Chapter IV: Issue of

Equity Shares

Primary Market

Rationale for Issue of Equity SharesOrganic Growth

Working Capital

Mergers & Take-Over

Financial Restructuring

Exit Route for VCs

Improving Debt-Equity Ratio

Banks meeting Capital Adequacy

Benefits of Issue of Shares

Liquidity

Evaluation of Securities

Enabling Future Funding

Higher Reputation

Better valuation of Shares

Take-Over of Companies

Demerits of Issue of SharesHuge Issue Expenses

Huge Administrative Expenses

Severe Regulation

Volatile Stock Market

Annual Listing Fee

Public Issue of Equity Shares 1.Appointment of a Merchant Banker

-Advisory Service

-Preparation of Basic Documents

-Appointment of other Merchant Bankers

-Preparation of Other Documents : MOU and Due Diligence Certificate

-Preparation and Filing of Final Prospectus

-Allocation of Responsibilities

Public Issue of Equity Shares… 2.Application to a Stock Exchange

3.Agreement with Depositories

4.Appointment of Underwriters

5.Appointment of Registrar to the Issue: Functions of Registrar

6.Appointment of Bankers

7.Appointment of Brokers

8.Appointment of Advertising Agencies: Statutory & Non-Statutory

9.Issue of Shares………..

Issue of Shares Filing Prospectus with SEBI, Registrar of

Companies and Stock Exchanges

Convening Press Conference or Investors’ Meet

Despatch of Application Forms

Opening of Subscription List

Closure of Subscription List

Allotment of Shares

Listing of Shares

Rights Issue of Equity Shares

Appointment of Merchant Bankers

Appointment of a Lead Manager

Appointment of Underwriters

Appointment of Registrar to the Issue

Application for Listing

Agreement with Depositories

Actual Issue

Listing of Shares

Book-BuildingA process undertaken by which a demand

for the securities proposed to be issued by a body corporate is elicited and built up and the price for such securities is assessed for the determination of the quantum of such securities to be issued by means of a notice, circular, advertisement, document or information memoranda or offer document.

-SEBI (Disclosure & Investor Protection) Guidelines 2000

Features of Book-BuildingQuantity Assessment

Price Discovery

A Series of Documents at Different Stages to Invite the Investors

QIB Portion and Public Issue Portion

Lead Book-Running Manager

Rationale for Book-Building

Institutional Investors

Legal Compulsion : Issue Exceeding 5 times the pre-issue networth

Irrelevant Quantum of Finance

Shorter Process of Issue

Financial IntermediariesMerchant Banker as Lead Book-

Runner

Co-Book Runners

Syndicate Members

Registrar to the Issue

Bankers to the Issue

Merchant Banker As Book Runner Facilitating Appointment of Other Book Runners Facilitating Appointment of Syndicate Members Circulation of Information Memorandum Gathering the Input through IM Filing Red Herring Prospectus with SEBI along

with IM Facilitating Appointment of other Fis Filing Due Diligence Certificate with SEBI Determination of Price Band Opening & Closure of Subscription List Allotment of Shares Getting the Shares Listed Filing Final Prospectus

Functions of Syndicate Members

Facilitating Quantity Assessment

Underwriting

Collection of Bid-cum-Application Forms

Functions of Registrar to the Issue

Appointment of Bankers

Printing & Supply of Forms

Allotment

Other Procedure

Issue Procedure

A. Quantity Assessment Stage

B. Pre-Issue Stage

C. Actual Issue Stage

D. Allotment Stage

Quantity Assessment Stage

Appointment of Financial Intermediaries

Preparation of Information Memorandum

Sending Information Memorandum

Determination of Quantity & Price-Band

Underwriting

Pre-Issue StageAppointment of Other Financial Intermediaries

Application to Stock Exchange

Preparation of Draft Red Herring Prospectus

Filing Documents with SEBI

Informing the Registrar of Companies

Agreement with Depositories

Appointment of an Ad Agency

Filing Final Red-Herring Prospectus

Despatch of Application Forms

Opening Escrow Accounts

Actual Issue StageOpening the

Subscription List

Receipt of Application cum Bid Forms

Uploading the

Information

Closure of Subscription

List

Allotment Stage

Determining the Cut-Off Price

Actual Allotment

Crediting Demat Accounts

Listing the Shares

Filing Final Prospectus

Merits of Book-BuildingRealisation of a High Price

Quick Issue Process

Fast Availability of Funds

Lesser Issue Expenses

Quick Update

Lack of Uncertainty

Quick Allotment

Opportunity for Revision

Quick Listing of Shares

Less Administrative Cost

Preference by Institutional Investors

Up-to-date Information

Demerits of Book-BuildingSuitable for Mega Issues Well Developed Market

Manipulation of Price

Unfair Allotment Concentrated Holding

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