Delisting of shares under SEBI

Reverse Book Building at NSE

Delisting of shares under SEBI (delisting of Securities) guidelines 2003

Securities and Exchange Board of India has issued the SEBI (Delisting of Securities) Guidelines 2003’ for delisting of shares from stock exchanges. The guidelines inter alia provide the overall framework for voluntary delisting by a promoter. In accordance with the guidelines for the first time in India by any Exchange, National Stock Exchange now provides online reverse book building for promoter/acquirer through its trading network which spans various cities and towns across India. NSE operates a fully automated screen based bidding system that enables trading members to enter offers directly from their offices through a sophisticated telecommunication network.



What is Reverse Book Building (Delisting of shares)?

The Reverse Book Building is a mechanism provided for capturing the sell orders on online basis from the share holders through respective Book Running Lead Managers (BRLMs) which can be used by companies intending to delist its shares through buy back process. In the Reverse Book Building scenario, the Acquirer/Company offers to buy back shares from the share holders. The Reverse Book Building is basically a process used for efficient price discovery. It is a mechanism where, during the period for which the Reverse Book Building is open, offers are collected from the share holders at various prices, which are above or equal to the floor price. The buy back price is determined after the offer closing date



Business process for delisting through book building is as follows:

The acquirer shall appoint designated Book Running Lead Manager (BRLM) for accepting offers from the share holders.


The company/acquirer intending to delist its shares through Book Building process is identified by way of a symbol assigned to it by BRLM.


Orders for the offer shall be placed by the share holders only through the designated trading members, duly approved by the Exchange.


The designated trading members shall ensure that the security / share holders deposit the securities offered with the trading members prior to placement of an order.


The offer shall be open for 'n' number of days.


The BRLM shall intimate the final acceptance price and provide the valid accepted order file to the National Securities Clearing Corporation Limited (A wholly owned subsidiary of NSE carrying out clearing and responsible for settlement operations.)
SEBI guidelines shall be applicable to delisting of securities of companies and specifically apply to:

Voluntary delisting being sought by the promoters of a company.


Any acquisition of shares of the company (either by a promoter or by any other person) or scheme or arrangement, by whatever name referred to, consequent to which the public shareholding falls below the minimum limit specified in the listing conditions or listing agreement that may result in delisting of securities.


Promoters of the companies who voluntarily seek to delist their securities from all or some of the stock exchanges.


Cases where a person in control of the management is seeking to consolidate his holding in a company, in a manner which would result in the public shareholding or in the listing agreement that may have the effect of company being delisted.


Companies which may be compulsorily delisted by the stock exchanges.
NSE Reverse Book Building System

NSE uses the reverse book building system; a fully automated screen based bidding system that allows offers to run in several issues concurrently. The system has the facility of defining a hierarchy amongst the users of the system. The Book Running Lead Manager can define who will be the Syndicate member and who will be the other members participating in the issue. The Syndicate Member and other Members also have a facility of defining a hierarchy among the users of the system as Corporate Manager, Branch Manager and Dealer.


Trading Members
The Book Running Lead Manager will give the list of trading members who are eligible to participate in the Book Building process to the Exchange. Members have to submit a one-time undertaking to the Exchange. Eligible trading members have to give in the prescribed format details of the user IDs that they would like to use.


List of Approved Trading Members:
ICICI Brokerage Services Limited.
Karvy Stock Broking Limited.
Master Capital Services Limited.

Subscribers
Subscribers can approach any of the approved trading members for submitting offers in the NEAT IPO system. On line transaction registration slip are generated automatically after entering the offers in to the system, which acts as proof of the registration of each offer.


Reverse Book Building through the NSE system offers several advantages:
The NSE system offers a nation wide bidding facility in securities.


It provides a fair, efficient & transparent method for collecting offers using latest electronic trading systems.

IPO FAQ's

Frequently Asked Questions on IPOs

What is Book Building?
SEBI Guidelines defines Book Building as a process undertaken by which a demand for the securities proposed to be issued by a corporate body 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.


What is the main difference between offer of shares through book building and offer of shares through normal public issue?
Price at which securities will be allotted is not known in case of offer of shares through book building while in case of offer of shares through normal public issue, price is known in advance to investor. In case of Book Building, the demand can be known everyday as the book is built. But in case of the public issue the demand is known at the close of the issue.


What is minimum number of days for which bid should remain open in book building?
Book should remain open for minimum of 3 working days.


Can open outcry system be used for book building?
No. As per SEBI, only electronically linked transparent facility is allowed to be used in case of book building.


Is the issue price for placement portion and net offer to public the same?
Yes.


What is the floor price in case of book building?
Floor price is the minimum price at which bids can be made.


Can the Individual Investor use book building facility for making an application?
Yes.


What are the formalities to be completed by members before participating in an IPO?
The member has to submit a one-time undertaking in prescribed format to the membership department. Members have to make the request in prescribed format giving details of the user ids along with the VSAT numbers.


Can more than one issue be held simultaneously using NSE IPO system?
Yes.


Can the bidder revise his bids?
Yes.


Which members will be allowed to participate in book building of issue?
Book Running Lead Manager appointed by the issuer will intimate to the exchange the list of members who are eligible to participate in the issue. These members will be allowed to enter the bids in the IPO.


How to install the IPO software in trading terminal?
The members have to copy the NTIPOTDR.EXE file in root directory and then inflate the file by using command NTIPOTDR -D -O. The above executable file is available in extranet under common/ipo directory.


What proof can bidder request from trading member for entering bids?
Whenever a bid is entered by trading members in to the system, a unique transaction registration slip is automatically generated. Transaction registration slip gives details regarding number of shares bid for, price, the client name etc.


Is it possible to enter bids less than floor price?
No. The system automatically rejects the bids if price is less than floor price.


Is the Margin amount a compulsory field in order entry?
Margin amount is a compulsory numeric field. However if member collects no margin amount then he has to enter 0 in margin amount field.


Can members set up order limits for themselves?
Yes. Corporate Manager of each member can set up order limits for all the dealers under him.


Will the member be able to see the bid details for all the issues?
User will see the bid details for all the issues. However, he is able to enter bids only for those issues for which he has been appointed as member by Book Running Lead Manager.


Can the Syndicate Members set limits on orders to be entered by other members?
No. However the Syndicate Members can see the orders entered by members who are activated under him, by downloading EOD report.


Can the Syndicate members modify or cancel the orders of other members?Syndicate members cannot cancel or modify the bids entered by other members.


What are the reports downloaded to Syndicate members?
Syndicate Member (SM) will get a report download of his own orders as well as of all other members who are activated under him.


Will the change in the user level hierarchy in the IPO segment affect any change in the Capital Market Segment or vice versa?
The environment for Capital Market Segment and IPO book building segment are different. It is a matter of convenience, that User Ids available in the Capital Market Segment are used in IPO book building segment. Hence, any change in either of the Market segment will not affect the other market.

RESURGERE MINES & MINERALS INDIA LIMITED | IPO

RESURGERE MINES & MINERALS INDIA LIMITED
Symbol - Series	RESURGE EQ
Issue Period	Aug 11, 2008 to Aug 13, 2008
Issue Size	44,50,000 Equity Shares
Issue Type	100% Book Building
Face Value	Rs. 10/-
Price Range	Rs 263 /- to Rs 272 /-
Tick Size	Re. 1/-
Market Lot	20 shares
Minimum Order Quantity	20 shares
Maximum Subscription Amount for Retail Investor	Rs.100000
IPO Market Timings	10.00 a.m. to 5.00 p.m.
Book Running Lead Manager	MOTILAL OSWAL INVESTMENT ADVISORS PVT. LTD.
Co Book Running Lead Manager	PL Capital Markets Private Limited and Ashika CapitalLimited
Syndicate Member	Motilal Oswal Securities Limited, Prabhudas Lilladher Private Limited, Ambit Capital Private Limited and Elara Securities (India) Private Limited.
Categories	FI, IC, VC, MF, FII, FVCI, SIDC, PF, PEF, MLA, BDFI, NIF, CO, IND, HUF, NRI, OTH and EMP
No. of Cities with Bidding Centers	50
Inclusion in F&O Segment	Not Eligible
Name of the registrar	Intime Spectrum Registry Limited
Address of the registrar	C-13, Pannalal Silk Mills Compound, LBS Marg,Bhandup (West), Mumbai - 400 078
Contact person name number and Email id	Mr. Sachin Achar Tel No 91 22 25960320 Fax No 91 22 25960328 or 29 Email rmmil.ipo@intimespectrum.com

. Trading Member List . AJAY NATAVARLAL SECURITIES PVT. LTD. . ALMONDZ CAPITAL MARKETS PRIVATE LIMITED . AMIT JASANI FINANCIAL SERVICES PVT. LTD. . ANGEL CAPITAL AND DEBT MARKET LIMITED . AUM CAPITAL MARKET P. LTD. . BALANCE EQUITY BROKING (INDIA) PVT. LTD. . BHARGAVA LODHA STOCK BROKERS PVT. LTD. . CENTRUM BROKING PVT. LTD. . DEEP FINANCIAL CONSULTANTS PVT. LTD. . DSP MERRILL LYNCH LTD . EDELWEISS SECURITIES PVT. LTD. . ENAM SECURITIES DIRECT PVT. LTD. . EUREKA STOCK & SHARE BROKING SERVICES LTD . FORTUNE EQUITY BROKERS (INDIA) LIMITED . HDFC SECURITIES LTD . HEM FINLEASE PVT. LTD. . IL&FS INVESTSMART LIMITED . INDIA INFOLINE SECURITIES PVT. LTD. . INTERFACE BROKERAGE & RESEARCH LTD . J M FINANCIAL/J M MORGAN STANLEY RETAIL SERVICES PVT LIMITED . JOINDRE CAPITAL SERVICES LTD . KHANDWALA INTEGRATED FINANCIAL SERVICES P LTD . KUNVARJI FINSTOCK PVT. LTD. . MARWADI SHARES & FINANCE PVT. LTD. . MICROSEC INDIA LIMITED . MUDRA OM SECURITIES PVT. LTD. . PRAVIN RATILAL SHARE AND STOCK BROKERS LTD . R TRADE SECURITIES LTD . RELIGARE SECURITIES LTD. . RIKHAV SECURITIES LTD . RR EQUITY BROKERS PRIVATE LIMITED . SBI CAPITAL MARKETS LTD. . SHAREKHAN LTD. . SMC GLOBAL SECURITIES LTD. . SSJ HOLDINGS PRIVATE LIMITED . SUMEDHA FISCAL SERVICES LTD. . TATA SECURITIES LTD . UTI SECURITIES LTD . VOGUE COMMERCIAL COMPANY LTD. . WAY2WEALTH BROKERS PVT LTD . ZUARI INVESTMENTS LTD. .

Initial Public Offerings (IPO)

Initial Public Offerings (IPO)
A corporate may raise capital in the primary market by way of an initial public offer, rights issue or private placement. An Initial Public Offer (IPO) is the selling of securities to the public in the primary market. It is the largest source of funds with long or indefinite maturity for the company.


What is Book Building?
SEBI guidelines defines Book Building as "a 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".

Book Building is basically a process used in Initial Public Offer (IPO) for efficient price discovery. It is a mechanism where, during the period for which the IPO is open, bids are collected from investors at various prices, which are above or equal to the floor price. The offer price is determined after the bid closing date.

As per SEBI guidelines, an issuer company can issue securities to the public though prospectus in the following manner:

100% of the net offer to the public through book building process
75% of the net offer to the public through book building process and 25% at the price determined through book building. The Fixed Price portion is conducted like a normal public issue after the Book Built portion, during which the issue price is determined.

The concept of Book Building is relatively new in India. However it is a common practice in most developed countries.


Difference between Book Building Issue and Fixed Price Issue
In Book Building securities are offered at prices above or equal to the floor prices, whereas securities are offered at a fixed price in case of a public issue. In case of Book Building, the demand can be known everyday as the book is built. But in case of the public issue the demand is known at the close of the issue.