Tuesday, February 23, 2016

PREFERENTIAL ISSUE PROCEDURE TO BE FOLLOWED BY LISTED COMPANIES


PREFERENTIAL ISSUE PROCEDURE TO BE FOLLOWED BY LISTED COMPANIES
Acts & Regulations to be complied with
·        SECTION 62 OF THE COMPANIES ACT 2013
·        Insider Trading Regulations – regulation 13
·        Takeover Regulations -7(1), 7(1A), 7(3) persons acting in concert, etc.
·        Listing Agreement -24(a), 36(7), 22(a)
·        SEBI DIP Guidelines – Preferential Issue Guidelines.
Complaints to be satisfied

Ø 10% of the PRICE shall be payable at the time of allotment of warrants. This amt will be forfeited if the option to acquire shares is not exercised.
Ø Option to convert Warrants and other financial Instruments should be exercised within 18 months of date of issue of security.
Ø Instruments allotted on preferential basis to promoter / promoter group shall be subject to lock in of 3Yrs. However only 20% of the total capital of the company including capital brought in by way of preferential issue shall be locked in for 3 Yrs and remaining shall be locked into a period of 1 year.
Ø Instrument should be allotted within 15 days of EGM Resolution .in case not allotted within 15 days then fresh EGM should be called and resolution should be passed.
Ø In case any allottee holds any shares in the company prior to Preferential Issue then that holding should be Demat form
Ø Entire pre preferential holding if any of the allottee shall be locked in for a period of 6 months.
Ø Securities allotted on preferential basis to persons other than promoter shall be locked in for a period of one year from the date of issue of security.
Before Board Meeting to consider Preferential Issue

·         Intimate  to all the stock exchanges at least 7 days in advance of the board meeting to consider Preferential Issue – CRD dept
·        Apply to the stock exchange for Pricing Certificate for last six months and last two weeks prior to relevant date
·        Get the Application letter and consent letter prepared and obtain the same from the proposed allottees before the board meeting to consider the Preferential issue i.e. on / before ……...
·         After obtaining the consent from the proposed allottees ,write a letter to CDSL and NSDL requesting to issue confirmation letter for Locking In Entire Pre Preferential Holding of the proposed allottees if any
·        In case proposed allottees holds any shares in the company prior to preferential issue the same should be held by them in Demat form so in case of any physical holders get the shares dematerialized
·        NSDL and CDSL will write a letter to the company asking us to submit the corporate Action form for Lock In of shares, within 2-3 days of receipt of the letter prepare Corporate Action form for lock in of shares along with necessary annexures and send the same to NSDL, CDSL and a copy of it to In time. Company can write a letter to NSDL and CDSL before Board Meeting i.e.  saying that company is proposing  the preferential Issue and asking for the formalities for Lock in of Entire Pre Preferential Holding
·        Dispatch notices and agenda to all the directors in writing.
·        Hold the Board meeting and the get the Bonus Issue and increase in authorised capital if required approved by the Board.

Post Board Meeting

Formalities  to be followed on the same day

·        Within Fifteen minutes of the board meeting fax the proceedings of Board Meeting to stock exchange about outcome of the board meeting as regards to decision of the board to issue shares on preferential basis, notice of EGM and increase in authorised share capital. Also information under clause 36(7)(i) and clause 22(a) should be faxed within 15 minutes .

Formalities on the Next Day of the Board Meeting

·        Next day forward the proceedings of the board meeting to the exchange as well as well send the same to NSDL, CDSL and R& T Agents .( Letter under clause 36(7)(i) and clause 22(a) should be forwarded to exchanges .)
·        Letter under clause 24(a) of the listing agreement to Regional Stock Exchange ie BSE –“DCS/ Listing department” asking for formalities which company needs to comply with in order to obtain In-principle Letter (next day / 2-3 days of Board meeting.

Formalities within 2-3 days of the conclusion of Board Meeting

·        Six copies of notice of  EGM should be send across to the stock exchange and 1 copy to NSDL, CDSL and R& T Agents.
·        Obtain mailing list from R&T Agents and dispatch notices to all the shareholders at least 21 days in advance as well also send the same to the auditors , PCS, and directors.
·        Obtain Lock In confirmation from NSDL & CDSL as regards to lock in of entire Pre Preferential holding of the proposed allottees as the same has to be submitted to the stock exchange for obtaining prior In Principle approval letter.
·        In while BSE will send a letter stating the formalities/ documents to be submitted which company needs to comply with for obtaining Prior In Principle approval. However In principle approval will be obtained by the company only after EGM is held as we have to submit EGM resolution for obtaining In principle approval.
·        Submit all the necessary documents as asked to be submitted by the exchange for obtaining In principle approval
·        Book the meeting hall for EGM
·        Advertise the notice of EGM in the newspapers at least 7 days before the EGM.
·        Keep ready all the folders for the directors and prepare chairman proceedings and make ready all the necessary  things
·        Hold the general meeting and get the proposal approved by the members by way of special resolution
Post EGM
Formalities on the same day

·        Within Fifteen minutes of the board meeting fax the proceedings of Board Meeting to stock exchange about outcome of the board meeting as regards to decision of the board to issue bonus shares notice of EGM and increase in authorised share capital. Also information under clause 36(7)(i) and clause 22(a) should be faxed within 15 minutes(Optional )
Formalities on the Next Day of the Board Meeting & EGM
·        Next day inward the proceedings of the board meeting to the exchange as well as well send the same to NSDL, CDSL and R& T Agents .( Letter under clause 36(7)(i) and clause 22(a) should be forwarded to exchanges .)
·        Next day send Copy of EGM resolution to DCS for obtaining In principle approval
·        File Form 23 with RoC within 30 days of EGM and also file form 5 in case of increase in authorised share capital  within 30 days
·        Obtain In principle approval letter from BSE. AS ALL THE FORMALITIES IN RELATION TO ALLOTMENT OF SHARES/WARRANTS HAS TO BE COMPLETED WITHIN 15 DAYS from the date of EGM, intimate stock exchange of the Board Meeting to consider allotment of warrants / shares.

·      Hold the Board Meeting
Post Board Meeting
Formalities on the same day
·        Within Fifteen minutes of the board meeting fax the proceedings of Board Meeting to stock exchange about outcome of the board meeting as regards to decision of the board to issue shares on preferential basis, notice of EGM and increase in authorised share capital. Also information under clause 36(7)(i) and clause 22(a) should be faxed within 15 minutes .
·        Write a letter to the Stock Exchange DCS department  informing regarding the allotment of warrants / Shares along with Board Resolution
Formalities on the Next Day of the Board Meeting
·        Next day inward the proceedings of the board meeting to the exchange as well as well send the same to NSDL, CDSL and R& T Agents .( Letter under clause 36(7)(i) and clause 22(a) should be forwarded to exchanges .)
·        Next day inward letter to the Stock Exchange DCS department informing regarding the allotment of warrants / Shares along with Board Resolution.
PROCEDURE FO CONVERSION OF WARRANTS INTO EQUITY SHARES
Before Board Meeting to consider allotment of equity shares on conversion
·         Intimate  to all the stock exchanges atleast 7 days in advance of the board meeting to consider allotment of equity shares on conversion of warrants  – CRD dept
·        Hold the Board Meeting
Post Board Meeting
Formalities on the same day
·        Within Fifteen minutes of the board meeting fax the proceedings of Board Meeting to stock exchange about outcome of the board meeting as regards to decision of the board to issue shares on preferential basis, notice of EGM and increase in authorised share capital. Also information under clause 36(7)(i) and clause 22(a) should be faxed within 15 minutes .
Formalities on the Next Day of the Board Meeting
·        Next day inward the proceedings of the board meeting to the exchange as well as well send the same to NSDL, CDSL and R& T Agents .( Letter under clause 36(7)(i) and clause 22(a) should be forwarded to exchanges .)
·        Write a letter to the Stock Exchange DCS department  informing regarding the allotment of shares on conversion of share warrants dated date of Board Meeting
·        Provide Information under Regulation 13 of SEBI (PROHIBITION INSIDER TRADING) REGULATIONS ,1992 regarding  acquisition of equity shares  by the PROMOTER COMPANY  to the stock exchange  CRD Dept
·        Provide Information under Regulation 7(1A)of SEBI (TAKEOVER  REGULATIONS ,1997 regarding  acquisition of equity shares  by the PROMOTER COMPANY  to the stock exchange  CRD Dept
·        Provide Information under Regulation 7(1A)of SEBI (TAKEOVER  REGULATIONS ,1997 regarding  acquisition of equity shares  by the PROMOTER COMPANY  to the stock exchange  CRD Dept
·        Provide Information under Regulation 7(3)of SEBI (TAKEOVER  REGULATIONS ,1997 regarding  acquisition of equity shares  by the PROMOTER COMPANY  to the stock exchange  CRD Dept
·        File Pass-3 for allotment of shares within 30 days
·        Make Listing application as per Prior In Principle approval letter  WITHIN 30 DAYS OF ALLOTMENT OF  SHARES
·        Open a Demat Account for the allotees and Execute Corporate Action information Form for Equity Shares
·        Follow up with  stock exchange for In Principle Listing Approval for listing of Shares
·        On receipt of In Principle Listing Letter forward the same all the stock exchanges as well as to CDSL, NSDL and  R& T Agents
·        Obtain Credit of shares in NSDL and CDSL by filing necessary corporate Action Forms
·        Also as per in-principle Listing Letter intimate NSDL and CDSL about the Lock In of the Shares allotted.
·        Forward the confirmation letter from CDSL and NSDL to the Stock Exchange regional, BSE and the certified copy of the Acknowledgement of NSDL and CDSL for Lock In of shares should be also submitted to the stock exchange.
·        Obtain Trading Permission from regional stock exchange i.e. BSE
·        Forward the trading permission to all the other stock exchanges and obtain trading permission from there also

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