application forms and allotment, collection of share application and allotment money ,listing of issues and criticism handling.

Name Divya Ranjan

Roll no - 302414

Bankers to the Issue:

Any bank which is registered with SEBI can be appointed as the banker for the issue .The function of the banker includes collection of application money, maintenance of daily report and forwarding the money collected to the registrar.
Underwriters to the Issue Broker To the Issue: Any recognized member of an stock exchange can be a broker for the issue. Registration Of The Offer Document

For registration of the offer, first of all 10 copies of the draft prospectus have to be filed with SEBI. The prospectus filed is treated as a public document. At the same time, the Lead manager files the document with all listed stock exchanges. Any changes to be made in the prospectus should be completed within 21 days of filing the offer .Thereafter the draft prospectus is deemed to have been cleared by SEBI.
Promoters Contribution:

In the IPO of an unlisted company ,the promoters of the company should not contribute less than the 20% of the post issue capital. as given in Chapter- IV of the SEBI Act, 1992.All the contribution have to be made before the opening of the issue.
Lock-in Requirement The promoters contribution will be locked for a period of three years. The lock in period starts from the allotment date or date from the commencement of commercial production, whichever is less. Marketing of the Issue

Advertisement campaigns Timing of the Issue Reservation of the Issue Retail distribution

Advertisement campaigns can be done with the help ads in the televisions, ads on internet sites and ads in the newspaper.

Name Divya Ranjan

Roll no - 302414

Timing of the Issue Decision regarding the timing of the issue should be in respect of the market situation .If market is crashing then the issue should be postponed and vice versa.IPO is to be issued with keeping in mind the sentiments of the investors in the market.

Reservation of the Issue

Sometimes reservations are customized to a specific group of investors. This decreases the amount which is to be issued to general public .For reservation following are the group of investors: Financial institutions and Oversees Corporate Bodies Mutual Funds FII (Foreign Direct Investment) Employees of the company Group Shareholders

The offer made to the public should not be less then the 25 percentage of the total IPO

Post-Issue Activities
Principles of Allotment

After the completion of the subscription, the merchant banker has to inform within three days of the closure, whether 90 percentage of the total amount has been issued or not. In case of oversubscribed, shares should be allotted on the pro rata basis and excess money should be refunded back.
Formalities Associated With Listing

The rules and regulations listed by Sebi for issue of IPO and issuing company has to follow these .These rules are implemented by SEBI to protect the of an investors. The issuing company should disclose each and every details about the company in the prospectus of the

Name Divya Ranjan

Roll no - 302414

company. It should disclose P&L A/C .balance sheet, information regarding right issue and bonus issue and any other relevant information.

Name Divya Ranjan

Roll no - 302414