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Master Circular for Issue of Capital And Disclosure Requirements

The Securities and Exchange Board of India (“SEBI”)in the exercise of its powers conferred under Section 11(1) of the Securities and Exchange Board of India Act, 1992 has issued a Master Circular for Issue of Capital and Disclosure Requirements (“ICDR”) vide Circular No. SEBI/HO/CFD/PoD-2/P/CIR/2023/00094 dated June 21, 2023 (the “Circular”).​1 This Circular has come up as a replacement for all circulars/ directions issued by SEBI under the relevant provisions of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018 (“ICDR Regulations”)​2, thereby enabling the stakeholders to have access to the circulars passed in this regard from time to time.

The following are the key highlights of the Circular:

  1. Non-compliance with certain provision of ICDR Regulations - Stock Exchanges can, if necessary, levy a fine on a listed entity or any other person for non-compliance with certain provisions of ICDR Regulations. Stock Exchange shall record reasons in writing for the following contraventions:

    1. Delay in completion of a bonus issue: As per Regulation 295(1) of ICDR Regulations, an issuer announcing a bonus issue shall complete the issuance within 15 (fifteen) days from the date of approval of the bonus issue by its board of directors, in cases where the approval of its shareholders for capitalisation of profits or reserved for making the bonus issue is not required; and within 2 (two) months where the issuer is required to obtain the shareholders’ approval. Non- compliance with the aforesaid requirement would result in the levy of a fine of INR 20,000 (Rupees Twenty Thousand Only) per day of non-compliance until the date of compliance.
    2. Delay in completing the conversion of convertible securities: Conversion of convertible securities and allotment of shares must be completed within 18 (eighteen) months from the date of allotment of convertible securities as per Regulation 162 of ICDR Regulations. In case of any delay in making the conversion and allotment within the above timeline, Stock Exchanges will levy the a fine from the entity amounting to INR 20,000 (Rupees Twenty Thousand Only) per day of non-compliance until the date of compliance.
    3. Delay in applying for a listing in the stock exchange: A fine of INR 20,000 (Rupees Twenty Thousand Only) per day of non-compliance for not complying with the provisions of Schedule XIX ( Listing of Securities on Stock Exchanges ), providing for the application for listing to be made by the issuer from date of allotment within such period as may be specified by the SEBI from time to time. In this regard, it has been specified that such issuer would have to make an application for listing within a period of 20 (twenty) days from the date of allotment, in case of a further issue of equity shares.
    4. Delay in applying for trading approval to the stock exchange/s: A fine of INR 20,000 (Rupees Twenty Thousand Only) per day of non-compliance will be levied if the application for trading approval is not made to the stock exchange/s within 7 (seven) working days from the date of grant of listing approval by the stock exchange/s.

    Credit of fine: The fine realized for any of the above contraventions shall be credited to the “Investor Protection Fund”​3 of the concerned stock exchange. Details of the non- compliant listed entities along with the details of fine imposed and fine received, etc. shall be disseminated on the website by the recognized stock exchange. Accordingly, a notice shall be issued by the recognized stock exchanges to such non-compliant listed entities for ensuring compliance, and the fine is to be collected within 15 (fifteen) days from the date of the notice. Non-compliance with the notice to pay a fine by a non- compliant listed entity may result in the initiation of enforcement action by the recognized stock exchange in accordance with Regulation 298 of ICDR Regulations.

    Bonus Issue delays: It has been clarified that only upon the payment of requisite fine by the listed entity, the approvals for listing and trading of promoters’ bonus shares would be granted by the stock exchange. However, in the interest of investors and subject to compliance with other requirements, the approvals for listing and trading of bonus shares allotted to persons other than promoters, may be granted.

  2. Streamlining the process of Rights Issue - The Circular has further consolidated the provisions pertaining to the process of Rights Issue (the detailed procedure for which has been provided under Annexure I of the Circular):

    Sr. No Process Regulation Timeframe
    1 Providing advance notice to stock exchange/s of record date specifying the purpose of the record date by a listed entity. 42(2) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“LODR Regulations”)4 3 (three) working days (excluding the date of intimation and the record date).
    2 Issuance of newspaper advertisement disclosing date of completion of dispatch and intimation of the same to the stock exchanges 84 (1) of the ICDR Regulations 2 (two) days before the date of opening of the issue.
    3 In the letter of offer and abridged letter of offer, Issuer to disclose process of credit of Rights Entitlements (“REs”) in the demat account and renunciation thereof. - -
    (a)The REs with separate ISIN to be credited to demat account of shareholders in demat form, against shares held as on the record date. - Before the date of opening of the issue.
    (b) Physical shareholders to provide their demat account details to issuer/ Registrar for issue of credit of REs. - Not later than 2 (two) working days prior to the issue closing date.
    (c)Credi of REs in their demat account - 1 (one) day before the issue closing date.
    4 Trading of REs on the secondary market platform of the stock exchange shall: - -
    (a)commence - Along with opening of the issue.
    (b)close - 3 (three) working days prior to the closure of the rights issue.
    5 Renouncement of REs held by investors in demat mode by trading on stock exchange platform or off market transfer and shall be settled by transferring demat REs through depository mechanism. - -
    6 Payment mode for rights issue shall be only through the Application Supported by Blocked Amount (“ASBA”) facility. - -
    7 Withdrawal of application by any shareholder - Before the issue closing date.
  3. Disclosures in the Offer Document - Certain disclosures shall be made in the offer document, provided under the Circular as follows:

    1. Disclosures in the Abridged Prospectus: Regulation 34(1) of the ICDR Regulations mandates that the abridged prospectus shall contain disclosures as provided under Annexure I of Part E of Schedule VI of the said regulations. The format for disclosures in the Abridged Prospectus has been revised, with an intent to simplify and provide greater clarity and consistency in disclosures across documents and to provide additional but critical information in the abridged prospectus, as provided under Annexure II of the Circular.
    2. Disclosures in the front cover page of the offer document: Clause 1(a) of Part A - Schedule VI of the ICDR Regulations provides for the information to be disclosed on the front cover of the offer document. The format for disclosure shall be as provided under Annexure III of the Circular.
    3. Issuer company, lead managers and registrar to an issuer to make available a copy of the form on their website, and a link for download of the abridged prospectus shall be provided in the price band advertisement. The Issuer Company / Merchant Bankers (“MBs”) shall:
      1. ensure that disclosures are adequate, accurate and do not contain any misleading or misstatement.
      2. ensure that qualitative statements shall be substantiated with Key Performance Indicators (“KPIs”) and other quantitative factors.
      3. insert a Quick Response (“QR”) code on the front page of the documents to make downloading of the prospectus, abridged prospectus and price band advertisement easier.

  4. Online Filing System - The Circular lays down an online system for filings related to public issues, rights issues, institutional placement programs, schemes of arrangement, takeovers and buy backs. All filings by MB’s of offer documents and related documents and by recognized stock exchanges of draft scheme of arrangement and related documents shall be made in physical form with SEBI alongside online filing through the SEBI intermediary portal at

  5. Compensation to Retail Individual Investors (“RIIs”) in an Initial Public Offering (“IPO”) -
    1. There has been a reduction in complaints pertaining to refunds, as a result of ASBA. However, there have been instances where applicants in an IPO have failed to get allotment of specified securities resulting in an opportunity loss, which may be attributed to the following reasons –
      1. Failure on the part of the Self Certified Syndicate Banks (“SCSB”) to make bids in the concerned exchange system even though the amount has been blocked in the bank account of the investor.
      2. Failure on the part of SCSB to process ASBA applications even after submission within the timeline.
      3. Any other failure on the part of SCSB resulting in the rejection of the application form.
    2. As a result of the above factors, and to ensure a uniform policy for payment of minimum compensation to investors by virtue of the failure on the part of SCSB, the following factors are to be considered:
      1. the opportunity loss suffered by the investor due to non-allotment of shares;
      2. the number of times the issue was oversubscribed in the relevant category;
      3. the probability of allotment; and
      4. the listing gains if any on the day of listing.
    3. The Circular further lays down the formula for calculation of minimum fair compensation:
      Compensation = (Listing price​5 - Issue Price) X No. of shares that would have been allotted if the bid was successful X Probability of allotment of shares determined on the basis of allotment.
    4. Categories for compensation to applicants:
      1. In case of issues that are subscribed between 90% (ninety percent) to100% (one hundred percent), the applicant shall be compensated for all the allotted shares.
      2. Where the listing price is below the issue price, no compensation shall be payable.
    5. The basis of allotment file shall be shared by the Registrar and Transfer Agents, if requested by SCSB, to ensure SCSB has access to the allotment ratio for arriving at the compensation payable.
    6. If the application has not been considered by the SCSB for allotment due to failure on the part of SCSB, the applicant can seek redressal within 3 (three) months of the listing date. Upon receipt of such an application, SCSB shall resolve the same within 15 (fifteen) days, pursuant to which interest at the rate of 15% (fifteen percent) per annum would be payable. Upon failure by SCSB to redress the grievance within the specified time, SEBI shall be empowered to initiate the authority to act against it.
    7. The SCSB shall submit the half-yearly report to SEBI in the specified format as provided under the Circular.

  6. Guidelines on issuance of non-convertible debt instruments along with warrants (‘NCDs with Warrants’) in terms of Chapter VI – Qualified Institutions Placement of ICDR Regulations - For the purpose of streamlining procedure of issuance and applicability of Electronic Book Provider Platform (“EBP Platform”) mechanism on the non-convertible debt instruments (“NCDs Portion”), it was decided that for issues wherein size of NCDs Portion is above threshold prescribed under the Securities and Exchange Board of India (Issue and Listing of Non-Convertible Securities) Regulations, 2021 (“NCS Regulations 2021”) and circulars thereunder,
    1. EBP Platform mechanism shall be mandatory for NCDs Portion of the issue (for both stapled and segregated offer) and issuer shall be required to comply with the NCS Regulations 2021, and circulars issued thereunder.
    2. The warrants portion of the issue shall be in terms of Chapter VI on Qualified Institutions Placement under the ICDR Regulations.
    3. Of the total issue size​6, at least 40% (forty percent) size shall consist of warrants portion.

  7. Framework for the process of recognition of investors for the purpose of Innovators Growth Platform (“IGP”) - The Circular provides for the framework for the process of recognition of investors and lays down that the Innovators Growth Platform Investors (“IGPI”) for the purpose of IGP, are investors whose holding in the issuer company is eligible for computation of at least 25% (twenty-five percent) of the pre-issue capital as per Regulation 283(1) of the ICDR Regulations.
    1. Eligibility: Following entities shall be eligible IGPIs - An individual with a total gross income of INR 50,00,000 (Rupees Fifty Lakhs Only) annually and a minimum liquid net worth of INR 5,00,00,000 (Rupees Five Crores Only) (or) a body corporate with net worth of INR 25,00,00,000 (Rupees Twenty-Five Crores Only).
    2. Procedure for recognition: An investor with a demat account with a depository shall make an application to the stock exchanges/ depositories for recognition as an IGPI. The stock exchanges/ depositories shall be responsible for verification and maintenance of the IGPI data but may use the services of brokers/depository participants respectively for such purpose. The documentation for recognition has been provided at Annexure V of the Circular.
    3. Recognition granted by stock exchange/depository would remain valid for a period of 3 (three) years from the date of issue of such accreditation, unless the IGPI becomes ineligible due to a change in the financial status, in which case, information of ineligibility shall be provided to the stock exchange/ depository.
    4. MB’s to ensure fulfilment of the eligibility criteria of IGPIs and that their holding in the company desirous of listing on IGP is in accordance with Regulation 283(1) of the ICDR Regulations.

  8. Issue Summary Document (“ISD”) and dissemination of issue advertisements- It was decided to make the relevant information / data points at the Stock Exchanges and Depositories available in a structured manner.
    1. Accordingly, the Circular provides that pursuant to consultation with stakeholders, the ISD was designed and introduced for the following, in extensible business reporting language (“XBRL”) format -
      1. public issue of specified securities (IPO / further public offer);
      2. further issues (preferential issue, qualified institutions placement, rights issue, issue of American depository receipts, global depository receipts and foreign currency convertible bonds;
      3. buy-back of equity shares (through tender offer or from the open market);
      4. open offer under SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (“SEBI SAST Regulations”); and
      5. voluntary delisting of equity shares where exit opportunity is required under SEBI (Delisting of Equity Shares) Regulations, 2021 (“SEBI Delisting Regulations”)
    2. ISD is to be filed in two stages-
      1. In the first stage, ISD shall be filed containing pre-issue/ offer fields; and
      2. In the second stage, ISD shall be filed containing post-issue/ offer fields after allotment, as applicable for respective ISD.
    3. The format for ISD has been provided under Annexure VI of the Circular, along with the timeline for submission of details and holds the respective entity responsible for submission (“Submitting Entity”). Such details may be filed with the stock exchange where the securities of the entity in respect of which ISD is being filed, is listed or is proposed to be listed. The stock exchanges shall be responsible for developing a utility to facilitate filing of ISD.
    4. Upon receipt of the ISD, stock exchanges shall further transmit the information to other stock exchanges/depositories for dissemination. The ISD shall be disseminated through the websites of the relevant stock exchange where the entity is listed or is proposed to be listed, and the depositories; and all entities involved in this process shall be responsible for taking necessary steps to ensure compliance in this regard.
    5. The stock exchanges/ depositories shall bring the provisions of Chapter 8 of the Circular to the notice of all registered merchant bankers, listed entities and issuers and also disseminate the same on their websites and shall communicate to SEBI, the status of implementation of the provisions of Chapter 8 of the Circular within a period of 7 (seven) days of implementation and in their monthly developments reports.

The Circular seeks to simplify and streamline the process of Issue of Capital and Disclosure Requirements. Earlier there were no provisions pertaining to the levy of penalties on non- compliance for the delay in completing the process for issuance of a bonus issue, delay in completing the conversion of convertible securities, delay in applying for listing in stock exchange/s and for trading approval to the stock exchange/s. This Circular provides for the imposition of certain penalties for the above non-compliance. Further, SEBI has made document filing easier by introducing the online SEBI Intermediary Portal and mechanism for a QR code. SEBI has also enhanced the role of ISD in the issuance of IPO, further issues and buy-back of equity shares.

3. .
5. Listing price shall be taken as the highest of the opening prices on the day of listing across the recognized stock exchanges.
6.The combined size of NCDs issue and the aggregate size of the warrants portion, including the conversion price of warrants.