Equity Share Market

Rationale
 Organic Growth
 Working Capital
 Mergers & Take overs
 Financial Restructuring
 Exit route For Venture Capitalists
 Merits
 Liquidity
 Evaluation of Securities
 Enabling Future Funding
 Higher Reputation
 Better Valuation of shares
 Takeover of Companies
 Intermediaries in Capital Market

SEBI
Merchant Banker
Registrar
ROC
Banker - To Company
Brokers
Depositories
 Depository

There are two depositories in India viz.

 National Securities Depository Ltd. (NSDL)

 Central Depository Services Ltd. (CSDL)

Shares in electronic form (ie, Dematerialized-

Demats) in accounts maintained by above agencies
 Shares issuing Procedure

 Appointment of Merchant Bankers

 Advisory Services
 Preparing draft Prospectus
 Appointment of Other MBs
 Preparation of Other Documents (MOU & Due diligence
Certi.)
 Preparations & Filing of Final Prospectus
 Allocation of Responsibilities
 Appli. To Stock Exchange
 Agreement with Depository
 Appointment of Underwriters
 Appoint. To Registrar of Issue
 Appointment of Bankers
 Appointment of Brokers
 Appoint. Of Advertising Agency
 Obtaining Rating from CR Agency
 Issue of shares
 Filing Prospectus
 Press Conf/InvestorMeet
 Opening Subsriptn. List
 Closure of Subscrp, List
 Allotment of Shares
 Listing of Shares
 Book Building
SEBI (Disclosures & Investors’
Protection) Guidelines 2000

 A process undertaken by which a demand for the

securities proposed to be issued by a body
corporate is elicited and built up and 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.
Features
 Quantity Assessment
 Price Determination
 Documents
 Category
 Private Placement Portion
 Public issue
 Lead Book Running Manager
Merits & Demerits of Book Building

Merits Demerits
 Realization of High Price  Suitable For Mega issues
 Quick Process  Well-developed markets
 Fast Availability of Funds  Manipulation of Price
 Lesser Issue Expenses  Unfair Allotment
 Quick Update  Concentrated Holding
 Lack of Uncertainty
 Opportunity for Revision
 Quick Share Listing
 Less Admini. Costs
 Preferred by Insti.Invstrs
 Financial Intermediaries in Book building

 Merchant Banker as a Book Runner Syndicate members

 Registrar to Issue
 Advising Co. appoint, of other Bk Runners
 Facili. qty. Assessment
 Appoint of Bankers
 Enabling appoint. Of Syndicate .Members
 Underwriting
 Prntg & supply of forms
 Inform. Memoranda amgst Synd. Mmbrs
 Coll.of Bid cum Appl.
 Allotment
 Preparation. Of Red Herring Prospectus
 Other Procedure
 Filing Due diligence Certificate
 Determining Price Band
 Issue Procedure

 Qty Assess.Stage Pre-issue Stage

 Actual Issue Allotment Stage
 App.of Finan.Intermed.App. Of Other FI
 Opening Subscr ListCut Off Price
 Prep of Inf.Memorndm Appli. To Stock Exch
 Appli. Cum bid Forms Actual Allot.
 Sending IM Draft Red Herring Prsp.
 Updating Information Cr. Demat A/Cs
 Qnty & Price Band Filing to SEBI
 Opportunity for Revi. Share listing
 UnderwritingInf. To ROC
 Closure of Subcr. List Final Prosp.
 Agree. With Deposito Advertising Agency
 Final Red herring Pro Disp. Of appli. Forms
 Opening Escro A/C
 Bonus & Right Shares

Both are equity i.e. ownership capital; Both add to

net worth figures in Balance Sheet

Bonus shares means issues of shares to the share

holders out of company’s accumulated profits and
reserves

Right shares means offer of shares to the existing

share holders at a certain price. It is mandatory for
the Company after two years of incorpo. Or one year
of first IPO
 Right Issue of Equity Shares
Issue Procedure

Before Issue Actual Issue

 Advertisement
 Various Appointments
 Dispatch. Of Appli. Forms
 Merchant Banker
 Opening Subscription list
 Lead Manager
 Acceptance of Appli. forms
 Underwriters
 Allotment
 Registrars
 Certificate of Merchant
 Appli. For listing on Stock
Exch Banker (MB)
 Listing of Shares
 Agree. With all Depositories