Appeal Against Refusal

Notice about refusal to register the shares, must be given by the company to the transferor and transferee, within two months, to the transferor and transferee. Company shall also intimate the reasons for refusal.

Transferor or transferee, may appeal to the Company Law Board (CLB) in Form No. 1, as specified in CLB regulations, 1991, within two months of the receipt of notice of such refusal, or

Where the company has sent no notice, within four months from the date on which the instrument of transfer was delivered to the company.

Company Law Board, after hearing the parties, may pass any of the following orders.

• Dismiss the appeal, or
• Direct that transfer shall be registered within 10 days of he receipt of order, or
• Direct the rectification of the register and also direct the company to pay damages, if any, sustained by any party aggrieved, or
• May grant any interim injunction or stay, or
• Incidental or consequential orders regarding payment of dividend or the allotment of bonus or rights shares.

In case of any default by the company, in complying with the orders of Company Law Board, the company ordinary defaulting officers may be fined in monetary terms.

I.P.O.'s (INITIAL PUBLIC OFFER)

A Company proposing to raise resources by a public issue should first select the type of securities i.e. share and /or debentures to be issued by it. The decision regarding the issue of shares to be made at par or premium should be decided keeping in view the SEBI guidelines.

The whole process of issue of shares can be divided into two parts:
- Pre issue activities, and
- Post issue activities

All activities beginning with the planning of capital issues, till the opening of the subscription list are pre issue activities, while all activities subsequent to the opening of the subscription list may be called post issue activities.

The various steps involved in public issue of shares are enumerated below:

1. Compliance With The SEBI Guidelines

   Before making any issue of capital, it is to be ensured that the proposed issue complies with the provision of the SEBI guideline for disclosure and investor protection with regards to Pricing of issue, promoters, Contribution, lock in period, reservation, etc.

2. Holding Of General Meeting

   If it is required by the Articles of Association, that consent of shareholder is to be obtained, then meeting of the shareholder will be called.

3. Intimation To Stock Exchange

   A copy of the Memorandum and Articles of Association of the company is to be sent to the Stock Exchanges where the shares are to be listed, for approval.

4. Appointment

   A Company, which issues shares, has to appoint one or more Merchant Bankers, who act as Lead Managers to the public issue. The company may, also appoint Registrars, underwriter, brokers etc

5. Drafting Of Prospectus

   Apart from the notice of offer to issue shares to public prospectus should also disclose:
   - Justification of Premium, if called.
   - Net Asset value (NAV)
   - High and Low price of the shares of the company for the last two years.
   - Highlights of the issue, as well as the "Risk Factors".
   - A clause that company shall refund the entire application money if minimum subscription is not received.
   - A statement by the lead managers that in their opinion the assets of the underwriters are adequate to meet their obligations.

6. Approval Of Prospectus

   The draft prospectus alongwith the application form for issue of shares should be approved by the solicitors/legal advisors/stock exchange & [where application has been made seeking permission for shares to be draft in] of the company to ensure that it contains all disclosures and information as required by various statutes, rules, notifications, etc.

7. Approval Of Board Of Directors

   After the concerned parties / agencies have approved the draft prospectus and the application form, the board of directors of the company should approve the final draft, before filing with the Registrar of companies.

8. Registration Of Propectus With ROC

   Before the prospectus is issued to the public it must be filed with the Registrar of companies, duly signed thereon by every director or proposed director of the company.

   The prospectus must be registered with ROC within 3 months of vetting by SEBI.

9. Application To Stock exchange To List Shares

   Before filing prospectus with the Registrar of companies, the company should submit on application to the Stock Exchange (s) for enlistment of securities offered to the public by the said issue. The fact that an application has / have been made to the stock exchange must be stated in the prospectus.

10. Printing And Distribution Of Prospectus And Application Forms

    After Receipt of Acknowledgement card from the SEBI and the intimation from Registrar of Companies regarding registration of prospectus, the company should take steps to issue the prospectus within 90 days of it's registration with ROC

    For this compliance, requisite steps for printing and distribution amongst Banker, Underwriter public etc. should be made. Announcement And Advertisement

    Announcement regarding the proposed issue should be made at least ten (10) days before the subscription list opens.

    No advertisement should include Brand Names for the issue except the normal commercial name of the company or commercial brand names of the company or commercial brand names of it's products already in use.

    Subscription List

    As stipulated by SEBI guidelines the subscription list for public issue is to be kept open for atleast 3 working days and for a total period of not exceeding 10 working days, which is to be disclosed in prospectus as well.

11. Separate Bank Account

    A SEPARATE Bank account is opened for the purpose of collecting the proceeds of the issue. Further, the date of opening and closing of the subscription list should be intimated to all the collecting and controlling branches of the bank with whom the company has entered into an agreement for the collection of application forms.

    Minimum Subscription

    As per the SEBI guidelines, if the company does not receive 90% of the issue amount from the public subscription including development from underwriters within 120 days from the date of the issue, the amount of subscription received is required to be refunded to the applications. In case of disputed development also, subscription is required to be refunded if 90% of the issued amount plus accepted

    Development from underwriters if any is not received within 120 days of the issue of prospectus. All money received from the applicants for shares is required to be repaid forthwith without interest and if any such money is not so repaid in the next 10 days (after the expiry of 120 days), the directors of the company are jointly and severally liable to repay that money, with interest from the expiry of the 130 days.

    The company should refund the amount within 10 weeks of the closing of the subscription list and pay interest, if refunds are delayed by more than 8 days after this period.

12. Allotment Of Shares

    A return of allotment in Form no.--- 2 of the companies (central government's) General Rules and Form, 1956 should be filed with Registrar of companies within 30 days of the date of allotment alongiwith the fees payable, as prescribed in schedule X of the Act.

    In case, the issue is over-subscribed, the basis of allotment has to be decided in consultation with the stock exchange authorities as per the guidelines laid down by the stock exchanges.

13. Over Subscription

    The Over-subscribed amount should after the finalisation of allotment, be refunded to the applicants within 10 weeks of the closure of subscription list. If the money is not so refunded, the company is liable to refund the money with interest as specified from the expiry of the 8 days after 10 weeks of the closure of subscription list.

14. Compliance Report

    As stipulated by SEBI guidelines within 45 days of the closure of issue, a report in the prescribed form alongwith a compliance certificate from statutory auditor/ practicing charted accountant or by a company secretary in practice is to be forwarded to SEBI by the lead managers.

15. Issuance Of Share Certificates

    As per section 113, the company should deliver the share certificate within 3 months after the allotment of shares.