When thinking of going public with your company, one of the first things you need to do is determine if your company is even eligible to apply for an IPO. The rules of IPO are complex, and it can be difficult to determine whether or not your company meets all the IPO eligibility criteria. In this blog post, we will outline all the rules and regulations that govern IPO applications. So, to stay up-to-date, keep in mind these rules.
Published on 03 February 2023
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What are IPO Requirements in India?
As per the rules of IPO, there are a few conditions that must be met:
The company must have been operating for at least three years.
It should have made a profit in the two financial years preceding the issue of the IPO.
A minimum net worth of Rs. 3 crores is also necessary to be eligible for an IPO in India.
Furthermore, a float of at least 20% must be maintained. This means that 20% of the company's shares should be publicly traded.
Last but not least, a SEBI-registered Merchant Banker has to audit the financial statements for compliance with IPO rules and regulations.
By adhering to these IPO rules, companies can make their way into the Indian stock market by raising funds through Initial Public Offerings or IPOs.
What are the Requirements for IPO Applications Set Forth by SEBI?
A corporation must satisfy certain requirements established by the Securities and Market Board of India to be qualified for listing and trading on an Indian stock exchange. These criteria include, among others:
First, the business has to have at least Rs 3 crores in net value.
Second, it had to be in operation for a minimum of three years.
Third, it has to have generated revenue in at least two of the last three fiscal years.
Fourth, the public should own minimum 25% of the business.
Fifth, there must be no qualifiers or exclusions in the three years' worth of audited financial accounts.
Sixth, it needs at least Rs. 1 crore in terms of investment.
Seventh, there must have been a net profit during the previous three years.
Eighth, the business shouldn't have fallen behind on any loans or overdrafts from banks or other financial institutions.
What Other Requirements Exist Besides the IPO Applications that NSE and SEBI have Mandated?
A few more prerequisites must be satisfied in addition to the IPO application, which the NSE and SEBI prescribe. The following criteria are stated below:
The firm must have been operating for at least three years, or at least two of those years should have been profitable. Additionally, it must possess a net worth of at least Rs. 3 crores.
In addition, no legal action must still be pending against the corporation, and a minimum of 25% of the stocks must be made available to the public.
It can use a merchant banker to apply for registration on the stock market. A financial intermediary that plans and oversees transactions in the equity and debt finance sectors is known as a merchant banker. Merchant bankers are frequently employed by businesses to aid in capital market cash raising. A merchant banker would assist a company with the pricing and execution of the IPO and will be in charge of maintaining shareholder connections once the shares have been listed on the stock exchange.
The Process of Applying for an IPO
The phases are as follows, and the procedure takes roughly six to eight months:
Choosing merchant bankers: The first step in the IPO process involves selecting a merchant banker to oversee the entire process.
Draft Red Herring Prospectus (DRHP) submission to SEBI: The second step is submitting the DRHP to SEBI. This document contains details of the company, the proposed IPO and its financial statements.
Getting SEBI's approval: After the DRHP is submitted to SEBI, they will review it and issue their approval if all rules of IPO are followed.
Setting the offer size and pricing range: After getting SEBI's approval, the company and its merchant banker have to decide on the size of the offer and the price range.
Beginning of the IPO: The company and its merchant banker then start marketing the IPO to potential investors.
Costing for the IPO: The company and its merchant banker also have to decide on the costs of the IPO.
The book's release and distribution: The company and its merchant banker then have to decide on the book's distribution, including deciding which investment banks will manage it.
The Bottom Line
When qualifying for an initial public offering, rules and regulations must be strictly followed. Organizations must ensure that their company meets all criteria related to the rules of IPO, which can vary from country to country. Generally speaking, companies must have a minimum market capitalization to meet the IPO eligibility requirements.
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IPO, or an Initial Public Offering, is the first time a company issues stocks for the purchase of the common public. Investors can then make gains on these stocks that may appreciate over the course of time. While there are many benefits of investing in an IPO, there are many risks associated with it as well. Therefore, before you invest in an IPO, you must understand the benefits of the IPO to investors.
IPOs have become extremely popular these days, with many companies going public during the year. Many companies recorded record-breaking subscriptions. Many IT companies, BFSI companies, food and beverage companies, etc., captured the limelight when it came to IPO. Thus, IPOs have gained momentum in recent years and seem like they will continue to do so.
Initial Public Offering, also known as IPO, is the first time when a private company offers shares to the public. In this process, the ownership gets transferred- from being entirely privately held, the ownership of the company is given to the public.
IPO, or an Initial Public Offering, is the first time a company issues stocks for the purchase of the common public. Investors can then make gains on these stocks that may appreciate over the course of time. While there are many benefits of investing in an IPO, there are many risks associated with it as well. Therefore, before you invest in an IPO, you must understand the benefits of the IPO to investors.
IPOs have become extremely popular these days, with many companies going public during the year. Many companies recorded record-breaking subscriptions. Many IT companies, BFSI companies, food and beverage companies, etc., captured the limelight when it came to IPO. Thus, IPOs have gained momentum in recent years and seem like they will continue to do so.
Initial Public Offering, also known as IPO, is the first time when a private company offers shares to the public. In this process, the ownership gets transferred- from being entirely privately held, the ownership of the company is given to the public.
Sharekhan Comtrade Private Limited (TM) operates the web site accessible from the URL www.myespresso.com (the “web site”').
Sharekhan Comtrade Private Limited is committed to protecting your privacy and utilising technology that gives you the most powerful, safe, online experience that you can get anywhere else.
Sharekhan Comtrade Private Limited does, however, gather certain information that is provided by you to the Web Site. Sharekhan Comtrade Private Limited believes that by collecting this information Sharekhan Comtrade Private Limited is able to provide you with a personalised web experience, and to assist its own sales team and advertisers in efficiently reaching an appropriate audience.Sharekhan Comtrade Private Limited does, however, gather certain information that is provided by you to the Web Site. Sharekhan Comtrade Private Limited believes that by collecting this information Sharekhan Comtrade Private Limited is able to provide you with a personalised web experience, and to assist its own sales team and advertisers in efficiently reaching an appropriate audience.
Sharekhan Comtrade Private Limited requests the minimum information it believes necessary to achieve this goal.
The following discloses Sharekhan Comtrade Private Limited's information gathering and dissemination practices for the Web Site:
System Data:
Sharekhan Comtrade Private Limited uses your IP address to help diagnose problems with our server and to administer the web site. Your IP address is used to identify you and your shopping cart and to gather broad demographic information.
Registration Data:
The Web Site's registration form may require users to give us contact information (like their name, phone number and e-mail address), unique identifiers (like their PAN Number) and demographic information (like their pin code, age or income level). The Web Site uses customer contact information from the registration form to send the users information about Sharekhan Comtrade Private Limited and promotional material from some of Sharekhan Comtrade Private Limited's partners. The customer's contact information is also used to contact the visitor when necessary. Unique identifiers (such as PAN numbers) are collected to verify the user's identity. Demographic and profile data is also collected at the Web Site. We use this data to tailor the visitor's experience at the Web Site, showing them contents that we think they might be interested in, and displaying the contents according to their preferences. This information is shared with advertisers on an aggregate basis.
Links and Co-Branded Sites:
This site contains links to other Web Sites which are not necessarily been screened or reviewed by www.myespresso.com. Sharekhan Comtrade Private Limited is neither responsible for the privacy practices or the contents of such Web Sites nor shall be held answerable for the inaccurate, inappropriate or offensive data, material, information, products and services that may be viewed on those sites.
Sharekhan Comtrade Private Limited may operate a number of co-branded sites. Policies regarding information collection and sharing may differ on some of these co-branded sites. If you have any particular questions, you should check the privacy statement that appears on each co-branded site.
Order Forms:
The Web Site uses an order form for customers to request information, products and services. The Web Site collects visitors' contact information (like their mobile number or e-mail address), unique identifiers (like their PAN number) financial information (like their account or credit card numbers) and demographic information (like their pin code, age or income level). Contact information from the order form is used to send orders, information about Sharekhan Comtrade Private Limited, and promotional material from some of Sharekhan Comtrade Private Limited's partners to the visitors of the Web Site. The visitor's contact information is also used to get in touch with the visitor when necessary. Financial information that is collected is used to check the users' qualifications and bill the user for products and services. Unique identifiers (such as PAN numbers) are collected from Web Site visitors to verify the user's identity.
Surveys and Contests:
The Web Site's online surveys ask visitors for contact information (like their mobile number or e-mail address) and demographic information (like their pin code, gender, age or income level). The Web Site uses contact data from its surveys to send the user information about Sharekhan Comtrade Private Limited and promotional material from some of Sharekhan Ltd.'s partners. The customer's contact information is also used to contact the visitor when necessary. Users may opt-out of receiving future mailings; see the choice/opt-out section below. Demographic and profile data is also collected at the Web Site. The Web Site use this data to tailor its visitor's experience at the Web Site, showing them content that it thinks they might be interested in, and displaying the content according to their preferences. This information is shared with advertisers on an aggregate basis.
Sharekhan Comtrade Private Ltd run contests on the Web Site in which we ask visitors for contact information (like their e-mail address). Sharekhan Comtrade Private Limited uses contact data from its contests to send users information about Sharekhan Comtrade Private Ltd. and promotional material from some of our partners. The customer's contact information is also used to contact the visitor when necessary. Users may opt-out of receiving future mailings; see the choice/opt-out section below.
Third-Party Advertisement Servers:
Sharekhan Comtrade Private Limited engages the services of an outside advertisement company to display advertisement on the Web Site. These advertisements may contain cookies. While Sharekhan Comtrade Private Limited uses cookies in other parts of the Web Site, cookies received with banner advertisements are collected by the Advertisement company, and Sharekhan Comtrade Private Limited does not have access to this information.
Protection of your Data and Information:
The privacy and protection of your data and information provided to us is of vital importance. Sharekhan Comtrade Private Limited shall ensure to safeguard the security and confidentiality of any information you share with us. Any personally identifiable information of the customers obtained by us shall not be used or shared other than for the purposes to which the customers consents. However security and confidentiality of information cannot be guaranteed cent percent. Hence despite our utmost efforts to protect your personal information, Sharekhan Comtrade Private Limited and www.myespresso.com cannot warrant the security of any information you transmit to us through our online services. Such transmission of your personal information is done at your own risk.
Disclosure of Customer Information :
Sharekhan Comtrade Private Limited and www.myespresso.com shall not deliberately disclose customer's personally identifiable information to any unauthorized third person, save and except where such information shall be disclosed in good faith and for the purpose of law for the time being in force or to protect the rights and property of Sharekhan Comtrade Private Limited and www.myespresso.com.
Public Forums :
The Web Sites makes chat rooms, forums, message boards and/or news groups available to its users. Please remember that any information that is disclosed in these areas becomes public information and you should exercise caution when deciding to disclose your personal information.
Supplemental Information :
The Web Site supplements the information that you provide with information that is received from third parties.
The Web Site DOES NOT entice by the prospect of a special game, prize or other activity, to divulge more information than is needed to participate in the activity.
Further to the above, in light of the recently notified Information Technology (Reasonable security practices and procedures and sensitive personal data or information) Rules, 2011. (Hereinafter referred to as the Rules)
The following shall be deemed to be sensitive information :
Password;
Financial information such as Bank account or credit card or debit card or other payment instrument details;
Physical, physiological and mental health condition;
Sexual orientation;
Medical records and history;
Biometric information;
Any detail relating to the above clauses as provided to body corporate for providing service; and
Any of the information received under above clauses by body corporate for processing, stored or processed under lawful contract or otherwise:
provided that, any information that is freely available or accessible in public domain or furnished under the Right to Information Act, 2005 or any other law for the time being in force shall not be regarded as sensitive personal data or information for the purposes of Rules.
Collection of Information:
Compliance with KYC guidelines as per SEBI / Exchanges / Or any other Act, law or regulation requiring the same and any internal KYC guidelines formulated by Sharekhan Comtrade Private Limited.
In order to provide enhanced trading experience to the client.
In order to provide any further information to be provided to regulators.
Such information may be collected in a manner that the client is always aware of the collection and purported usage of the same. The client shall have an option to withdraw consent to share the information. However such intimation shall be required in writing. Such intimation shall only be taken into account from the date on which the same is received. Sharekhan Comtrade Private Limited may choose to stop services to such a client in case such intimation is received. Such information shall only be used for the purpose it is collected.
Clients would be allowed an option not to disclose any information to be collected, provided the same is in compliance with regulatory requirements.
Disclosure of information:
Disclosure of sensitive information would be as per the terms agreed by the clients. For any change in such terms, the clients would be informed.
Provided no consent may be required in case the same is being shared as per compliance guidelines or as required by regulators.
Any information being disclosed to third parties would be in accordance with the Rules and would be done provided such third party has the same level of compliance guidelines as Sharekhan Comtrade Private Limited.
Sharekhan Comtrade Private Limited shall allow clients to review their personal information and the same shall be allowed to be edited provided exchange guidelines relevant to the same are followed.
Sharekhan Comtrade Private Limited shall maintain reasonable security practices and procedures and maintain a comprehensive documented information security programme. In the event of an information security breach, Sharekhan Comtrade Private Limited or a person on its behalf shall be required to demonstrate as and when called upon to do so by the agency mandated under the law, that there have implemented security control measures as per their documented information security programme and information security policies and information security policies that contain managerial, technical, operational and physical security control measures that are commensurate with the information assets being protected with the nature of business.
KYC Languages
Download Client Registration Documents (Rights & Obligations, Risk Disclosure Document, Do's & Don't's) in Vernacular Language :
Note: "This document is a translated version of the client registration documents in English and is being provided in vernacular language to facilitate better understanding by the investors. In case of any ambiguity, the contents of the English version would prevail."
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