For a company to establish itself or run, it requires funds. Even established companies require money in order to continue with their ongoing process.
IPO/FPO are a convenient way to raise funds for a business without having to return the borrowed money. Instead, they provide ownership to the investor in form of shares or stocks. Its a good way of building attraction and making sure that the issue gets sold like candy.
FPOs if they require additional fund but do not have the means to take a loan from the bank. if a company has already gone for IPO then they go for FPO.
- Funding Capital Requirements for Organic Growth
- Expansions & Diversification into New Projects Funding Global Requirements or Joint Venture
- Funding Infrastructure Requirements
- Marketing Initiatives and building Distribution Channels
- Financing Working Capital
- Repaying debts to strengthen the Balance Sheet Meeting Issue Expenses For Non-funding Needs Retention and
- incentive for Employees through stock options
- Provide liquidity to the shareholders
For listing a company on BSE through public offering of IPO/FPO the minimum listing requirements are as follows
In relation to large-cap companies:
- The minimum post-issue paid-up capital of the company shall be Rs. 10 crores for IPOs & Rs.3 crore for FPOs
- The minimum issue size shall be Rs. 10 crore
- The minimum market capitalization of the Company shall be Rs. 25 crore (market capitalization to be calculated by multiplying the post-issue number of equity shares with the issue price)
In relation to small cap companies:
- The minimum post-issue paid-up capital of the company shall be Rs. 3 crore
- Minimum issue size shall be 3 Cr
- Minimum market capitalization shall be Rs. 5 Crores
- Minimum income/turnover of the company shall be Rs. 3 Crores in preceding three 12 months period
- Minimum no. of shareholder after issue to be 1000
- A due diligence study conducted by a Charted Accountant
Procedure for floating an IPO
Floating an IPO is when a company is all set to issue stocks or shares to the public for the first time.
The floating of shares can be done thru a fixed price method or book building method or a combination of both.
Involves an Issuer Company & IPO Process Initialization
- To appoint lead manager as book runner who is the main underwriter
- Appoint registrar of the issue
- Appoint syndicate members or the appointed intermediate underwrites
Lead manager’s pre-issue role part – 1
- Prepare draft offer prospectus document for IPO
- File draft offer prospectus with SEBI
Review of draft prospectus by SEBI
- Revert it back to Lead Manager in case of any clarification
- If SEBI approve the draft offer prospectus, the draft offer prospectus becomes an Offer Prospectus
Lead manager’s pre-issue role part – 2
- Submit this Offer Prospectus to Stock Exchanges, registrar of the issue and get it approved
- Decide the issue date & issue price band
- Modify Offer Prospectus that will now have a date and price band on it. This document is now called The Red Herring Prospectus.
- The Red Herring Prospectus along with the IPO Application Forms are then printed and posted to the syndicate members and through which they are distributed to the investors.
Investor Bidding for the public issue
- Public Issue is now Open for investors bidding.
- Investors fill the application forms, place orders with the syndicate members
- Syndicate members update the BSE/NSE with the bidding information
- They also send all the physically filled forms and cheques to the registrar
- Investor can revise the bidding by filling a form and syndicate member keeps updating the latest data
Public Issue Closes for biddings
- Based on the bids received, lead managers evaluate the final issue price and updates the
- ‘Red Herring Prospectus’ with the final issue
- The final price and send it to SEBI and Stock Exchanges.
Registrar ‐ Processing IPO Applications
- Registrar receives all application forms & cheques
- Send the cheques for clearance and weed out all the bogus applications
- Prepare ‘Basis of Allotment’.
- Transfer shares in the Demat account of investors.
- Refund the remaining money through ECS or Cheques
Lead manager – Stock Listing
- Once all allocated shares are transferred in investors DP accounts, the Lead Manager with the help of Stock Exchange decides Issue Listing Date
- Finally, the share of the issuer company gets listed in Stock Market.
MUDS Management & Strategic Services is a premier service that provides all kinds of corporate services to our clients. Our client’s satisfaction is our core concern and so we strive to provide a complete solution for all their consultancy and management needs. We have a team of experts from different domains working in-house and providing all solutions under one roof for prompt delivery at very competitive costs. At MUDS, we’re committed to easing out the entire business process of our clients with our clout and a pool of the best resources available in the industry. Floating an IPO or launching an FPO takes time and careful planning with lots of expertise from different domains. They need to hire underwriters, audit companies, attorneys for advice.
- We make the investor understand the view and objectives of such an issue and also make them acquainted with all the aspects of floating an IPO/FPO with due clarity.
- We just don’t make them plunge in for something as big as this before appraising our client with the current investment climate, performance of the industry as such and give a glimpse of the investor’s appetite
- we guide our clients thru the entire process of issuance, registration, and administration of IPO and FPOs.
- Help them in following special regulations, guidelines & rules.
- We help on overall coordination and act as an interface between the company and the SEBI/NSE/BSE
- We help In overall coordination of appointment of lead managers and the syndicate if the services are to be taken from outside
- After completing the due diligence we help finalize the disclosure document.
Frequently Asked Questions on IPO/FPO (Public Issue)
What all activities does MUDS undertake during floating of a public issue?
- We undertake fresh issue of IPO by an unlisted company
- Listing – filing with SEBI and Stock exchanges
- SEBI clearance and ROC guidelines
- ROC filing of final prospectus
- Being a facilitator between the company and the investment banking firm, assisting during underwriting service
- Perform the task of a book runner and lead underwriters ourselves
- Help them in IPO grading for assessment of IPO in relation to other listed IPOs
- Helping investor decide whether to go for fixed price issue or a book built issue method of pricing based on investors demand.
- Taking prior approval of the registrar on the right issue
- What are all the stage-wise Documentation & process of IPO issue:
- All documents needed in principle approval stage
- Handling all the fast track issues
- Book Building Issue Checklist
- Fixed Price Issue Checklist
- Obtaining NOC for 1% of issue amount
- Basis of allotment Stage
- Finalization and filing of offer document
- Listing and Trading Approval Stage
- documents required in rights, bonus, preferential issue checklist
- Listing of unlisted company pursuant to amalgamation or demerger
- Name change
- Buyback of Equity Shares
- Debt issue check list
- Listing on BSE SME platform
Will MUDS help in being a nodal authority while dealing with the SEBI
Yes, indeed. We make the company follow all the acts and furnish disclosures necessary while listing. Including like preparation of Letter of Application to be submitted to the stock exchange where the company wishes to be listed.Timely payment of annual listing fees, submission of results in form of P&L, balance sheet, shareholding pattern, corporate governance report etc.
Procuring Permission to Use the Name of BSE in an Issuer Company’s Prospectus
Completing trade permission formalities at all stock exchange and deposit of 1% issue amount
What are the things necessary for a company who is looking to float its IPO or an FPO in the market?
Where do I start and what are are the initial help I can expect from MUDS?
At MUDS, we Provide a compliance certificate on IPO/FPO, including guiding thru the formalities and procedures connected to the issuance right from Pre-IPO to Listing and complying all the regulatons connected thereof
Issuance of a confirmation of compliance of conditions and stipulations as prescribed by SEBI is a must
IPO Grading service aimed at facilitating the assessment of equity issues
Alternately Call our Legal Expert Now For Free Consultation at +91 9599672352
Thanks Muds Team for their all round support in successful delivery of services. Their approach is Client Centric and they possess the deep understanding of the Subject
Their Professional Approach blended with personal touch eases out all hassals in the Transaction.
We have been working with Muds since 4 years and their service is dependable. I highly recommend Muds in every facets of Business for the hassal free sleep.
Company Secretary - Hines
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