National Mineral Policy 2006 - Department of Mines

investment in early stage companies, is appropriate for prospecting companies. Most privateequity firms are structured as specialist funds which do private investment in either thegrowth or the buy-out phases.Indian Stock Exchanges7.11 The Indian stock markets have gone through rapid changes in the past few years andthe listing norms of stock exchanges have also been revised. Guidelines for Initial PublicOfferings (IPOs) by unlisted companies issued by the Securities and Exchange Board of India(SEBI) (Disclosure and Investor Protection Guidelines) include the following:a. The company has net tangible assets of at least Rs. 3 crores in each of the preceding 3 fullyears (of 12 months each), of which not more than 50% is held in monetary assets:b. Provided that if more than 50% of the net tangible assets are held in monetary assets, thecompany has made firm commitments to deploy such excess monetary assets in itsbusiness/project;c. The company has a track record of distributable profits in terms of Section 205 of theCompanies Act, 1956, for at least three (3) out of immediately preceding five (5) years;d. Provided further that extraordinary items shall not be considered for calculatingdistributable profits in terms of Section 205 of Companies Act, 1956e. The company has a net worth of at least Rs. 1 crore in each of the preceding 3 full years(of 12 months each);f. In case the company has changed its name within the last one year, at least 50% of therevenue for the preceding 1 full year is earned by the company from the activitysuggested by the new name; andg. The aggregate of the proposed issue and all previous issues made in the same financialyear in terms of size (i.e. offer through offer document + firm allotment + promoters’contribution through the offer document), does not exceed five (5) times its pre-issue networth as per the audited balance sheet of the last financial year.An unlisted company not in compliance with the above guidelines can still undertake an IPOif the issue is made through the book-building process and at least 50 per cent of the offer isallotted to the Qualified Institutional Buyers (QIBs) or if financial institutions (FIs) and bankssubscribe to at least 15 per cent of the issue and another 10 per cent is allotted to QIBs. In141