Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
Retail Investors
Companies Act, 1956 Securities and Exchange Board of India Act, 1992 SEBI (Disclosures and Investor Protection) Guidelines , 2000 ( DIP Guidelines ) Securities Contracts (Regulation) Act, 1956 Listing Agreements with the Stock Exchanges The Depositories Act, 1996 Foreign Exchange Management Act, 1999 ( FEMA )
Rs. 3 Crores (Net Tangible Assets) in last 3 years Rs. 1 Crore (Net Worth) in last 3 years Distributable profits for 3 years in last 5 years In case of change of name, 50% revenues from activity suggested by new name Aggregate of all issues in one financial year not to exceed 5 times issuer s pre issue net worth
institutions/scheduled commercial banks of which 10% comes from appraisers AND 10 Crores minimum post issue face value capital; OR 2 years of compulsory market making post issue
Pricing
Free pricing of shares Issuer company free to fix face value of the shares
Issue of shares or of convertible securities by a company to a select group of persons under Section 81(IA) of the Companies Act, 1956. Conditions of preferential issue (Chapter XIII of DIP Guidelines) Pricing as per the DIP guidelines Continuous listing (Minimum public shareholding) Existing shares of proposed allottee(s) in demat form Lock in of pre-preferential allotment shareholding No sale and transfer any equity shares for past 6 months Non-transferability of instruments Allotment must be completed within 15 days
Issue of shares or of convertible securities by a company to Qualified Institutional Buyers ( QIBs ) (Chapter XIIIA of DIP Guidelines) Eligibility: Equity shares listed for one year preceding the date of notice to shareholders Minimum public shareholding to be maintained Note: No placement to QIB who is promoter or related to promoter Pricing as per the DIP guidelines Non applicability of Chapter XIII of DIP guidelines
Conditions: Minimum Number of allottees: 2, where the issue size is less than or equal to Rs. 250 Crores 5, where the issue size is greater than Rs. 250 Crores No single allottee shall be allotted more than 50% of the issue size. Transfer restriction for 1 year (except on a stock exchange) Minimum 10% allotment to mutual funds
Credit rating required Debenture trustee must be appointed Debentures not to be issued for acquisition of shares or providing loan to any company belonging to the same group. (Not to apply to FCDs converting within 18 months) Company to create Debenture Redemption Reserve ( DRR ) Debentures to be redeemed as per offer document Offer document to specify the assets on which security is created and ranking of the charge Premium amount and time of conversion to be determined by issuer company and disclosed Interest rate on debentures to be freely determined by issuer company
SEBI (Substantial Acquisition of Shares and Takeovers) Regulations 1997 (Takeover Code) SEBI (Prohibition of Insider Trading) Regulations 1992 SEBI (Bankers to an Issue) Regulations, 1994 SEBI (Merchant Bankers) Regulations, 1992 SEBI (Underwriters) Regulations, 1993 SEBI (Registrars to an Issue and Share Transfer Agents)Regulations, 1993 SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003
Bonds
Foreign Currency Convertible Bonds ( FCCBs ) Foreign Currency Exchangeable Bonds ( FCEBs ) Euro Bonds
Note: Indian companies listing overseas must either before or simultaneously list on the Indian stock exchanges
Companies Act, 1956 SEBI DIP Guidelines Issue of Foreign Currency Convertible Bonds and Ordinary
Shares (Through Depository Receipt Mechanism) Scheme 1993 ( FCCB Scheme ) Issue of Foreign Currency Exchangeable Bonds Scheme,2008 Foreign Exchange Management Act, 1999 ( FEMA ) Foreign Exchange Management (Transfer or Issue of any Foreign Security) Regulations, 2004 External Commercial Borrowing Policy ( ECB Policy ) Foreign Direct Investment Policy ( FDI Policy )
DRs represent shares of an Indian company trading on a foreign stock exchange The DR holders are part of foreign holding in a company but unlike FDI, investors in DRs do not enjoy voting rights DRs of most Indian companies experienced a sharp fall due to market meltdown. However, recently the DRs have recovered and trading turnovers have improved. DRs have become popular because of two-way fungibility No prior approval of SEBI, RBI or government is required for issue of DRs No restrictions on the use of proceeds except investment in real estate and the stock markets
Foreign currency convertible bonds are debt instruments which are convertible into equity of the company at a later point of time Both FDI and ECB policies are applicable Coupon rate must not exceed 300 basis points over SBI PLR RBI approval required for companies other than companies who can access ECB under automatic route and for all companies raising more than US$ 500 million Restriction on use of proceeds US$ 20 million can be raised for rupee expenditure Proceeds to be parked abroad till required in India Preferred by companies for raising funds for overseas expansions and acquisitions
FCEB Scheme was notified on February 15, 2008 A security offered by an issuing company and subscribed
to by investors living outside India and exchangeable into equity shares of another company, which is called the offered company. The issuing company must be a part of the promoter group and must hold the equity shares being offered at the time of issuing FCEBs. The offered company has to be a listed company, which is engaged in a sector eligible to receive FDI and eligible for ECB.
RBI is still considering the instrument No guidelines for FCEBs issued by RBI yet RBI is unsure how FCEBs would work within existing
framework of ECB Policy Lack of transparency regarding use of the funds according to RBI Issues on monitoring of the FDI cap on companies when bonds raised by one company gets converted into equity of another company.
NASDAQ
Listing is expensive 3 Indian companies listed
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Int r st Rat rp rat R s lts Gl bal apital Mark t Sc nari F r ign F nds Infl w Str ngt /W akness f t e L cal rrency
GDP growth in India: 2007-08 8.7% GDP growth forecast for India: 2008-09
IMF 7.9%
CMIE 9.5%
CMIE 5.5%
RBI comfort level (Feb 08)
5%
Money supply in the economy as on March 03, 2008 Bank Lending Rates (2007-08) 12.75% to 13.25%
Rs. 39,98,887 Crores Representing a Y on Y increase of 21% Total foreign funds inflow in 2006-07 : US$ 29.1 billion Total foreign funds inflow is 2007-08 (till Feb 08) : US$ 56.4 billion
Interest Rates
Exchange Rate Rs./$ Year Rs./$ 2006-07 45.28 2007-08 Qtr 1 41.25 Qtr 2 40.54 Qtr 3 39.47 Qtr 4 39.83 39.95 2008-09 (Week ending Apr 18)
RBI purchased US$ 75.4 billion from currency market in 2007-08 till Feb 08
Although there are negative factors like the gloomy global markets, pressure on the export market due to rupee appreciation, rising inflation rate on one hand, on the other hand India has a strong growth story Lets hope good times are ahead!