A private placement is a process of inviting subscription the securities of a corporate issuer otherwise than through a public offer.
Private placement is the act of placing a new issue of shares with a group of selected financial institutions (Dictionary of banking and finance)
The transferring of securities to a small selected group of investors. The sale of bond or other security directly to a limited number of investors. (Bloomberg)
Private placements are mainly for fund raising.
But sometimes they are made for strategic objectives.
Strategic reasons
1. Consolidation of stakes of promoters.
2. Induct a strategic investor or a joint venture partner
3. Provide stakes to working directors and senior management.
4. Implement a employee stock option plan.
5. Reward shareholders with bonus issues.
Private Placement Route for Fund Raising
1. Early state venture capital
2. Later stage private equity
3. Other institutional investors
4. Non institutional investors
5. International capital markets
Tuesday, September 30, 2008
Monday, September 29, 2008
Goldman Sachs - The Controllers group - Recruitment at Bangalore - July 2008
Fresher Jobs: CA, accounting, finance
Employer Name: Goldman Sachs
Employer Address:
Email:
URL: www.gs.com
Phone:
Required Skills: Looking for Qualified CA freshers for various divisions in Goldman Sachs, Bangalore
Required Experience: 0-3 Years
Required Education: UG - B.Com - Commerce
Job Location: Bangalore
Job Description
WHO WE ARE
Goldman Sachs is a leading global investment banking, securities and investment management firm that provides a wide range of services worldwide to a substantial and diversified client base that includes corporations, financial institutions, governments and high net-worth individuals.
Founded in 1869, it is one of the oldest and largest investment banking firms. The firm is headquartered in New York and maintains offices in London, Bangalore, Frankfurt, Tokyo, Hong Kong and other major financial centres around the world.
We are committed to growing our distinctive Culture and upholding our core values which always place our client's interests first. These values are reflected in our Business Principles, which emphasise integrity, commitment to excellence, innovation and teamwork.
BUSINESS UNIT OVERVIEW
The Controllers group is responsible for safeguarding the firm's assets: to help maintain the integrity of Goldman Sachs' finances and expenditures.
Through careful consideration and analyses of firm finances, objectives and strategies, we ensure that the firm's businesses continue to be profitable and efficiently run. Controllers also ensure that all business practices are in compliance with financial and regulatory requirements worldwide. Since contact with virtually every part of the firm is essential to Controllers, professionals in the department experience Goldman Sachs businesses, products and sophisticated technology systems in depth.
SKILL / EXPERIENCE
â Chartered Accountant.
â Relevant work experience is in any of the above
â Able to easily grasp new concepts
â Flexible and able to work well under pressure
â Adept at multi-tasking and able to work in a team environment
â Strong interpersonal and communication (written and verbal) skills
â Inquisitive, enthusiastic self starter with a strong analytical mind-set
â Knowledge of MS Office (Word, Excel, Access) required.
About Employer
Goldman Sachs is a leading global investment banking, securities and investment management firm that provides a wide range of services worldwide to a substantial and diversified client base that includes corporations, financial institutions, governments and high net-worth individuals. Founded in 1869, it is one of the oldest and largest investment banking firms. The firm is headquartered in New York and maintains offices in London, Frankfurt, Tokyo, Hong Kong and other major financial centers around the world.
Employer Name: Goldman Sachs
Employer Address:
Email:
URL: www.gs.com
Phone:
Required Skills: Looking for Qualified CA freshers for various divisions in Goldman Sachs, Bangalore
Required Experience: 0-3 Years
Required Education: UG - B.Com - Commerce
Job Location: Bangalore
Job Description
WHO WE ARE
Goldman Sachs is a leading global investment banking, securities and investment management firm that provides a wide range of services worldwide to a substantial and diversified client base that includes corporations, financial institutions, governments and high net-worth individuals.
Founded in 1869, it is one of the oldest and largest investment banking firms. The firm is headquartered in New York and maintains offices in London, Bangalore, Frankfurt, Tokyo, Hong Kong and other major financial centres around the world.
We are committed to growing our distinctive Culture and upholding our core values which always place our client's interests first. These values are reflected in our Business Principles, which emphasise integrity, commitment to excellence, innovation and teamwork.
BUSINESS UNIT OVERVIEW
The Controllers group is responsible for safeguarding the firm's assets: to help maintain the integrity of Goldman Sachs' finances and expenditures.
Through careful consideration and analyses of firm finances, objectives and strategies, we ensure that the firm's businesses continue to be profitable and efficiently run. Controllers also ensure that all business practices are in compliance with financial and regulatory requirements worldwide. Since contact with virtually every part of the firm is essential to Controllers, professionals in the department experience Goldman Sachs businesses, products and sophisticated technology systems in depth.
SKILL / EXPERIENCE
â Chartered Accountant.
â Relevant work experience is in any of the above
â Able to easily grasp new concepts
â Flexible and able to work well under pressure
â Adept at multi-tasking and able to work in a team environment
â Strong interpersonal and communication (written and verbal) skills
â Inquisitive, enthusiastic self starter with a strong analytical mind-set
â Knowledge of MS Office (Word, Excel, Access) required.
About Employer
Goldman Sachs is a leading global investment banking, securities and investment management firm that provides a wide range of services worldwide to a substantial and diversified client base that includes corporations, financial institutions, governments and high net-worth individuals. Founded in 1869, it is one of the oldest and largest investment banking firms. The firm is headquartered in New York and maintains offices in London, Frankfurt, Tokyo, Hong Kong and other major financial centers around the world.
Sunday, September 28, 2008
Integrating ESG into Investment Research - Goldman Sachs
A presentation by Goldman Sachs
June 2006
Sarah Forrest
sarah.forrest@gs.com
http://www.ahcgroup.com/powerpoint/GoldmanSachsPresentation.ppt
What Are Thought Leaders / Leading Financial Industry Organizations
Saying About E S G? Sustainability?
http://www.ga-institute.com/esg-matters/what-leaders-are-saying.html
Goldman Sachs – “GS SUSTAIN”
Over the past five years new analytic tools were developed by global investment bankers Goldman Sachs “to help pick tomorrow’s capital market winners,” and to develop a short list of companies that could be positioned as market winners for the long-term. The GS “Green is Gold” report at the end of 2007 states that there was a 25 percent premium for companies with a good ESG record against peers in the MSCI World Index (since August 2005. To date these are mostly EU and UK companies; 25% are US-based.) The comprehensive GS SUSTAIN framework created by Goldman Sachs will be a major influence in advancing ESG metrics for investors and analysts and investment bankers in the USA in the months ahead.
http://www.unglobalcompact.org/docs/summit2007/gs_esg_embargoed_until030707pdf.pdf
CFA Institute (the trade association for financial analysts)
“Investors are generally well-served in analyzing a public company’s financial data, but as more and more firms provide non-financial ESG metrics, investors are finding it challenging to understand and incorporate this into their research models.” – Matt Orsagh, CFA, CIPM, project manager for the Institute’s ESG Manual.
“Successful investing is dependent on one’s ability to discern the factors that influence the market’s valuation of a Company and then judge the accuracy of that valuation. In recent years non-financial factors – including environmental, social and governance factors – have figured ever more prominently in the value of corporations…ESG factors represent a broad set of intrinsic concerns that may ultimately affect valuation of equity, fixed-income, real estate and infrastructure investments…” – from the CFA Institute’s ESG Manual for Investors. (May 2008)
Bloomberg News – Tracking and Evaluating ESG Factors
Bloomberg News is serviced by 135 bureaus worldwide and supplemented by a huge number of news wires, RSS wires and more, is presenting ESG information through a number of screens: “News, Research, Third Party Data Sets & Research, Indices, Funds, Bloomberg Law, Energy & Emissions, Management & Bios, Financial Analysis, Company Risk, Equity Screening, Equity Scoring, and Portfolio Analysis.” Using these powerful, sophisticated tools, investors are building their own models for ESG metric evaluation.
Mercer - Marsh & McLennan Companies (NYSE:MMC)
Mercer global [investment] manager research has further evolved its manager research process to evaluate the extent to which fund managers proactively integrate ESG factors into their mainstream investment process (May 2008). Institutional asset managers are becoming increasingly interested in whether managers behave as active owners of capital and whether they reflect the materiality of ESG in their investment decision-making. Mercer’s existing ESG research process has been expanded to rate all [investment] managers on their ESG capabilities at the strategy level. Craig Metrick, US head of Mercer’s responsible lending team: “For Mercer to take this step sends a clear signal to managers and owners. Not only do we believe that ESG factors are important, but our clients (some of the largest asset owners in the world) do too.”
Responsible Investor – United Kingdom
Could sovereign wealth funds be the most important trends in ESG investing,” the publishers asked in July 2008? SWFs – thinking of China, the Middle East, and Singapore – are becoming important shareowners in Citigroup, Merrill Lynch, UBS, and Barclays. (Estimates are total SWF assets are $3 billion and growing substantially.) SWFs, says RI, are in different stages of adopting ESG policies for the relationships with their “investees.” Could we see more divestment – such as Norway’s Global Pension Fund dumping its ownership in Wal-Mart? Norway and the New Zealand SWFs cite higher returns and national values as reasons for a focus on ESG. The largest Norwegian investors are said to be lobbying that country’s top companies to report to a set of standards on the environment, labor and human rights, says RI.
New York Society of Securities Analysts (NYSSA)
Program, May 2008 – “Responsible Investment Across Asset Classes: Diversification in ESG Investing.” Traditionally, socially responsible investing (SRI) was largely limited to public equity and fixed-income funds. As responsible investing concepts have evolved and increasingly incorporated environmental, social and governance (ESG) analysis into decision-making, an array of investment products has emerged. These offer market returns, liquidity and diversification; they are relevant for both high net-worth individuals and institutional investors.
Business For Social Responsibility (BSR)
The topic of incorporating ESG criteria as part of a long-term company valuation by financial institutions has been entering mainstream debate in recent years. Although many mainstream institutions such as ABN AMRO and Goldman Sachs have begun considering the effects of including ESG criteria as part of their fundamental financial analysis, investors are waiting for vetted proof of long-term materiality before fully incorporating the criteria.
If ESG criteria become part of mainstream financial analysis, it can have an important influence on how public companies manage these issues. It is therefore important to understand how these criteria are being incorporated by mainstream financial institutions, as well as the barriers that have prevented such integration from becoming universally practiced. [BSR has issued a report on ESG and Mainstream Investing, August 2008] The report evaluates the challenges that have faced and solutions have been proposed industry-wide.
for PDF copy of report, click on
http://www.bsr.org/reports/BSR_ESG_Mainstream_Investing.pdf
Your Company's ESG - Environmental, Social, and Governance Factors Are Mattering More Now to Institutional Investors (By Hank Boerner, CEO - Governance & Accountability Institute) - Published September/October 2007 in Corporate Finance Review
http://www.hankboerner.com/library/Corporate%20Finance%20Review/Your%20Companies%20ESG%20-%20Enviro%20Social%20Governance%20(09&10-2007).pdf
June 2006
Sarah Forrest
sarah.forrest@gs.com
http://www.ahcgroup.com/powerpoint/GoldmanSachsPresentation.ppt
What Are Thought Leaders / Leading Financial Industry Organizations
Saying About E S G? Sustainability?
http://www.ga-institute.com/esg-matters/what-leaders-are-saying.html
Goldman Sachs – “GS SUSTAIN”
Over the past five years new analytic tools were developed by global investment bankers Goldman Sachs “to help pick tomorrow’s capital market winners,” and to develop a short list of companies that could be positioned as market winners for the long-term. The GS “Green is Gold” report at the end of 2007 states that there was a 25 percent premium for companies with a good ESG record against peers in the MSCI World Index (since August 2005. To date these are mostly EU and UK companies; 25% are US-based.) The comprehensive GS SUSTAIN framework created by Goldman Sachs will be a major influence in advancing ESG metrics for investors and analysts and investment bankers in the USA in the months ahead.
http://www.unglobalcompact.org/docs/summit2007/gs_esg_embargoed_until030707pdf.pdf
CFA Institute (the trade association for financial analysts)
“Investors are generally well-served in analyzing a public company’s financial data, but as more and more firms provide non-financial ESG metrics, investors are finding it challenging to understand and incorporate this into their research models.” – Matt Orsagh, CFA, CIPM, project manager for the Institute’s ESG Manual.
“Successful investing is dependent on one’s ability to discern the factors that influence the market’s valuation of a Company and then judge the accuracy of that valuation. In recent years non-financial factors – including environmental, social and governance factors – have figured ever more prominently in the value of corporations…ESG factors represent a broad set of intrinsic concerns that may ultimately affect valuation of equity, fixed-income, real estate and infrastructure investments…” – from the CFA Institute’s ESG Manual for Investors. (May 2008)
Bloomberg News – Tracking and Evaluating ESG Factors
Bloomberg News is serviced by 135 bureaus worldwide and supplemented by a huge number of news wires, RSS wires and more, is presenting ESG information through a number of screens: “News, Research, Third Party Data Sets & Research, Indices, Funds, Bloomberg Law, Energy & Emissions, Management & Bios, Financial Analysis, Company Risk, Equity Screening, Equity Scoring, and Portfolio Analysis.” Using these powerful, sophisticated tools, investors are building their own models for ESG metric evaluation.
Mercer - Marsh & McLennan Companies (NYSE:MMC)
Mercer global [investment] manager research has further evolved its manager research process to evaluate the extent to which fund managers proactively integrate ESG factors into their mainstream investment process (May 2008). Institutional asset managers are becoming increasingly interested in whether managers behave as active owners of capital and whether they reflect the materiality of ESG in their investment decision-making. Mercer’s existing ESG research process has been expanded to rate all [investment] managers on their ESG capabilities at the strategy level. Craig Metrick, US head of Mercer’s responsible lending team: “For Mercer to take this step sends a clear signal to managers and owners. Not only do we believe that ESG factors are important, but our clients (some of the largest asset owners in the world) do too.”
Responsible Investor – United Kingdom
Could sovereign wealth funds be the most important trends in ESG investing,” the publishers asked in July 2008? SWFs – thinking of China, the Middle East, and Singapore – are becoming important shareowners in Citigroup, Merrill Lynch, UBS, and Barclays. (Estimates are total SWF assets are $3 billion and growing substantially.) SWFs, says RI, are in different stages of adopting ESG policies for the relationships with their “investees.” Could we see more divestment – such as Norway’s Global Pension Fund dumping its ownership in Wal-Mart? Norway and the New Zealand SWFs cite higher returns and national values as reasons for a focus on ESG. The largest Norwegian investors are said to be lobbying that country’s top companies to report to a set of standards on the environment, labor and human rights, says RI.
New York Society of Securities Analysts (NYSSA)
Program, May 2008 – “Responsible Investment Across Asset Classes: Diversification in ESG Investing.” Traditionally, socially responsible investing (SRI) was largely limited to public equity and fixed-income funds. As responsible investing concepts have evolved and increasingly incorporated environmental, social and governance (ESG) analysis into decision-making, an array of investment products has emerged. These offer market returns, liquidity and diversification; they are relevant for both high net-worth individuals and institutional investors.
Business For Social Responsibility (BSR)
The topic of incorporating ESG criteria as part of a long-term company valuation by financial institutions has been entering mainstream debate in recent years. Although many mainstream institutions such as ABN AMRO and Goldman Sachs have begun considering the effects of including ESG criteria as part of their fundamental financial analysis, investors are waiting for vetted proof of long-term materiality before fully incorporating the criteria.
If ESG criteria become part of mainstream financial analysis, it can have an important influence on how public companies manage these issues. It is therefore important to understand how these criteria are being incorporated by mainstream financial institutions, as well as the barriers that have prevented such integration from becoming universally practiced. [BSR has issued a report on ESG and Mainstream Investing, August 2008] The report evaluates the challenges that have faced and solutions have been proposed industry-wide.
for PDF copy of report, click on
http://www.bsr.org/reports/BSR_ESG_Mainstream_Investing.pdf
Your Company's ESG - Environmental, Social, and Governance Factors Are Mattering More Now to Institutional Investors (By Hank Boerner, CEO - Governance & Accountability Institute) - Published September/October 2007 in Corporate Finance Review
http://www.hankboerner.com/library/Corporate%20Finance%20Review/Your%20Companies%20ESG%20-%20Enviro%20Social%20Governance%20(09&10-2007).pdf
Global Securities Services Technology - Goldman Sachs
Global Securities Services Technology
Global Securities Services provides clearance, financing, custody, short coverage and reporting services to hedge funds and institutional clients.
In addition to these core services, the group offers the following value-added solutions: capital introduction, startup and consulting services, system integration and fund administration. Global Securities Services fulfills its mission by:
Providing hedge funds with all the tools and services to run their business
Meeting the demands high trading volumes create for new technology products
Developing and supporting applications used for trade processing, custody services, reporting, portfolio accounting, performance tracking, trading and credit risk analysis
Providing direct external client support
Global Securities Services Technology is comprised of five departments:
Prime Brokerage captures and process all client trades, payments and journals. The team designs and develops several core Web-based and Excel-based tools that are used by clients’ portfolio/risk/operations manager. It is also responsible for the automated delivery of custody, portfolio accounting, and performance and risk reporting to our clients in multiple time zones.
Securities Lending automates securities lending trading and middle-office decision and workflow processes, development of risk management tools, system scalability to support high transaction volumes, and expansion of the platform to include new products and markets. The group also develops and maintains e-commerce applications on both supply and demand sides of the business.
Futures develops trading, trade processing and clearing systems used internally as well as by external clients. Functional areas covered by these systems include trading and order management, trade booking and allocation services, trade matching and clearing, and trade processing.
Goldman Sachs Execution and Clearance supports a full brokerage platform for broker-dealers with proprietary businesses and hedge funds, including applications for trade processing, position and balance, margin, asset servicing, fund transfer, and financial and regulatory reporting.
Global Securities Services Risk IT is responsible for risk and margin financing technology used by the Global Securities Services business. The group provides risk management tools and reports to internal Global Securities Services management and external Hedge Fund clients. It also implements and supports various risk methodologies across broad asset classes, providing insights to risk managers and the appropriate leverage to our external clients.
http://www2.goldmansachs.com/careers/our-firm/divisions/technology/how-were-organized/global-securities-services-technology.html
Global Securities Services provides clearance, financing, custody, short coverage and reporting services to hedge funds and institutional clients.
In addition to these core services, the group offers the following value-added solutions: capital introduction, startup and consulting services, system integration and fund administration. Global Securities Services fulfills its mission by:
Providing hedge funds with all the tools and services to run their business
Meeting the demands high trading volumes create for new technology products
Developing and supporting applications used for trade processing, custody services, reporting, portfolio accounting, performance tracking, trading and credit risk analysis
Providing direct external client support
Global Securities Services Technology is comprised of five departments:
Prime Brokerage captures and process all client trades, payments and journals. The team designs and develops several core Web-based and Excel-based tools that are used by clients’ portfolio/risk/operations manager. It is also responsible for the automated delivery of custody, portfolio accounting, and performance and risk reporting to our clients in multiple time zones.
Securities Lending automates securities lending trading and middle-office decision and workflow processes, development of risk management tools, system scalability to support high transaction volumes, and expansion of the platform to include new products and markets. The group also develops and maintains e-commerce applications on both supply and demand sides of the business.
Futures develops trading, trade processing and clearing systems used internally as well as by external clients. Functional areas covered by these systems include trading and order management, trade booking and allocation services, trade matching and clearing, and trade processing.
Goldman Sachs Execution and Clearance supports a full brokerage platform for broker-dealers with proprietary businesses and hedge funds, including applications for trade processing, position and balance, margin, asset servicing, fund transfer, and financial and regulatory reporting.
Global Securities Services Risk IT is responsible for risk and margin financing technology used by the Global Securities Services business. The group provides risk management tools and reports to internal Global Securities Services management and external Hedge Fund clients. It also implements and supports various risk methodologies across broad asset classes, providing insights to risk managers and the appropriate leverage to our external clients.
http://www2.goldmansachs.com/careers/our-firm/divisions/technology/how-were-organized/global-securities-services-technology.html
Asset Management Technology - Goldman Sachs
Asset Management Technology
The Goldman Sachs Asset Management (GSAM) business supports a set of global institutional and high net worth investors who wish to follow investment strategies that carefully balance risk and return.
GSAM Technology is directly aligned to the business, working on a variety of software engineering problems that range in duration from hours to years. It is a fast-paced environment, adapting to market and customer needs to create software that is robust enough to cater to an ever-changing business environment. GSAM Technology utilizes an array of different technologies with increasing development focus on open source and Linux-based technologies.
Trading and Portfolio Management is responsible for building trading tools and developing automation that allow the business to construct portfolios and manage risk. Technologists are aligned to provide the support needed to service our clients. GSAM trading desks are broken into the following groups: Quantitative Equities, Quantitative Strategies, Active Equity, Fixed Income and Money Markets, and Goldman Sachs Investment Strategies (Liberty Harbor and Investment Partners).
Alternative Investments Technology works closely with the businesses in GSAM dedicated to the third-party alternative investments offering. The technologists work on software tools supporting such functions as portfolio construction, risk monitoring and reporting, as well as the automation of a variety of business processes. Alternative Investments Technology is comprised of the following groups: Private Equity Group (PEG), Hedge Fund Strategies (HFS), Global Manager Strategies (GMS) and Alternative Investment Client Experience (AICE).
Funds Distribution is responsible for the support and development of the Global Cash Services internet platform. This is a suite of systems that allows our clients to execute trades electronically in GSAM and other providers’ funds. This electronic trading system provides clients with a streamlined cash management solution and can serve as a single online centre for trading, reporting and research needs.
Client Reporting, Marketing and E-Commerce supports Operations, Client Service, Marketing, BDS, Product teams and E-Commerce applications in GSAM. The applications in this space are used to produce various client materials for institutional clients and marketing materials to facilitate the sales and marketing efforts across institutional and third party/mutual fund products. The team also supports both client and public web sites for GSAM.
Sales supports the Sales, Client Services, Operations, Sales Attribution, Marketing and Product Management teams by facilitating the sales effort across the institutional and third party distribution channels. We help manage client relationships and track GSAM product sales, enabling such functions as wholesaler compensation, sales reporting and management reporting.
Operations and Core Data supports the operations workflow, including trades management, portfolio accounting, product pricing, billing, and reconciliation for hedge/mutual funds and separate accounts managed by GSAM portfolio managers.
Compliance develops and supports systems that enable compliance officers to monitor GSAM's interaction with client specified guidelines and regulatory requirements for both clients and GSAM employee holdings and transactions.
Performance supports flexible performance and risk calculations for all GSAM-managed investments. It also maintains fund treasury processes that provide service and control related to the development, launch and financial oversight of the division’s pooled investment products, such as hedge/mutual funds, consistent with Goldman’s business principles.
http://www2.goldmansachs.com/careers/our-firm/divisions/technology/how-were-organized/asset-management-technology.html
The Goldman Sachs Asset Management (GSAM) business supports a set of global institutional and high net worth investors who wish to follow investment strategies that carefully balance risk and return.
GSAM Technology is directly aligned to the business, working on a variety of software engineering problems that range in duration from hours to years. It is a fast-paced environment, adapting to market and customer needs to create software that is robust enough to cater to an ever-changing business environment. GSAM Technology utilizes an array of different technologies with increasing development focus on open source and Linux-based technologies.
Trading and Portfolio Management is responsible for building trading tools and developing automation that allow the business to construct portfolios and manage risk. Technologists are aligned to provide the support needed to service our clients. GSAM trading desks are broken into the following groups: Quantitative Equities, Quantitative Strategies, Active Equity, Fixed Income and Money Markets, and Goldman Sachs Investment Strategies (Liberty Harbor and Investment Partners).
Alternative Investments Technology works closely with the businesses in GSAM dedicated to the third-party alternative investments offering. The technologists work on software tools supporting such functions as portfolio construction, risk monitoring and reporting, as well as the automation of a variety of business processes. Alternative Investments Technology is comprised of the following groups: Private Equity Group (PEG), Hedge Fund Strategies (HFS), Global Manager Strategies (GMS) and Alternative Investment Client Experience (AICE).
Funds Distribution is responsible for the support and development of the Global Cash Services internet platform. This is a suite of systems that allows our clients to execute trades electronically in GSAM and other providers’ funds. This electronic trading system provides clients with a streamlined cash management solution and can serve as a single online centre for trading, reporting and research needs.
Client Reporting, Marketing and E-Commerce supports Operations, Client Service, Marketing, BDS, Product teams and E-Commerce applications in GSAM. The applications in this space are used to produce various client materials for institutional clients and marketing materials to facilitate the sales and marketing efforts across institutional and third party/mutual fund products. The team also supports both client and public web sites for GSAM.
Sales supports the Sales, Client Services, Operations, Sales Attribution, Marketing and Product Management teams by facilitating the sales effort across the institutional and third party distribution channels. We help manage client relationships and track GSAM product sales, enabling such functions as wholesaler compensation, sales reporting and management reporting.
Operations and Core Data supports the operations workflow, including trades management, portfolio accounting, product pricing, billing, and reconciliation for hedge/mutual funds and separate accounts managed by GSAM portfolio managers.
Compliance develops and supports systems that enable compliance officers to monitor GSAM's interaction with client specified guidelines and regulatory requirements for both clients and GSAM employee holdings and transactions.
Performance supports flexible performance and risk calculations for all GSAM-managed investments. It also maintains fund treasury processes that provide service and control related to the development, launch and financial oversight of the division’s pooled investment products, such as hedge/mutual funds, consistent with Goldman’s business principles.
http://www2.goldmansachs.com/careers/our-firm/divisions/technology/how-were-organized/asset-management-technology.html
Private Wealth Management Technology - Goldman Sachs
Private Wealth Management Technology
Private Wealth Management Technology partners with the Private Wealth Management business to create technical solutions that provide clients with a level of investment research, trading execution and personalized wealth services that most firms afford only to their institutional investors.
Private Wealth Management Technology is comprised of the following application development teams:
Sales Technology builds and supports applications that help the Private Wealth Advisors effectively manage the clients before, during and after the sale. It covers investment management tools, client web and investment research portal.
Trading Technology provides a wide array of tools to manage, execute and book orders for various financial products such as equities, options, fixed income, structured notes, foreign exchange, mutual funds, IPOs, hedge funds, private equity, derivatives and cash equivalents.
Core Custody builds and maintains applications that provide the core custody functions, including bookkeeping, asset servicing, margin calculations, asset transfer and cash management.
Middle Office Tools builds applications that facilitate the front office and operations staff to perform various account maintenance functions, such as initiating wire transfers, approval of payments and managing of business exceptions using workflow tools.
Core Accounting builds and maintains systems that provide portfolio valuation functions including tax-lot generation, using various depletion algorithms, gain/loss calculations, accretion amortization and yield calculations, calculations of investment returns on various asset classes and comparison to benchmarks.
Reporting designs and maintains report-friendly databases containing all client investment data, and generates client reports including e-confirms and monthly statements.
Private Banking develops and supports online banking functions, such as bank depository accounts, automatic bill pay, ACH transfers, direct deposits, checking, debit and charge cards, loans and mortgages.
Compliance supplies the necessary tools to monitor all Private Wealth Management business activity, addressing both regulatory and internal requirements.
Financial Systems provides timely and accurate financial information used to manage the Private Wealth Management business, bill clients, post revenues and compensate sales teams.
Referential Data builds systems that maintain various reference data elements, accounts and client information, product information, prices and exchange rates as well as financial and holiday calendars.
Core and Infrastructure designs, develops and implements infrastructure for complex database systems, middle tier and front-end apps. It is responsible for system stability, scalability, performance and architecture enhancements and caters for build, deploy and release management for the entire department.
http://www2.goldmansachs.com/careers/our-firm/divisions/technology/how-were-organized/private-wealth-management-technology.html
Private Wealth Management Technology partners with the Private Wealth Management business to create technical solutions that provide clients with a level of investment research, trading execution and personalized wealth services that most firms afford only to their institutional investors.
Private Wealth Management Technology is comprised of the following application development teams:
Sales Technology builds and supports applications that help the Private Wealth Advisors effectively manage the clients before, during and after the sale. It covers investment management tools, client web and investment research portal.
Trading Technology provides a wide array of tools to manage, execute and book orders for various financial products such as equities, options, fixed income, structured notes, foreign exchange, mutual funds, IPOs, hedge funds, private equity, derivatives and cash equivalents.
Core Custody builds and maintains applications that provide the core custody functions, including bookkeeping, asset servicing, margin calculations, asset transfer and cash management.
Middle Office Tools builds applications that facilitate the front office and operations staff to perform various account maintenance functions, such as initiating wire transfers, approval of payments and managing of business exceptions using workflow tools.
Core Accounting builds and maintains systems that provide portfolio valuation functions including tax-lot generation, using various depletion algorithms, gain/loss calculations, accretion amortization and yield calculations, calculations of investment returns on various asset classes and comparison to benchmarks.
Reporting designs and maintains report-friendly databases containing all client investment data, and generates client reports including e-confirms and monthly statements.
Private Banking develops and supports online banking functions, such as bank depository accounts, automatic bill pay, ACH transfers, direct deposits, checking, debit and charge cards, loans and mortgages.
Compliance supplies the necessary tools to monitor all Private Wealth Management business activity, addressing both regulatory and internal requirements.
Financial Systems provides timely and accurate financial information used to manage the Private Wealth Management business, bill clients, post revenues and compensate sales teams.
Referential Data builds systems that maintain various reference data elements, accounts and client information, product information, prices and exchange rates as well as financial and holiday calendars.
Core and Infrastructure designs, develops and implements infrastructure for complex database systems, middle tier and front-end apps. It is responsible for system stability, scalability, performance and architecture enhancements and caters for build, deploy and release management for the entire department.
http://www2.goldmansachs.com/careers/our-firm/divisions/technology/how-were-organized/private-wealth-management-technology.html
Fixed Income, Currencies and Commodities Technlogy - Goldman Sachs
Fixed Income, Currencies and Commodities & Global Derivatives Technology
Fixed Income, Currency and Commodities and Global Derivatives Technology support the technology needs of the firm as it builds an integrated sales and trading desktop and service-side architecture to be used across product lines and divisions.
The primary responsibilities of each group involve:
Providing trade entry and position management functionality to mainly traders and operations
Processing trades and providing real-time trade reporting and batch feeds for the settlement and clearance of trades
Creating integrated solutions for trade positions, profit and loss statements and risk management
These two groups are comprised of the following departments:
Global Trading System globally supports interest rate products and credit desks by developing applications that support fixed income products such as US Treasuries, US and International Government Bonds, and Emerging Market Bonds and Futures.
Global Repo Systems supports firm financing, sales and trading and collateral management of fixed income, equities and loan instruments.
Mortgage Trading Systems supports Agency and Non Agency Mortgages and loan businesses by managing critical pool allocation flows.
Money Markets Trading Technology builds and maintains money market trading and sales technology that supports sales and trade entry, position management and electronic trading for all money market products.
Electronic Trading and Core Services provides technology to manage the electronic trading needs of various business-facing application groups. The team also supports various offering and execution models to communicate with external vendors across product lines.
Interest Rate Products supports highly complex trades that can take anywhere from a day to two months to complete.
Credit Products provides a highly robust and scalable system to support thousands of credit-linked derivatives trades a day, swiftly and without error.
Currencies Technology provides high pricing availability and integrity to allow for our strategies to be confidently placed into the market.
Commodities supports the firm’s trading of a wide range of commodities, including electricity, natural gas, oil, metals, freight, plastics, pulp and paper, in both physical and derivative form.
http://www2.goldmansachs.com/careers/our-firm/divisions/technology/how-were-organized/FICC-global-derivatives-technology.html
Fixed Income, Currency and Commodities and Global Derivatives Technology support the technology needs of the firm as it builds an integrated sales and trading desktop and service-side architecture to be used across product lines and divisions.
The primary responsibilities of each group involve:
Providing trade entry and position management functionality to mainly traders and operations
Processing trades and providing real-time trade reporting and batch feeds for the settlement and clearance of trades
Creating integrated solutions for trade positions, profit and loss statements and risk management
These two groups are comprised of the following departments:
Global Trading System globally supports interest rate products and credit desks by developing applications that support fixed income products such as US Treasuries, US and International Government Bonds, and Emerging Market Bonds and Futures.
Global Repo Systems supports firm financing, sales and trading and collateral management of fixed income, equities and loan instruments.
Mortgage Trading Systems supports Agency and Non Agency Mortgages and loan businesses by managing critical pool allocation flows.
Money Markets Trading Technology builds and maintains money market trading and sales technology that supports sales and trade entry, position management and electronic trading for all money market products.
Electronic Trading and Core Services provides technology to manage the electronic trading needs of various business-facing application groups. The team also supports various offering and execution models to communicate with external vendors across product lines.
Interest Rate Products supports highly complex trades that can take anywhere from a day to two months to complete.
Credit Products provides a highly robust and scalable system to support thousands of credit-linked derivatives trades a day, swiftly and without error.
Currencies Technology provides high pricing availability and integrity to allow for our strategies to be confidently placed into the market.
Commodities supports the firm’s trading of a wide range of commodities, including electricity, natural gas, oil, metals, freight, plastics, pulp and paper, in both physical and derivative form.
http://www2.goldmansachs.com/careers/our-firm/divisions/technology/how-were-organized/FICC-global-derivatives-technology.html
Equity Trading Technology - Goldman Sachs
Equity Trading Technology builds software to support the firm’s trading businesses and constructs a vision for how technology should be used to solve trading problems.
Equities Trading Technology is comprised of the following departments:
Shares Technology develops and supports trading systems for the Listed and OTC single shares trading desks, which are comprised of agency and market-making activity.
Equity Derivatives Trading assists in facilitating clients, making markets and taking views on volatility that underlie equity cash securities. This department also provides access to various options markets, facilitating orders and creating customized hedging and risk-taking solutions.
Algorithmic Trading designs and administers automated execution strategies used by internal equity businesses, as well as external clients such as fund managers and hedge funds.
Equity Capital Markets develops the technology for equity financing activities, including the handling of IPOs, secondary offerings and block trades that use common stock, preferred stock, convertible and derivative products.
Principal Strategies functions as the main proprietary trading desk within the Equities business, taking on risk on behalf of the firm by investing in publicly and privately traded equities and equity-related securities across the globe.
Electronic Transaction Services serves as the premier electronic trading platform, offering destination-neutral access to all major pools of liquidity for equities, options and electronic futures.
http://www2.goldmansachs.com/careers/our-firm/divisions/technology/how-were-organized/equity-trading-technology.html
Equities Trading Technology is comprised of the following departments:
Shares Technology develops and supports trading systems for the Listed and OTC single shares trading desks, which are comprised of agency and market-making activity.
Equity Derivatives Trading assists in facilitating clients, making markets and taking views on volatility that underlie equity cash securities. This department also provides access to various options markets, facilitating orders and creating customized hedging and risk-taking solutions.
Algorithmic Trading designs and administers automated execution strategies used by internal equity businesses, as well as external clients such as fund managers and hedge funds.
Equity Capital Markets develops the technology for equity financing activities, including the handling of IPOs, secondary offerings and block trades that use common stock, preferred stock, convertible and derivative products.
Principal Strategies functions as the main proprietary trading desk within the Equities business, taking on risk on behalf of the firm by investing in publicly and privately traded equities and equity-related securities across the globe.
Electronic Transaction Services serves as the premier electronic trading platform, offering destination-neutral access to all major pools of liquidity for equities, options and electronic futures.
http://www2.goldmansachs.com/careers/our-firm/divisions/technology/how-were-organized/equity-trading-technology.html
Investment Research Technology - Goldman Sachs
Investment Research Technology builds the software that enables the Global Investment Research team to perform fundamental analysis of individual companies, sectors and entire economies.
The group also supports the production of macroeconomic forecasts, reports on companies and industries, investment opinions on individual securities, strategic portfolio management recommendations and a wide range of data products for the firm's investing clients and the firm's own traders and salespeople. Projects include:
Developing analytical tools for financial modeling and sophisticated stock screening
Generating custom document management solutions to create, publish and archive the firm's research content
Building a Web site for our clients, featuring a library of our publications and tools for working with the data produced by Global Investment Research analysts
Developing and maintaining distribution systems for transmitting our research to clients inside and outside the firm
Creating reporting systems for monitoring and improving client service and ensuring regulatory compliance.
Investment Research Technology is comprised of the following groups:
Publishing designs and develops analyst-facing authoring tools and workflow. This includes Word and PowerPoint templates for the creation of written content and generation of renditions from said content.
Numbers delivers the centralized global strategy for the capture and processing of Investment Research financial data. This includes financial analysis tools integrated into the analyst desktop via .NET, integration with our core J2EE workflow systems and leverage of the strategic GS SecDB platform both for the benefit of Global Investment Research (GIR) and the distribution of our numbers firmwide.
Content Management Group Applications provides software solutions to centralize, streamline and expedite content management tasks. The group develops and maintains applications and tools for document and referential data workflow management and compendium authoring and generation.
Distribution is responsible for re-engineering the distribution platform in GIR. This includes all the data and document feeds that are sent out to various aggregators such as Bloomberg and Reuters. The team leverages new technologies on the internet to increase the marketability, presence and visibility of GIR, such as podcasts and RSS channels.
Legal provides software tools for generating disclosures and disclaimers to meet regulatory requirements for investment research publications.
Management Information Systems provisions analytical tools and operational reports for GIR management and its business unit leaders.
Core oversees data architecture, software development and deployment procedures, quality assurance, project management and division-wide technical concerns, such as security, performance and scalability. The group is also responsible for the software that manages, analyzes and retrieves the financial data produced by GIR analysts.
http://www2.goldmansachs.com/careers/our-firm/divisions/technology/how-were-organized/investment-research-technology.html
The group also supports the production of macroeconomic forecasts, reports on companies and industries, investment opinions on individual securities, strategic portfolio management recommendations and a wide range of data products for the firm's investing clients and the firm's own traders and salespeople. Projects include:
Developing analytical tools for financial modeling and sophisticated stock screening
Generating custom document management solutions to create, publish and archive the firm's research content
Building a Web site for our clients, featuring a library of our publications and tools for working with the data produced by Global Investment Research analysts
Developing and maintaining distribution systems for transmitting our research to clients inside and outside the firm
Creating reporting systems for monitoring and improving client service and ensuring regulatory compliance.
Investment Research Technology is comprised of the following groups:
Publishing designs and develops analyst-facing authoring tools and workflow. This includes Word and PowerPoint templates for the creation of written content and generation of renditions from said content.
Numbers delivers the centralized global strategy for the capture and processing of Investment Research financial data. This includes financial analysis tools integrated into the analyst desktop via .NET, integration with our core J2EE workflow systems and leverage of the strategic GS SecDB platform both for the benefit of Global Investment Research (GIR) and the distribution of our numbers firmwide.
Content Management Group Applications provides software solutions to centralize, streamline and expedite content management tasks. The group develops and maintains applications and tools for document and referential data workflow management and compendium authoring and generation.
Distribution is responsible for re-engineering the distribution platform in GIR. This includes all the data and document feeds that are sent out to various aggregators such as Bloomberg and Reuters. The team leverages new technologies on the internet to increase the marketability, presence and visibility of GIR, such as podcasts and RSS channels.
Legal provides software tools for generating disclosures and disclaimers to meet regulatory requirements for investment research publications.
Management Information Systems provisions analytical tools and operational reports for GIR management and its business unit leaders.
Core oversees data architecture, software development and deployment procedures, quality assurance, project management and division-wide technical concerns, such as security, performance and scalability. The group is also responsible for the software that manages, analyzes and retrieves the financial data produced by GIR analysts.
http://www2.goldmansachs.com/careers/our-firm/divisions/technology/how-were-organized/investment-research-technology.html
Finance Division - Planning & Analysis
Finance Division - Planning & Analysis
Goldman Sachs is a leading global investment banking, securities and investment management firm that provides a wide range of services worldwide to a substantial and diversified client base, including corporations, financial institutions, governments and high-net-worth individuals. The firm is headquartered in New York and has offices in London, Frankfurt, Hong Kong, Tokyo and other major financial centres around the world.
The Controllers division of Goldman Sachs is responsible for safeguarding the assets of the firm and maintaining the integrity of Goldman Sachs’ finances and expenditure. Through careful consideration and analysis of the firm’s finance, objectives and strategies, Controllers ensures the firm’s businesses continue to be profitable and efficiently run.
This includes:
- measuring the profitability of the firm’s increasingly complex products and services,
-requiring the design and operation of financial systems to identify and manage risk,
allocate revenue and costs, and
-facilitate firmwide planning and forecasting processes.
Controllers also monitor business practices across the firm to ensure that they are in keeping with financial and regulatory requirements worldwide.
Staffed with over 800 professionals, Controllers operates in offices worldwide including all major business centers such as New York, London, Frankfurt, Tokyo and Hong Kong.
The London Planning & Analysis team is responsible for regular reporting and in-depth financial analysis of European performance for senior European Management.
Key responsibilities would include:
• Weekly reporting of European results to senior Management
• Daily reporting of the trading divisions’ performance
• Monthly financial analysis to the European Management Committee
• Metric analysis and business planning
• Working with the Executive Office to prepare presentations and financial support
• Detailed expense review
• Developing a rapport with trading and investment banking divisions to improve reporting and control of European revenue and expenses
• Ad hoc projects
http://www.cityfellowships.com/pdf/planningandanalysis.pdf
Sarah Smith, Controller and Chief Accounting Officer of Goldman Sachs Sarah E. Smith is the controller and chief accounting officer of Goldman Sachs, with responsibility for the 1,300 members of the global controllers department. She serves on several firmwide committees, including the Risk Committee, the Commitments Committee, and the Partnership Committee. She is also co-chair of the Structured Products Committee and has oversight of Operational Risk. Sarah joined Goldman Sachs in 1996 as a vice president in Finance and held various positions prior to becoming controller in 2002. She was named managing director in1998 and partner in 2002. Prior to joining the firm, Sarah worked in the national and audit practices of KPMG in both London and New York, and held several finance positions at Bristol-MyersSquibb. Sarah attended City of London University and is a member of the Instituteof Chartered Accountants in England and Wales. She is former chair of the Securities Industries Association Accounting Policy Committee and a member of theWashington-based Committee for Economic Development and serves on the US Treasury Department's Commission on the Auditing Industry.
February 20, 2008
http://www.hbswany.org/article.html?aid=150
Goldman Sachs is a leading global investment banking, securities and investment management firm that provides a wide range of services worldwide to a substantial and diversified client base, including corporations, financial institutions, governments and high-net-worth individuals. The firm is headquartered in New York and has offices in London, Frankfurt, Hong Kong, Tokyo and other major financial centres around the world.
The Controllers division of Goldman Sachs is responsible for safeguarding the assets of the firm and maintaining the integrity of Goldman Sachs’ finances and expenditure. Through careful consideration and analysis of the firm’s finance, objectives and strategies, Controllers ensures the firm’s businesses continue to be profitable and efficiently run.
This includes:
- measuring the profitability of the firm’s increasingly complex products and services,
-requiring the design and operation of financial systems to identify and manage risk,
allocate revenue and costs, and
-facilitate firmwide planning and forecasting processes.
Controllers also monitor business practices across the firm to ensure that they are in keeping with financial and regulatory requirements worldwide.
Staffed with over 800 professionals, Controllers operates in offices worldwide including all major business centers such as New York, London, Frankfurt, Tokyo and Hong Kong.
The London Planning & Analysis team is responsible for regular reporting and in-depth financial analysis of European performance for senior European Management.
Key responsibilities would include:
• Weekly reporting of European results to senior Management
• Daily reporting of the trading divisions’ performance
• Monthly financial analysis to the European Management Committee
• Metric analysis and business planning
• Working with the Executive Office to prepare presentations and financial support
• Detailed expense review
• Developing a rapport with trading and investment banking divisions to improve reporting and control of European revenue and expenses
• Ad hoc projects
http://www.cityfellowships.com/pdf/planningandanalysis.pdf
Sarah Smith, Controller and Chief Accounting Officer of Goldman Sachs Sarah E. Smith is the controller and chief accounting officer of Goldman Sachs, with responsibility for the 1,300 members of the global controllers department. She serves on several firmwide committees, including the Risk Committee, the Commitments Committee, and the Partnership Committee. She is also co-chair of the Structured Products Committee and has oversight of Operational Risk. Sarah joined Goldman Sachs in 1996 as a vice president in Finance and held various positions prior to becoming controller in 2002. She was named managing director in1998 and partner in 2002. Prior to joining the firm, Sarah worked in the national and audit practices of KPMG in both London and New York, and held several finance positions at Bristol-MyersSquibb. Sarah attended City of London University and is a member of the Instituteof Chartered Accountants in England and Wales. She is former chair of the Securities Industries Association Accounting Policy Committee and a member of theWashington-based Committee for Economic Development and serves on the US Treasury Department's Commission on the Auditing Industry.
February 20, 2008
http://www.hbswany.org/article.html?aid=150
Thursday, September 25, 2008
Compliance - Stock Broking Company - India - Part 1
Section 18A of SECURITIES AND EXCHANGE BOARD OF INDIA (STOCK BROKERS & SUB-BROKERS) Regulations, 1992, prescribes appointment of a compliance officer for a stock broking firm.
Appointment of compliance officer
18A (1) Every stock broker shall appoint a compliance officer who shall be responsible for monitoring the compliance of the Act, rules and regulations, notifications, guidelines instructions, etc, issued by the Board or the Central Government and for redressal of investors grievances.
(2) The compliance officer shall immediately and independently report the Board any
non-compliance observed by him
Bombay Stock Exchange's Surveillnace & Supervision department publishes a compliance Manual to bring out the issues which a complinace officer has to implement and monitor to comply with the rules of central government, SEBI and stock exchange.
The latest compliance manual is published in May 2008.
The first issue discussed in the manual is maintenance of accounting records as pe Rule 15 of the Securities Contracts (Regulation) rules, 1957 and Regulation 17 of the SEBI (STOCK BROKERS & SUB-BROKERS) Regulations, 1992.
Regulation 17 of the SEBI (STOCK BROKERS & SUB-BROKERS) Regulations, 1992 is given below.
Maintenance of proper books of accounts, records etc. by Stock Brokers
17
(1) Every stock-broker shall keep and maintain the following books of accounts,
records and documents namely; -
(a) Register of transactions (Sauda Book);
(b) Clients ledger;
(c) General ledger;
(d) Journals;
(e) Cash book;
(f) Bank pass book;
(g) Documents register containing, inter-alia, particulars of securities received
and delivered in physical form and the statement of accounts and other records
relating to receipt and delivery of securities provided by the Depository
Participants in respect of dematerialized securities.
(h) Members' contract books showing details of all contracts entered into by him
with other members of the same exchange or counterfoils or duplicates of memos of confirmation issued to such other member;
(i) Counterfoils or duplicates of contract notes issued to clients;
(j) Written consent of clients in respect of contracts entered into as principals;
(k) Margin deposit book;
(l) Registers of accounts of sub- brokers;
(m) an agreement with a sub- broker specifying the scope of authority and
responsibilities of the Stock-Broker and such sub- broker.
(n) An agreement with the stock broker and with the client of the sub-broker to
establish privity of contract between a stock broker and the client of the subbroker.
(2) Every stock-broker shall intimate to the Board the place where the books of
accounts, records and documents are maintained.
(3) Without prejudice to sub- regulation (1), every stock- broker shall, after the close of each accounting period furnish to the Board if so required as soon as possible but not later than six months from the close of the said period a copy of the audited balance sheet and profit and loss account, as at the end of the said
accounting period:
Provided that, if it is not possible to furnish the above documents within the time
specified, the stock-broker shall keep the Board informed of the same together
with the reasons for the delay and the period of time by which such documents
would be furnished.
Maintenance of books of accounts and records
18. Every stock broker shall preserve the books of account and other records maintained under regulation 17 for a minimum period of five years.
Issues related to dealings with the client is the next topic
Regulation of Client Broker Transactions
All transactions relating to clients are to be routed through the client bank account. A member-baroker cannot use the clients' account to make payments for his trades as a principal.
No money can be withdrawn by the broker from clients'account unless there is a liability of clients to the member broker.
Member-brokers should not use clients' account for making payment for office expenses such as, salary, Telephone bills, TDS payments, purchase of office equipment, etc.
It is compulsory for all member-brokers to keep separate accounts for client's securities and to keep such books of accounts, as may be necessary to distinguish his securities from those of the clients' securities.
Member-broker should ensure payment of money/delivery of securities to the clients within 24 hours of the declaration of payout by the Exchange in respect of the concerned settlement.
Appointment of compliance officer
18A (1) Every stock broker shall appoint a compliance officer who shall be responsible for monitoring the compliance of the Act, rules and regulations, notifications, guidelines instructions, etc, issued by the Board or the Central Government and for redressal of investors grievances.
(2) The compliance officer shall immediately and independently report the Board any
non-compliance observed by him
Bombay Stock Exchange's Surveillnace & Supervision department publishes a compliance Manual to bring out the issues which a complinace officer has to implement and monitor to comply with the rules of central government, SEBI and stock exchange.
The latest compliance manual is published in May 2008.
The first issue discussed in the manual is maintenance of accounting records as pe Rule 15 of the Securities Contracts (Regulation) rules, 1957 and Regulation 17 of the SEBI (STOCK BROKERS & SUB-BROKERS) Regulations, 1992.
Regulation 17 of the SEBI (STOCK BROKERS & SUB-BROKERS) Regulations, 1992 is given below.
Maintenance of proper books of accounts, records etc. by Stock Brokers
17
(1) Every stock-broker shall keep and maintain the following books of accounts,
records and documents namely; -
(a) Register of transactions (Sauda Book);
(b) Clients ledger;
(c) General ledger;
(d) Journals;
(e) Cash book;
(f) Bank pass book;
(g) Documents register containing, inter-alia, particulars of securities received
and delivered in physical form and the statement of accounts and other records
relating to receipt and delivery of securities provided by the Depository
Participants in respect of dematerialized securities.
(h) Members' contract books showing details of all contracts entered into by him
with other members of the same exchange or counterfoils or duplicates of memos of confirmation issued to such other member;
(i) Counterfoils or duplicates of contract notes issued to clients;
(j) Written consent of clients in respect of contracts entered into as principals;
(k) Margin deposit book;
(l) Registers of accounts of sub- brokers;
(m) an agreement with a sub- broker specifying the scope of authority and
responsibilities of the Stock-Broker and such sub- broker.
(n) An agreement with the stock broker and with the client of the sub-broker to
establish privity of contract between a stock broker and the client of the subbroker.
(2) Every stock-broker shall intimate to the Board the place where the books of
accounts, records and documents are maintained.
(3) Without prejudice to sub- regulation (1), every stock- broker shall, after the close of each accounting period furnish to the Board if so required as soon as possible but not later than six months from the close of the said period a copy of the audited balance sheet and profit and loss account, as at the end of the said
accounting period:
Provided that, if it is not possible to furnish the above documents within the time
specified, the stock-broker shall keep the Board informed of the same together
with the reasons for the delay and the period of time by which such documents
would be furnished.
Maintenance of books of accounts and records
18. Every stock broker shall preserve the books of account and other records maintained under regulation 17 for a minimum period of five years.
Issues related to dealings with the client is the next topic
Regulation of Client Broker Transactions
All transactions relating to clients are to be routed through the client bank account. A member-baroker cannot use the clients' account to make payments for his trades as a principal.
No money can be withdrawn by the broker from clients'account unless there is a liability of clients to the member broker.
Member-brokers should not use clients' account for making payment for office expenses such as, salary, Telephone bills, TDS payments, purchase of office equipment, etc.
It is compulsory for all member-brokers to keep separate accounts for client's securities and to keep such books of accounts, as may be necessary to distinguish his securities from those of the clients' securities.
Member-broker should ensure payment of money/delivery of securities to the clients within 24 hours of the declaration of payout by the Exchange in respect of the concerned settlement.
Training Plan for A Mid-Sized Investment Banking Firm
Training Plan for A Mid-Sized Investment Banking Firm
(Prepared for 1996)
Introduction
Needs Analysis
Methodology
The Company
Factors
The Continuing Education Plan
Medium/Content and Audience
Record Retention/Tracking
http://www.cecouncil.com/publications/council_publications/trainingplan4.htm
(Prepared for 1996)
Introduction
Needs Analysis
Methodology
The Company
Factors
The Continuing Education Plan
Medium/Content and Audience
Record Retention/Tracking
http://www.cecouncil.com/publications/council_publications/trainingplan4.htm
Rul;e 144A - Rule 230.144A USA Security Laws
CHAPTER II--SECURITIES AND EXCHANGE COMMISSION
PART 230_GENERAL RULES AND REGULATIONS, SECURITIES ACT OF 1933--Table of
Sec. 230.144A Private resales of securities to institutions.
Preliminary Notes: 1. This section relates solely to the application
of section 5 of the Act and not to antifraud or other provisions of the
federal securities laws.
2. Attempted compliance with this section does not act as an
exclusive election; any seller hereunder may also claim the availability
of any other applicable exemption from the registration requirements of
the Act.
3. In view of the objective of this section and the policies
underlying the Act, this section is not available with respect to any
transaction or series of transactions that, although in technical
compliance with this section, is part of a plan or scheme to evade the
registration provisions of the Act. In such cases, registration under
the Act is required.
4. Nothing in this section obviates the need for any issuer or any
other person to comply with the securities registration or broker-dealer
registration requirements of the Securities Exchange Act of 1934 (the
Exchange Act), whenever such requirements are applicable.
5. Nothing in this section obviates the need for any person to
comply with any applicable state law relating to the offer or sale of
securities.
6. Securities acquired in a transaction made pursuant to the
provisions of this section are deemed to be restricted securities within
the meaning of Sec. 230.144(a)(3) of this chapter.
7. The fact that purchasers of securities from the issuer thereof
may purchase such securities with a view to reselling such securities
pursuant to this section will not affect the availability to such issuer
of an exemption under section 4(2) of the Act, or Regulation D under the
Act, from the registration requirements of the Act.
(a) Definitions. (1) For purposes of this section, qualified
institutional buyer shall mean:
(i) Any of the following entities, acting for its own account or the
accounts of other qualified institutional buyers, that in the aggregate
owns and invests on a discretionary basis at least $100 million in
securities of issuers that are not affiliated with the entity:
(A) Any insurance company as defined in section 2(13) of the Act;
Note: A purchase by an insurance company for one or more of its
separate accounts, as defined by section 2(a)(37) of the Investment
Company Act of 1940 (the ``Investment Company Act''), which are neither
registered under section 8 of the Investment Company Act nor required to
be so registered, shall be deemed to be a purchase for the account of
such insurance company.
(B) Any investment company registered under the Investment Company
Act or any business development company as defined in section 2(a)(48)
of that Act;
(C) Any Small Business Investment Company licensed by the U.S. Small
Business Administration under section 301(c) or (d) of the Small
Business Investment Act of 1958;
(D) Any plan established and maintained by a state, its political
subdivisions, or any agency or instrumentality of a state or its
political subdivisions, for the benefit of its employees;
(E) Any employee benefit plan within the meaning of title I of the
Employee Retirement Income Security Act of 1974;
(F) Any trust fund whose trustee is a bank or trust company and
whose participants are exclusively plans of the types identified in
paragraph (a)(1)(i) (D) or (E) of this section, except trust funds that
include as participants individual retirement accounts or H.R. 10 plans.
(G) Any business development company as defined in section
202(a)(22) of the Investment Advisers Act of 1940;
(H) Any organization described in section 501(c)(3) of the Internal
Revenue Code, corporation (other than a bank as defined in section
3(a)(2) of the Act or a savings and loan association or other
institution referenced in section 3(a)(5)(A) of the Act or a foreign
bank or savings and loan association or equivalent institution),
partnership, or Massachusetts or similar business trust; and
(I) Any investment adviser registered under the Investment Advisers
Act.
(ii) Any dealer registered pursuant to section 15 of the Exchange
Act, acting for its own account or the accounts of other qualified
institutional buyers, that in the aggregate owns and invests on a
discretionary basis at least $10 million of securities of issuers that
are not affiliated with the dealer, Provided, That securities
constituting the whole or a part of an unsold allotment to or
subscription by a dealer as a participant in a public offering shall not
be deemed to be owned by such dealer;
(iii) Any dealer registered pursuant to section 15 of the Exchange
Act acting in a riskless principal transaction on behalf of a qualified
institutional buyer;
Note: A registered dealer may act as agent, on a non-discretionary
basis, in a transaction with a qualified institutional buyer without
itself having to be a qualified institutional buyer.
(iv) Any investment company registered under the Investment Company
Act, acting for its own account or for the accounts of other qualified
institutional buyers, that is part of a family of investment companies
which own in the aggregate at least $100 million in securities of
issuers, other than issuers that are affiliated with the investment
company or are part of such family of investment companies. Family of
investment companies means any two or more investment companies
registered under the Investment Company Act, except for a unit
investment trust whose assets consist solely of shares of one or more
registered investment companies, that have the same investment adviser
(or, in the case of unit investment trusts, the same depositor),
Provided That, for purposes of this section:
(A) Each series of a series company (as defined in Rule 18f-2 under
the Investment Company Act [17 CFR 270.18f-2]) shall be deemed to be a
separate investment company; and
(B) Investment companies shall be deemed to have the same adviser
(or depositor) if their advisers (or depositors) are majority-owned
subsidiaries of the same parent, or if one investment company's adviser
(or depositor) is a majority-owned subsidiary of the other investment
company's adviser (or depositor);
(v) Any entity, all of the equity owners of which are qualified
institutional buyers, acting for its own account or the accounts of
other qualified institutional buyers; and
(vi) Any bank as defined in section 3(a)(2) of the Act, any savings
and loan association or other institution as referenced in section
3(a)(5)(A) of the Act, or any foreign bank or savings and loan
association or equivalent institution, acting for its own account or the
accounts of other qualified institutional buyers, that in the aggregate
owns and invests on a discretionary basis at least $100 million in
securities of issuers that are not affiliated with it and that has an
audited net worth of at least $25 million as demonstrated in its latest
annual financial statements, as of a date not more than 16 months
preceding the date of sale under the Rule in the case of a U.S. bank or
savings and loan association, and not more than 18 months preceding such
date of sale for a foreign bank or savings and loan association or
equivalent institution.
(2) In determining the aggregate amount of securities owned and
invested on a discretionary basis by an entity, the following
instruments and interests shall be excluded: bank deposit notes and
certificates of deposit; loan participations; repurchase agreements;
securities owned but subject to a repurchase agreement; and currency,
interest rate and commodity swaps.
(3) The aggregate value of securities owned and invested on a
discretionary basis by an entity shall be the cost of such securities,
except where the entity reports its securities holdings in its financial
statements on the basis of their market value, and no current
information with respect to the cost of those securities has been
published. In the latter event, the securities may be valued at market
for purposes of this section.
(4) In determining the aggregate amount of securities owned by an
entity and invested on a discretionary basis, securities owned by
subsidiaries of the entity that are consolidated with the entity in its
financial statements prepared in accordance with generally accepted
accounting principles may be included if the investments of such
subsidiaries are managed under the direction of the entity, except that,
unless the entity is a reporting company under section 13 or 15(d) of
the Exchange Act, securities owned by such subsidiaries may not be
included if the entity itself is a majority-owned subsidiary that would
be included in the consolidated financial statements of another
enterprise.
(5) For purposes of this section, riskless principal transaction
means a transaction in which a dealer buys a security from any person
and makes a simultaneous offsetting sale of such security to a qualified
institutional buyer, including another dealer acting as riskless
principal for a qualified institutional buyer.
(6) For purposes of this section, effective conversion premium means
the amount, expressed as a percentage of the security's conversion
value, by which the price at issuance of a convertible security exceeds
its conversion value.
(7) For purposes of this section, effective exercise premium means
the amount, expressed as a percentage of the warrant's exercise value,
by which the sum of the price at issuance and the exercise price of a
warrant exceeds its exercise value.
(b) Sales by persons other than issuers or dealers. Any person,
other than the issuer or a dealer, who offers or sells securities in
compliance with the conditions set forth in paragraph (d) of this
section shall be deemed not to be engaged in a distribution of such
securities and therefore not to be an underwriter of such securities
within the meaning of sections 2(11) and 4(1) of the Act.
(c) Sales by Dealers. Any dealer who offers or sells securities in
compliance with the conditions set forth in paragraph (d) of this
section shall be deemed not to be a participant in a distribution of
such securities within the meaning of section 4(3)(C) of the Act and not
to be an underwriter of such securities within the meaning of section
2(11) of the Act, and such securities shall be deemed not to have been
offered to the public within the meaning of section 4(3)(A) of the Act.
(d) Conditions to be met. To qualify for exemption under this
section, an offer or sale must meet the following conditions:
(1) The securities are offered or sold only to a qualified
institutional buyer or to an offeree or purchaser that the seller and
any person acting on behalf of the seller reasonably believe is a
qualified institutional buyer. In determining whether a prospective
purchaser is a qualified institutional buyer, the seller and any person
acting on its behalf shall be entitled to rely upon the following non-
exclusive methods of establishing the prospective purchaser's ownership
and discretionary investments of securities:
(i) The prospective purchaser's most recent publicly available
financial statements, Provided That such statements present the
information as of a date within 16 months preceding the date of sale of
securities under this section in the case of a U.S. purchaser and within
18 months preceding such date of sale for a foreign purchaser;
(ii) The most recent publicly available information appearing in
documents filed by the prospective purchaser with the Commission or
another United States federal, state, or local governmental agency or
self-regulatory organization, or with a foreign governmental agency or
self-regulatory organization, Provided That any such information is as
of a date within 16 months preceding the date of sale of securities
under this section in the case of a U.S. purchaser and within 18 months
preceding such date of sale for a foreign purchaser;
(iii) The most recent publicly available information appearing in a
recognized securities manual, Provided That such information is as of a
date within 16 months preceding the date of sale of securities under
this section in the case of a U.S. purchaser and within 18 months
preceding such date of sale for a foreign purchaser; or
(iv) A certification by the chief financial officer, a person
fulfilling an equivalent function, or other executive officer of the
purchaser, specifying the amount of securities owned and invested on a
discretionary basis by the purchaser as of a specific date on or since
the close of the purchaser's most recent fiscal year, or, in the case of
a purchaser that is a member of a family of investment companies, a
certification by an executive officer of the investment adviser
specifying the amount of securities owned by the family of investment
companies as of a specific date on or since the close of the purchaser's
most recent fiscal year;
(2) The seller and any person acting on its behalf takes reasonable
steps to ensure that the purchaser is aware that
the seller may rely on the exemption from the provisions of section 5 of
the Act provided by this section;
(3) The securities offered or sold:
(i) Were not, when issued, of the same class as securities listed on
a national securities exchange registered under section 6 of the
Exchange Act or quoted in a U.S. automated inter-dealer quotation
system; Provided, That securities that are convertible or exchangeable
into securities so listed or quoted at the time of issuance and that had
an effective conversion premium of less than 10 percent, shall be
treated as securities of the class into which they are convertible or
exchangeable; and that warrants that may be exercised for securities so
listed or quoted at the time of issuance, for a period of less than 3
years from the date of issuance, or that had an effective exercise
premium of less than 10 percent, shall be treated as securities of the
class to be issued upon exercise; and Provided further, That the
Commission may from time to time, taking into account then-existing
market practices, designate additional securities and classes of
securities that will not be deemed of the same class as securities
listed on a national securities exchange or quoted in a U.S. automated
inter-dealer quotation system; and
(ii) Are not securities of an open-end investment company, unit
investment trust or face-amount certificate company that is or is
required to be registered under section 8 of the Investment Company Act;
and
(4)(i) In the case of securities of an issuer that is neither
subject to section 13 or 15(d) of the Exchange Act, nor exempt from
reporting pursuant to Rule 12g3-2(b) (Sec. 240.12g3-2(b) of this
chapter) under the Exchange Act, nor a foreign government as defined in
Rule 405 (Sec. 230.405 of this chapter) eligible to register securities
under Schedule B of the Act, the holder and a prospective purchaser
designated by the holder have the right to obtain from the issuer, upon
request of the holder, and the prospective purchaser has received from
the issuer, the seller, or a person acting on either of their behalf, at
or prior to the time of sale, upon such prospective purchaser's request
to the holder or the issuer, the following information (which shall be
reasonably current in relation to the date of resale under this
section): a very brief statement of the nature of the business of the
issuer and the products and services it offers; and the issuer's most
recent balance sheet and profit and loss and retained earnings
statements, and similar financial statements for such part of the two
preceding fiscal years as the issuer has been in operation (the
financial statements should be audited to the extent reasonably
available).
(ii) The requirement that the information be reasonably current will
be presumed to be satisfied if:
(A) The balance sheet is as of a date less than 16 months before the
date of resale, the statements of profit and loss and retained earnings
are for the 12 months preceding the date of such balance sheet, and if
such balance sheet is not as of a date less than 6 months before the
date of resale, it shall be accompanied by additional statements of
profit and loss and retained earnings for the period from the date of
such balance sheet to a date less than 6 months before the date of
resale; and
(B) The statement of the nature of the issuer's business and its
products and services offered is as of a date within 12 months prior to
the date of resale; or
(C) With regard to foreign private issuers, the required information
meets the timing requirements of the issuer's home country or principal
trading markets.
(e) Offers and sales of securities pursuant to this section shall be
deemed not to affect the availability of any exemption or safe harbor
relating to any previous or subsequent offer or sale of such securities
by the issuer or any prior or subsequent holder thereof.
[55 FR 17945, Apr. 30, 1990, as amended at 57 FR 48722, Oct. 28, 1992]
http://frwebgate.access.gpo.gov/cgi-bin/get-cfr.cgi?TITLE=17&PART=230&SECTION=144A&TYPE=TEXT
PART 230_GENERAL RULES AND REGULATIONS, SECURITIES ACT OF 1933--Table of
Sec. 230.144A Private resales of securities to institutions.
Preliminary Notes: 1. This section relates solely to the application
of section 5 of the Act and not to antifraud or other provisions of the
federal securities laws.
2. Attempted compliance with this section does not act as an
exclusive election; any seller hereunder may also claim the availability
of any other applicable exemption from the registration requirements of
the Act.
3. In view of the objective of this section and the policies
underlying the Act, this section is not available with respect to any
transaction or series of transactions that, although in technical
compliance with this section, is part of a plan or scheme to evade the
registration provisions of the Act. In such cases, registration under
the Act is required.
4. Nothing in this section obviates the need for any issuer or any
other person to comply with the securities registration or broker-dealer
registration requirements of the Securities Exchange Act of 1934 (the
Exchange Act), whenever such requirements are applicable.
5. Nothing in this section obviates the need for any person to
comply with any applicable state law relating to the offer or sale of
securities.
6. Securities acquired in a transaction made pursuant to the
provisions of this section are deemed to be restricted securities within
the meaning of Sec. 230.144(a)(3) of this chapter.
7. The fact that purchasers of securities from the issuer thereof
may purchase such securities with a view to reselling such securities
pursuant to this section will not affect the availability to such issuer
of an exemption under section 4(2) of the Act, or Regulation D under the
Act, from the registration requirements of the Act.
(a) Definitions. (1) For purposes of this section, qualified
institutional buyer shall mean:
(i) Any of the following entities, acting for its own account or the
accounts of other qualified institutional buyers, that in the aggregate
owns and invests on a discretionary basis at least $100 million in
securities of issuers that are not affiliated with the entity:
(A) Any insurance company as defined in section 2(13) of the Act;
Note: A purchase by an insurance company for one or more of its
separate accounts, as defined by section 2(a)(37) of the Investment
Company Act of 1940 (the ``Investment Company Act''), which are neither
registered under section 8 of the Investment Company Act nor required to
be so registered, shall be deemed to be a purchase for the account of
such insurance company.
(B) Any investment company registered under the Investment Company
Act or any business development company as defined in section 2(a)(48)
of that Act;
(C) Any Small Business Investment Company licensed by the U.S. Small
Business Administration under section 301(c) or (d) of the Small
Business Investment Act of 1958;
(D) Any plan established and maintained by a state, its political
subdivisions, or any agency or instrumentality of a state or its
political subdivisions, for the benefit of its employees;
(E) Any employee benefit plan within the meaning of title I of the
Employee Retirement Income Security Act of 1974;
(F) Any trust fund whose trustee is a bank or trust company and
whose participants are exclusively plans of the types identified in
paragraph (a)(1)(i) (D) or (E) of this section, except trust funds that
include as participants individual retirement accounts or H.R. 10 plans.
(G) Any business development company as defined in section
202(a)(22) of the Investment Advisers Act of 1940;
(H) Any organization described in section 501(c)(3) of the Internal
Revenue Code, corporation (other than a bank as defined in section
3(a)(2) of the Act or a savings and loan association or other
institution referenced in section 3(a)(5)(A) of the Act or a foreign
bank or savings and loan association or equivalent institution),
partnership, or Massachusetts or similar business trust; and
(I) Any investment adviser registered under the Investment Advisers
Act.
(ii) Any dealer registered pursuant to section 15 of the Exchange
Act, acting for its own account or the accounts of other qualified
institutional buyers, that in the aggregate owns and invests on a
discretionary basis at least $10 million of securities of issuers that
are not affiliated with the dealer, Provided, That securities
constituting the whole or a part of an unsold allotment to or
subscription by a dealer as a participant in a public offering shall not
be deemed to be owned by such dealer;
(iii) Any dealer registered pursuant to section 15 of the Exchange
Act acting in a riskless principal transaction on behalf of a qualified
institutional buyer;
Note: A registered dealer may act as agent, on a non-discretionary
basis, in a transaction with a qualified institutional buyer without
itself having to be a qualified institutional buyer.
(iv) Any investment company registered under the Investment Company
Act, acting for its own account or for the accounts of other qualified
institutional buyers, that is part of a family of investment companies
which own in the aggregate at least $100 million in securities of
issuers, other than issuers that are affiliated with the investment
company or are part of such family of investment companies. Family of
investment companies means any two or more investment companies
registered under the Investment Company Act, except for a unit
investment trust whose assets consist solely of shares of one or more
registered investment companies, that have the same investment adviser
(or, in the case of unit investment trusts, the same depositor),
Provided That, for purposes of this section:
(A) Each series of a series company (as defined in Rule 18f-2 under
the Investment Company Act [17 CFR 270.18f-2]) shall be deemed to be a
separate investment company; and
(B) Investment companies shall be deemed to have the same adviser
(or depositor) if their advisers (or depositors) are majority-owned
subsidiaries of the same parent, or if one investment company's adviser
(or depositor) is a majority-owned subsidiary of the other investment
company's adviser (or depositor);
(v) Any entity, all of the equity owners of which are qualified
institutional buyers, acting for its own account or the accounts of
other qualified institutional buyers; and
(vi) Any bank as defined in section 3(a)(2) of the Act, any savings
and loan association or other institution as referenced in section
3(a)(5)(A) of the Act, or any foreign bank or savings and loan
association or equivalent institution, acting for its own account or the
accounts of other qualified institutional buyers, that in the aggregate
owns and invests on a discretionary basis at least $100 million in
securities of issuers that are not affiliated with it and that has an
audited net worth of at least $25 million as demonstrated in its latest
annual financial statements, as of a date not more than 16 months
preceding the date of sale under the Rule in the case of a U.S. bank or
savings and loan association, and not more than 18 months preceding such
date of sale for a foreign bank or savings and loan association or
equivalent institution.
(2) In determining the aggregate amount of securities owned and
invested on a discretionary basis by an entity, the following
instruments and interests shall be excluded: bank deposit notes and
certificates of deposit; loan participations; repurchase agreements;
securities owned but subject to a repurchase agreement; and currency,
interest rate and commodity swaps.
(3) The aggregate value of securities owned and invested on a
discretionary basis by an entity shall be the cost of such securities,
except where the entity reports its securities holdings in its financial
statements on the basis of their market value, and no current
information with respect to the cost of those securities has been
published. In the latter event, the securities may be valued at market
for purposes of this section.
(4) In determining the aggregate amount of securities owned by an
entity and invested on a discretionary basis, securities owned by
subsidiaries of the entity that are consolidated with the entity in its
financial statements prepared in accordance with generally accepted
accounting principles may be included if the investments of such
subsidiaries are managed under the direction of the entity, except that,
unless the entity is a reporting company under section 13 or 15(d) of
the Exchange Act, securities owned by such subsidiaries may not be
included if the entity itself is a majority-owned subsidiary that would
be included in the consolidated financial statements of another
enterprise.
(5) For purposes of this section, riskless principal transaction
means a transaction in which a dealer buys a security from any person
and makes a simultaneous offsetting sale of such security to a qualified
institutional buyer, including another dealer acting as riskless
principal for a qualified institutional buyer.
(6) For purposes of this section, effective conversion premium means
the amount, expressed as a percentage of the security's conversion
value, by which the price at issuance of a convertible security exceeds
its conversion value.
(7) For purposes of this section, effective exercise premium means
the amount, expressed as a percentage of the warrant's exercise value,
by which the sum of the price at issuance and the exercise price of a
warrant exceeds its exercise value.
(b) Sales by persons other than issuers or dealers. Any person,
other than the issuer or a dealer, who offers or sells securities in
compliance with the conditions set forth in paragraph (d) of this
section shall be deemed not to be engaged in a distribution of such
securities and therefore not to be an underwriter of such securities
within the meaning of sections 2(11) and 4(1) of the Act.
(c) Sales by Dealers. Any dealer who offers or sells securities in
compliance with the conditions set forth in paragraph (d) of this
section shall be deemed not to be a participant in a distribution of
such securities within the meaning of section 4(3)(C) of the Act and not
to be an underwriter of such securities within the meaning of section
2(11) of the Act, and such securities shall be deemed not to have been
offered to the public within the meaning of section 4(3)(A) of the Act.
(d) Conditions to be met. To qualify for exemption under this
section, an offer or sale must meet the following conditions:
(1) The securities are offered or sold only to a qualified
institutional buyer or to an offeree or purchaser that the seller and
any person acting on behalf of the seller reasonably believe is a
qualified institutional buyer. In determining whether a prospective
purchaser is a qualified institutional buyer, the seller and any person
acting on its behalf shall be entitled to rely upon the following non-
exclusive methods of establishing the prospective purchaser's ownership
and discretionary investments of securities:
(i) The prospective purchaser's most recent publicly available
financial statements, Provided That such statements present the
information as of a date within 16 months preceding the date of sale of
securities under this section in the case of a U.S. purchaser and within
18 months preceding such date of sale for a foreign purchaser;
(ii) The most recent publicly available information appearing in
documents filed by the prospective purchaser with the Commission or
another United States federal, state, or local governmental agency or
self-regulatory organization, or with a foreign governmental agency or
self-regulatory organization, Provided That any such information is as
of a date within 16 months preceding the date of sale of securities
under this section in the case of a U.S. purchaser and within 18 months
preceding such date of sale for a foreign purchaser;
(iii) The most recent publicly available information appearing in a
recognized securities manual, Provided That such information is as of a
date within 16 months preceding the date of sale of securities under
this section in the case of a U.S. purchaser and within 18 months
preceding such date of sale for a foreign purchaser; or
(iv) A certification by the chief financial officer, a person
fulfilling an equivalent function, or other executive officer of the
purchaser, specifying the amount of securities owned and invested on a
discretionary basis by the purchaser as of a specific date on or since
the close of the purchaser's most recent fiscal year, or, in the case of
a purchaser that is a member of a family of investment companies, a
certification by an executive officer of the investment adviser
specifying the amount of securities owned by the family of investment
companies as of a specific date on or since the close of the purchaser's
most recent fiscal year;
(2) The seller and any person acting on its behalf takes reasonable
steps to ensure that the purchaser is aware that
the seller may rely on the exemption from the provisions of section 5 of
the Act provided by this section;
(3) The securities offered or sold:
(i) Were not, when issued, of the same class as securities listed on
a national securities exchange registered under section 6 of the
Exchange Act or quoted in a U.S. automated inter-dealer quotation
system; Provided, That securities that are convertible or exchangeable
into securities so listed or quoted at the time of issuance and that had
an effective conversion premium of less than 10 percent, shall be
treated as securities of the class into which they are convertible or
exchangeable; and that warrants that may be exercised for securities so
listed or quoted at the time of issuance, for a period of less than 3
years from the date of issuance, or that had an effective exercise
premium of less than 10 percent, shall be treated as securities of the
class to be issued upon exercise; and Provided further, That the
Commission may from time to time, taking into account then-existing
market practices, designate additional securities and classes of
securities that will not be deemed of the same class as securities
listed on a national securities exchange or quoted in a U.S. automated
inter-dealer quotation system; and
(ii) Are not securities of an open-end investment company, unit
investment trust or face-amount certificate company that is or is
required to be registered under section 8 of the Investment Company Act;
and
(4)(i) In the case of securities of an issuer that is neither
subject to section 13 or 15(d) of the Exchange Act, nor exempt from
reporting pursuant to Rule 12g3-2(b) (Sec. 240.12g3-2(b) of this
chapter) under the Exchange Act, nor a foreign government as defined in
Rule 405 (Sec. 230.405 of this chapter) eligible to register securities
under Schedule B of the Act, the holder and a prospective purchaser
designated by the holder have the right to obtain from the issuer, upon
request of the holder, and the prospective purchaser has received from
the issuer, the seller, or a person acting on either of their behalf, at
or prior to the time of sale, upon such prospective purchaser's request
to the holder or the issuer, the following information (which shall be
reasonably current in relation to the date of resale under this
section): a very brief statement of the nature of the business of the
issuer and the products and services it offers; and the issuer's most
recent balance sheet and profit and loss and retained earnings
statements, and similar financial statements for such part of the two
preceding fiscal years as the issuer has been in operation (the
financial statements should be audited to the extent reasonably
available).
(ii) The requirement that the information be reasonably current will
be presumed to be satisfied if:
(A) The balance sheet is as of a date less than 16 months before the
date of resale, the statements of profit and loss and retained earnings
are for the 12 months preceding the date of such balance sheet, and if
such balance sheet is not as of a date less than 6 months before the
date of resale, it shall be accompanied by additional statements of
profit and loss and retained earnings for the period from the date of
such balance sheet to a date less than 6 months before the date of
resale; and
(B) The statement of the nature of the issuer's business and its
products and services offered is as of a date within 12 months prior to
the date of resale; or
(C) With regard to foreign private issuers, the required information
meets the timing requirements of the issuer's home country or principal
trading markets.
(e) Offers and sales of securities pursuant to this section shall be
deemed not to affect the availability of any exemption or safe harbor
relating to any previous or subsequent offer or sale of such securities
by the issuer or any prior or subsequent holder thereof.
[55 FR 17945, Apr. 30, 1990, as amended at 57 FR 48722, Oct. 28, 1992]
http://frwebgate.access.gpo.gov/cgi-bin/get-cfr.cgi?TITLE=17&PART=230&SECTION=144A&TYPE=TEXT
Green Shoe Option - SEBI Regulation in India
Section C - Introduction of Green Shoe Option
1. In clause 1.2.1, after sub-clause (xiii) a new sub-clause (xiii-a) shall be added as following;
"(xiii-a) "Green Shoe option" means an option of allocating shares in excess of the shares included in the public issue and operating a post-listing price stabilizing mechanism in accordance with the provisions of Chapter VIII-A of these Guidelines, which is granted to a company to be exercised through a Stabilising Agent."
2. The existing Clause 4.14.1 shall be substituted by the following:
"4.14.1 The entire pre-issue share capital, other than that locked-in as promoters'' contribution, shall be locked-in for a period of one year from the date of commencement of commercial production or the date of allotment in the public issue, whichever is later.
Provided that where shares held by promoter(s) are lent to the SA under clause 8A.7, they shall be exempted from the lock in requirements specified above, for the period starting from the date of such lending to the date when they are returned to the same promoter(s) under clause 8A.13 or under clause 8A.15, as the case may be."
3. A new chapter VIIIA on ''Green Shoe Option'' shall be inserted as following:
"CHAPTER VIII-A - GREEN SHOE OPTION
8A.1 (a) In case an issuer company is making an initial public offer of equity shares through the book building mechanism, the company can avail of the Green Shoe option (GSO) for stabilizing the post listing price of its shares, subject to the provisions of this Chapter.
(b) A company desirous of availing the option granted by this Chapter, shall in the resolution of the general meeting authorizing the public issue, seek authorization also for the possibility of allotment of further shares to the ''stabilizing agent'' (SA) at the end of the stabilization period in terms of clause 8A.15.
8A.2 The company shall appoint one of the Lead book runners, amongst the issue management team, as the "stabilizing agent" (SA), who will be responsible for the price stabilization process, if required. The SA shall enter into an agreement with the issuer company, prior to filing of offer document with SEBI, clearly stating all the terms and conditions relating to this option including fees charged / expenses to be incurred by SA for this purpose.
8A.3 The SA shall also enter into an agreement with the promoter(s) who will lend their shares for the purpose of clause 8A.5, specifying the maximum number of shares that may be borrowed from the promoters, which shall not be in excess of 15% of the total issue size.
8A.4 The details of the agreements mentioned in clause 8A.2 and 8A.3 shall be disclosed in the draft Red Herring prospectus, Red Herring prospectus and the final prospectus. The agreements shall also be included as material documents for public inspection in terms of clause 6.19.15.
8A.5 The Lead Book Runner, in consultation with the SA, shall determine the amount of shares to be overallotted with the public issue, subject to the maximum number specified in clause 8A.3..
8A.6 The draft Red Herring prospectus, the Red Herring prospectus and the final prospectus shall contain the following additional disclosures:
a. Name of the SA
b. The maximum number of shares (as also the percentage vis a vis the proposed issue size) proposed to be over-allotted by the company
c. The period, for which the company proposes to avail of the stabilization mechanism,
d. The maximum increase in the capital of the company and the shareholding pattern post issue, in case the company is required to allot further shares to the extent of over-allotment in the issue.
e. The maximum amount of funds to be received by the company in case of further allotment and the use of these additional funds, in final document to be filed with RoC
f. Details of the agreement/ arrangement entered in to by SA with the promoters to borrow shares from the latter which inter-alia shall include name of the promoters, their existing shareholding, number & percentage of shares to be lent by them and other important terms and conditions including the rights and obligations of each party.
g. The final prospectus shall additionally disclose the exact number of shares to be allotted pursuant to the public issue, stating separately therein the number of shares to be borrowed from the promoters and overallotted by the SA, and the percentage of such shares in relation to the total issue size.
8A.7 The SA shall borrow shares from the promoters of the company to the extent of the proposed over-allotment. These shares shall be in dematerialized form only. For the purposes of this clause, promoter means a promoter as defined in Explanation I to clause 6.4.2.1.
8A.8 The allocation of these shares shall be pro-rata to all the applicants.
8A.9 The stabilization mechanism shall be available for the period disclosed by the company in the prospectus, which shall not exceed 30 days from the date when trading permission was given by the exchange(s).
8A.10 The SA shall open a special account with a bank to be called the "Special Account for GSO proceeds of _____ company" (hereinafter referred to as the GSO Bank account) and a special account for securities with a depository participant to be called the "Special Account for GSO shares of _______ company" (hereinafter referred to as the GSO Demat Account).
8A.11 The money received from the applicants against the overallotment in the green shoe option shall be kept in the GSO Bank Account, distinct from the issue account and shall be used for the purpose of buying shares from the market, during the stabilization period.
8A.12 The shares bought from the market by the SA, if any during the stabilization period, shall be credited to the GSO Demat Account.
8A.13 The shares bought from the market and lying in the GSO Demat Account shall be returned to the promoters immediately, in any case not later than 2 working days after the close of the stabilization period.
8A.14 The prime responsibility of the SA shall be to stabilize post listing price of the shares. To this end, the SA shall determine the timing of buying the shares, the quantity to be bought, the price at which the shares are to be bought etc.
8A.15 On expiry of the stabilization period, in case the SA does not buy shares to the extent of shares over-allotted by the company from the market, the issuer company shall allot shares to the extent of the shortfall in dematerialized form to the GSO Demat Account, within five days of the closure of the stabilization period. These shares shall be returned to the promoters by the SA in lieu of the shares borrowed from them and the GSO Demat Account shall be closed thereafter. The company shall make a final listing application in respect of these shares to all the Exchanges where the shares allotted in the public issue are listed. The provisions of Chapter XIII shall not be applicable to such allotment.
8A.16 The shares returned to the promoters under clause 8A.13 or 8A.15, as the case may be, shall be subject to the remaining lock in period as provided in the proviso the clause 4.14.1.
8A.17 The SA shall remit an amount equal to (further shares allotted by the issuer company to the GSO Demat Account) * (issue price) to the issuer company from the GSO Bank Account. The amount left in this account, if any, after this remittance and deduction of expenses incurred by the SA for the stabilization mechanism, shall be transferred to the investor protection fund(s) of the stock exchange(s) where the shares of issuer company are listed, in equal parts if the shares are listed in more than one exchanges. The GSO Bank Account shall be closed soon thereafter.
8A.18 The SA shall submit a report to the stock exchange(s) on a daily basis during the stabilization period. The SA shall also submit a final report to SEBI in the format specified in Schedule XXIX. (Flag B)This report shall be signed by the SA and the company. This report shall be accompanied with a depository statement for the "GSO Demat Account" for the stabilization period, indicating the flow of the shares into and from the account. The report shall also be accompanied by an undertaking given by the SA and countersigned by the depository(ies) regarding confirmation of lock-in on the shares returned to the promoters in lieu of the shares borrowed from them for the purpose of the stabilization, as per the requirement specified in 8A.16.
8A.19 The SA shall maintain a register in respect of each issue having the green shoe option in which he acts as a SA. The register shall contain the following details of:
· in respect of each transaction effected in the course of the stabilizing action, the price, date and time
· the details of the promoters from whom the shares are borrowed and the number of shares borrowed from each; and,
· details of allotments made under clause 8A.15.
8A.20 The register must be retained for a period of at least three years from the date of the end of the stabilizing period."
8A.21For the purpose of the Chapter VIII-A, Over allotment shall be defined as an allocation of shares in excess of the size of a public issue, made by the SA out of shares borrowed from the promoters, in pursuance of a green shoe option exercised by the company in accordance with the provisions of the said Chapter"
Reference
SEBI/CFD/DIL/ DIP/ Circular No 11: (14-Aug-03) (Part i) Amendments to the SEBI (Disclosure and Investor Protection){ DIP} Guidelines,2000
http://india.smetoolkit.org/india/en/content/en/30151/SEBI-CFD-DIL-DIP-Circular-No-11-14-Aug-03-Part-i-Amendments-to-the-SEBI-Disclosure-and-Investor-Protection-DIP-Guidelines-2000
1. In clause 1.2.1, after sub-clause (xiii) a new sub-clause (xiii-a) shall be added as following;
"(xiii-a) "Green Shoe option" means an option of allocating shares in excess of the shares included in the public issue and operating a post-listing price stabilizing mechanism in accordance with the provisions of Chapter VIII-A of these Guidelines, which is granted to a company to be exercised through a Stabilising Agent."
2. The existing Clause 4.14.1 shall be substituted by the following:
"4.14.1 The entire pre-issue share capital, other than that locked-in as promoters'' contribution, shall be locked-in for a period of one year from the date of commencement of commercial production or the date of allotment in the public issue, whichever is later.
Provided that where shares held by promoter(s) are lent to the SA under clause 8A.7, they shall be exempted from the lock in requirements specified above, for the period starting from the date of such lending to the date when they are returned to the same promoter(s) under clause 8A.13 or under clause 8A.15, as the case may be."
3. A new chapter VIIIA on ''Green Shoe Option'' shall be inserted as following:
"CHAPTER VIII-A - GREEN SHOE OPTION
8A.1 (a) In case an issuer company is making an initial public offer of equity shares through the book building mechanism, the company can avail of the Green Shoe option (GSO) for stabilizing the post listing price of its shares, subject to the provisions of this Chapter.
(b) A company desirous of availing the option granted by this Chapter, shall in the resolution of the general meeting authorizing the public issue, seek authorization also for the possibility of allotment of further shares to the ''stabilizing agent'' (SA) at the end of the stabilization period in terms of clause 8A.15.
8A.2 The company shall appoint one of the Lead book runners, amongst the issue management team, as the "stabilizing agent" (SA), who will be responsible for the price stabilization process, if required. The SA shall enter into an agreement with the issuer company, prior to filing of offer document with SEBI, clearly stating all the terms and conditions relating to this option including fees charged / expenses to be incurred by SA for this purpose.
8A.3 The SA shall also enter into an agreement with the promoter(s) who will lend their shares for the purpose of clause 8A.5, specifying the maximum number of shares that may be borrowed from the promoters, which shall not be in excess of 15% of the total issue size.
8A.4 The details of the agreements mentioned in clause 8A.2 and 8A.3 shall be disclosed in the draft Red Herring prospectus, Red Herring prospectus and the final prospectus. The agreements shall also be included as material documents for public inspection in terms of clause 6.19.15.
8A.5 The Lead Book Runner, in consultation with the SA, shall determine the amount of shares to be overallotted with the public issue, subject to the maximum number specified in clause 8A.3..
8A.6 The draft Red Herring prospectus, the Red Herring prospectus and the final prospectus shall contain the following additional disclosures:
a. Name of the SA
b. The maximum number of shares (as also the percentage vis a vis the proposed issue size) proposed to be over-allotted by the company
c. The period, for which the company proposes to avail of the stabilization mechanism,
d. The maximum increase in the capital of the company and the shareholding pattern post issue, in case the company is required to allot further shares to the extent of over-allotment in the issue.
e. The maximum amount of funds to be received by the company in case of further allotment and the use of these additional funds, in final document to be filed with RoC
f. Details of the agreement/ arrangement entered in to by SA with the promoters to borrow shares from the latter which inter-alia shall include name of the promoters, their existing shareholding, number & percentage of shares to be lent by them and other important terms and conditions including the rights and obligations of each party.
g. The final prospectus shall additionally disclose the exact number of shares to be allotted pursuant to the public issue, stating separately therein the number of shares to be borrowed from the promoters and overallotted by the SA, and the percentage of such shares in relation to the total issue size.
8A.7 The SA shall borrow shares from the promoters of the company to the extent of the proposed over-allotment. These shares shall be in dematerialized form only. For the purposes of this clause, promoter means a promoter as defined in Explanation I to clause 6.4.2.1.
8A.8 The allocation of these shares shall be pro-rata to all the applicants.
8A.9 The stabilization mechanism shall be available for the period disclosed by the company in the prospectus, which shall not exceed 30 days from the date when trading permission was given by the exchange(s).
8A.10 The SA shall open a special account with a bank to be called the "Special Account for GSO proceeds of _____ company" (hereinafter referred to as the GSO Bank account) and a special account for securities with a depository participant to be called the "Special Account for GSO shares of _______ company" (hereinafter referred to as the GSO Demat Account).
8A.11 The money received from the applicants against the overallotment in the green shoe option shall be kept in the GSO Bank Account, distinct from the issue account and shall be used for the purpose of buying shares from the market, during the stabilization period.
8A.12 The shares bought from the market by the SA, if any during the stabilization period, shall be credited to the GSO Demat Account.
8A.13 The shares bought from the market and lying in the GSO Demat Account shall be returned to the promoters immediately, in any case not later than 2 working days after the close of the stabilization period.
8A.14 The prime responsibility of the SA shall be to stabilize post listing price of the shares. To this end, the SA shall determine the timing of buying the shares, the quantity to be bought, the price at which the shares are to be bought etc.
8A.15 On expiry of the stabilization period, in case the SA does not buy shares to the extent of shares over-allotted by the company from the market, the issuer company shall allot shares to the extent of the shortfall in dematerialized form to the GSO Demat Account, within five days of the closure of the stabilization period. These shares shall be returned to the promoters by the SA in lieu of the shares borrowed from them and the GSO Demat Account shall be closed thereafter. The company shall make a final listing application in respect of these shares to all the Exchanges where the shares allotted in the public issue are listed. The provisions of Chapter XIII shall not be applicable to such allotment.
8A.16 The shares returned to the promoters under clause 8A.13 or 8A.15, as the case may be, shall be subject to the remaining lock in period as provided in the proviso the clause 4.14.1.
8A.17 The SA shall remit an amount equal to (further shares allotted by the issuer company to the GSO Demat Account) * (issue price) to the issuer company from the GSO Bank Account. The amount left in this account, if any, after this remittance and deduction of expenses incurred by the SA for the stabilization mechanism, shall be transferred to the investor protection fund(s) of the stock exchange(s) where the shares of issuer company are listed, in equal parts if the shares are listed in more than one exchanges. The GSO Bank Account shall be closed soon thereafter.
8A.18 The SA shall submit a report to the stock exchange(s) on a daily basis during the stabilization period. The SA shall also submit a final report to SEBI in the format specified in Schedule XXIX. (Flag B)This report shall be signed by the SA and the company. This report shall be accompanied with a depository statement for the "GSO Demat Account" for the stabilization period, indicating the flow of the shares into and from the account. The report shall also be accompanied by an undertaking given by the SA and countersigned by the depository(ies) regarding confirmation of lock-in on the shares returned to the promoters in lieu of the shares borrowed from them for the purpose of the stabilization, as per the requirement specified in 8A.16.
8A.19 The SA shall maintain a register in respect of each issue having the green shoe option in which he acts as a SA. The register shall contain the following details of:
· in respect of each transaction effected in the course of the stabilizing action, the price, date and time
· the details of the promoters from whom the shares are borrowed and the number of shares borrowed from each; and,
· details of allotments made under clause 8A.15.
8A.20 The register must be retained for a period of at least three years from the date of the end of the stabilizing period."
8A.21For the purpose of the Chapter VIII-A, Over allotment shall be defined as an allocation of shares in excess of the size of a public issue, made by the SA out of shares borrowed from the promoters, in pursuance of a green shoe option exercised by the company in accordance with the provisions of the said Chapter"
Reference
SEBI/CFD/DIL/ DIP/ Circular No 11: (14-Aug-03) (Part i) Amendments to the SEBI (Disclosure and Investor Protection){ DIP} Guidelines,2000
http://india.smetoolkit.org/india/en/content/en/30151/SEBI-CFD-DIL-DIP-Circular-No-11-14-Aug-03-Part-i-Amendments-to-the-SEBI-Disclosure-and-Investor-Protection-DIP-Guidelines-2000
Qualified Institutional Buyer (QIB) - India
SEBI (Disclosure and Investor Protection) Guidelines, 2000
“xxiv a) “Qualified Institutional Buyer” means
a) a public financial institution as defined in section 4A of the
Companies Act, 1956;
b) a scheduled commercial bank;
c) a mutual fund registered with the Board;
7
d) a foreign institutional investor and sub-account registered with
SEBI, other than a sub-account which is a foreign corporate or
foreign individual;
e) a multilateral and bilateral development financial institution;
f) a venture capital fund registered with SEBI;
g) a foreign venture capital investor registered with SEBI;
h) a state industrial development corporation;
i) an insurance company registered with the Insurance Regulatory
and Development Authority (IRDA);
j) a provident fund with minimum corpus of Rs. 25 crores;
k) a pension fund with minimum corpus of Rs. 25 crores);
l) National Investment Fund set up by resolution no. F. No. 2/3/2005-
DDII dated November 23, 2005 of Government of India published in
the Gazette of India.”
Reference
Amendments to SEBI (Disclosure and Investor Protection) Guidelines,
2000
SEBI/CFD/DIL/DIP/32/2008/28/08
August 28, 2008
http://www.sebi.gov.in/circulars/2008/Cir-Dil32-2008.pdf
“xxiv a) “Qualified Institutional Buyer” means
a) a public financial institution as defined in section 4A of the
Companies Act, 1956;
b) a scheduled commercial bank;
c) a mutual fund registered with the Board;
7
d) a foreign institutional investor and sub-account registered with
SEBI, other than a sub-account which is a foreign corporate or
foreign individual;
e) a multilateral and bilateral development financial institution;
f) a venture capital fund registered with SEBI;
g) a foreign venture capital investor registered with SEBI;
h) a state industrial development corporation;
i) an insurance company registered with the Insurance Regulatory
and Development Authority (IRDA);
j) a provident fund with minimum corpus of Rs. 25 crores;
k) a pension fund with minimum corpus of Rs. 25 crores);
l) National Investment Fund set up by resolution no. F. No. 2/3/2005-
DDII dated November 23, 2005 of Government of India published in
the Gazette of India.”
Reference
Amendments to SEBI (Disclosure and Investor Protection) Guidelines,
2000
SEBI/CFD/DIL/DIP/32/2008/28/08
August 28, 2008
http://www.sebi.gov.in/circulars/2008/Cir-Dil32-2008.pdf
Tuesday, September 23, 2008
Canada - New issue Proceses
Equity Capital Markets New Issue Practices Handbook - Canada - 2007
http://www.iiac.ca/Upload/Equity_Capital_Markets_New_Issue_Practices.pdf
http://www.iiac.ca/Upload/Equity_Capital_Markets_New_Issue_Practices.pdf
Monday, September 22, 2008
US GAAP Statements for Foreign Companies
Reconciliation of SWiss GAAP and US GAAP
http://www.credit-suisse.com/investors/doc/reconc_swissgaap_usgaap_03.pdf
http://www.credit-suisse.com/investors/doc/reconc_swissgaap_usgaap_03.pdf
Risks Managers in Banks - September 2008
Citi group
Brian Leach, Richards Evans
Merrill Lynch
Noel Donohoe, Edmond Moriarty
http://www.efinancialnews.com/content/2451892654
Brian Leach, Richards Evans
Merrill Lynch
Noel Donohoe, Edmond Moriarty
http://www.efinancialnews.com/content/2451892654
Public Offers
In public offers, securities of a company are offered to the general public.
Initial Public offer (IPO)
It is first time offer of equity shares to public by a company
It is a significant milestone in the life of the company.
Can be a source of finance.
Creates a new ownership opportunity called the market window and a class of investors called the ‘ retail investors’.
Can be a liquidity event.
Creates Market capitalization for the company.
Can act as an enhancement or deterrent for future fund raising.
Open up gates of hostile takeover attempts.
Makes future acquisition of stakes by the promoters quite expensive and cumbersome.
Brings with it additional costs of regulatory compliance, restrictions on future capital transactions and cumbersome procedures.
The Listing Decision
Two stages:
Pre-IPO stage- Do we need listing?
Strategic
Financial
Merchant Banking
Post-IPO stage-Continuance or discontinuance
Shall we continue listing?
Do we need listing?
The Strategic Dimension
Most fundamental and needs sufficient introspection.
A company may remain private if its business model allows it.
A company should go for an IPO only when it is mature enough for it. This depends on the following:
Does the company need the IPO as a liquidity event for its existing investors?
Has the company matured enough to unlock value?
Is the company’s business model retail-oriented?
Is the company’s visibility in the market sufficient enough for investors to perceive its business model to the full extent?
Is the company confident of strong financial growth in the future?
The Financial Dimension
Due to Business model :
So large operation that going public is inevitable in order to maintain balances in capital structure. eg: Cement, Steel, Pharma, etc.
May require not just one but multiple rounds of public offers.
Some start-up business looks at an IPO as a source of finance than as a strategic move. eg: Reliance Petroleum
Unlocking value through an IPO becomes the need of the hour.
All other options looks unattractive
Strategic sale of equity are not enough
Example of BPCL(Public issue) and HPCL (Strategic sale)
Evaluating how much capital is proposed to be raised through the IPO and its deployment.
IPO with well laid out investment plans sell better
If fund requirement is too large or too small
The Merchant Banking Dimension
Merchant bankers takes calls based upon:
Business Plan
Financial position of the company
Expected future performance
Prevailing Conditions in the Primary market:
Strong (1999-2000) ex: Wipro, Infosys
Depressed (2001-2002) ex: Postponement by BioCon India, TCS
Expected issue pricing
Size of the offer
Post-issue capital structure
Own placement strength
Follow on public offer
It is a public offer that is made by a listed company. Any offer to sale shares after the initial public offer is a follow on offer.
The different types of FPOs are –
A. Public issue
B. Offer for sale
C. Composite issue
Difference between a right issue and an FPO
In case of rights shares are offered only the existing registered shareholders.
In an FPO, general public are offered the shares.
Hence in an FPO some subscribers may be subscribing to the issue for the first time.
A composite issue is a combination of a rights and public issue at the same time and is also referred to as
Considerations for an FPO
Price of the offer has to align with the performance of the share in the market in the recent past. Factors that affect the pricing is the market capitalization , expected future profits , size of the issue, the addition to the floating stock, the expected future price, investors experience with the company etc.
Choice of a secondary public offer needs to be assessed with respect to other alternatives in the equity and the debt market.
Secondary offer adds to the equity base and would therefore affect the future market capitalization.
Pricing of the offer determines the extent to which the promoters can subscribe to the secondary public offer. DIP guidelines allow free pricing of secondary offers.
Timing of the issue is important and determines the size and pricing of the issue. In a strong market, company may look at secondary offer favourably.
Merchant banker takes a call on the appropriate timing of the issue so that it satisfies both the issuer and the investor.
Rights Issue
Made to existing share holders only.
Entitlement to apply for and receive additional shares.
It’s a RIGHT, not an OBLIGATION.
For ascertaining the right, record date is fixed.
Entitlement ratio is fixed e.g. 1:2
- Thus if a shareholder has 200 shares he is entitled for 100 shares.
Shareholder can exercise or renounce his right to a third party.
Renouncee is entitled to subscribe & receive rights shares.
If the right is neither exercised nor renounced, it lapses and the issue is undersubscribed to that extent.
Promoters can seek to apply for those shares. The impact is change in shareholding pattern.
Oversubscription can occur if shareholders apply for additional shares. The letter of offer should specify the right to apply for more shares.
Considerations for Issuer for Issuing Rights
Objective of the Issue: Fund raising, consolidation or shareholder reward.
Is this an adequate source of financing?
If seeking shareholder loyalty, compare vis-à-vis bonus issue & higher dividend payout.
Overall condition of the primary markets.
Likelihood of poor response and its effect on market price of share.
Analysis of alternate sources of funding such as private placement.
Investor Considerations for Investing in Rights Issue
Cost of rights share vis-à-vis carrying cost or renouncing price.
Future prospects of company & fund utilization.
Medium term expectations of company’s market performance.
Composite Issue
Composite issue is a simultaneous issue of a rights issue and a public issue by a listed company and is also known as “rights-cum-public issue”.
Company prices it according to the value that the share can command.
DIP guidelines provide that a company making a composite issue of capital may issue securities at differential prices in the rights issue and the public issue. Justification for differential pricing has to be provided for in the offer document for the public issue.
Promoters contribution shall, at the option of the promoters, be either 20% of the proposed public issue or 20% of the post issue capital. Rights component of the composite issue is excluded to calculate the Post issue capital .
Other provisions under the DIP guidelines, the Companies Act, SCRA and the listing guidelines apply to composite issues as they apply separately to a rights issue and a public issue separately.
Dividend and bonus track record of company.
OTC Issue
Companies making OTC issues are exempt from the eligibility norms discussed earlier. The following conditions should be fulfilled
The company should be sponsored by a member of OTCEI
It should appoint at least 2 market makers
Minimum promoters contribution shall be 20% of the post issue capital with a lock in of 3 years
Listing Criteria of the OTCEI are as follows
Minimum paid up capital of 30 lakh and the minimum offer to the public should be 25% of the issued capital or Rs 20 Lakh which ever is higher
Company should be sponsored by a merchant banker
Companies need not fulfill any dividend paying track record
Public Issue of Debt Securities
Rationale for Public offers of Debt Instruments
Accessing Capital market better option than raising term loans from financial Institutions and Banks.
a) Syndication process for term loans would be a longer process than accessing the capital markets. b) In case of buoyant primary debt market cost of public floatation would be cheaper than interest and other costs payable on term loans.
Accessing public issue market is better than private placement of debt securities.
Issue of Debt Convertibles
Sometimes a company cannot afford to expand its equity base immediately with a public equity offering. This happens in large capital intensive projects where gestation period to yield good cash flow is very long.
In the past several major projects such as Reliance Petroleum (first issue) Essar Oil, MRPL and other had relied on the debt convertible route to raise funds from the pubic issue market.
Debt Market for Public Offers and Private Placement
Capital market has three main segments.
The debt market
The equity market
The derivatives market
Debt markets are a source of funds for foreign issuers also.
Debt market can three components.
Domestic debt or bond market
Foreign bond market
Eurobond market
In domestic bond market, the issuers within the country make issues.
In foreign bond market, the issuers are from other countries and investors are residents of a country.
In Euro bond markets, the issuers as well as the currency do not belong to the country.
For example, India may make a euro issue of yen and Americans, who are holding yen may subscribe to the issue.
Foreign Bond Market
Local regulations of a host country have to allow issue of foreign bonds.
USA
Japan
Germany
Switzerland and
UK
are the largest markets for foreign bonds
Other countries that permit foreign bond issues
France
Belgium
Sweden
Spain
Netherlands
USA
Yankee Bonds
Japan
Samurai Bonds (through public issue)
Shibosai Bonds (through private placement)
Shogun Bonds (non-Yen denominated)
UK
Bulldogs
Spain
Matador Bonds
Netherlands
Rembrandt Bonds
US Foreign Bond market
Public issue requires compliance with local listing requirement of the SEC in the US.
This includes stringent disclosure requirements and compliance with US GAAP accounting.
144A
An alternative to public issue is 144A Route
Euro Bond Market
There are regulations in several countries that govern the issuance of euro bonds denominated in their currencies.
Secondary market trades in euro bonds are largely self regulated under the auspices of International Securities market association.
Equity Issues Through Depository Issues
Important Concepts Associated with Public Offer
Firm Allotments
Reservations
Net public offer
Lock-in
Basis of allotment
Fixed Price Offer
Book Built Offer
Firm Allotments and Reservations
Allotment and Reservation are tools for pre-marketing a sizable part of issue thereby bringing down the risk of the issue.
Allotment – Investor or category of investor are approached by lead manager or the issuer company to subscribe the issue on a firm basis. ‘FIRM’ - ability to get same quantity as subscribed for in full. Investors have to make commitment to bring in their firm subscription even before issue is floated. This indicates the offer document showing certain amount of share being set aside for such investors, balance available for public subscription.
Reservation - It’s a modification of allotment, where allotment is done on competitive basis among certain category of investors. Reservation is without any prior commitments. If there is an over-subscription, then allotment happens on pro-rata basis.
Permanent Employees (not exceeding 10% of issue size), shareholders of group companies (not exceeding 10%, no firm allotments), mutual funds, Foreign Institutional Investors, Banks and Financial Institution and Multilateral Institution are category of person which are eligible for allotment or reservation.
Lock-in of Shares
Concept of Lock-in of promoters’ share and other share capital is for purpose of preventing such shareholders in making an unfair gains or exits from company and also for providing stabilization period for company’s post-script issue.
Provisions of lock-in of promoters’ share and other share capital are provided in Page 234
Differential Pricing and Price Band
Any unlisted company making an IPO of equity shares or convertibles may issue such securities to applicants in the firm allotment category at a price different from price at which net offer to the public is made provided that the price at which the security is being offered to the applicants in firm allotment category is higher than the price at which net offer is being made to Indian Public.
A justification has to be furnished in offer document on the price differential for the firm allotment category
The issuer company can mention a price band of 20% (the cap should not be more than the floor by 20%) in the offer documents filed by SEBI and the actual price can be determined at a later date before filing of offer document with ROC (Registrar of Companies)
Public Issue
Offer for Sale
Right Issue
Preferential Allotment
Private Placement
QIBs
Offer Document
Green Shoe Option
Refers to the option of allocating shares in excess of the shares included in the public issue and operating a post-listing price stabilizing mechanism thru a Stabilizing Agent
The GSO can be exercised for a maximum of 15% of the size of the issue
The SA operates a special de-mat account for the purpose of allotment of shares and trading in case the GSO is exercised
SA uses the proceeds from allotment of shares to buyback shares from market to suck excess liquidity in any to stabilize the price
On-line IPO (e-IPO)
Applicants -> Brokers -> Stock Exchanges -> issuer company
There is change in only the procedure in which applications are made and proceeds are received the rest is same as Retail IPO
Applicant places order through the online system of the broker- application need not me submitted at this stage
The broker may collect a margin money from applicant which may be upto 100% of the bid amount
This margins are placed in escrow account of brokers with the clearing house bank
The broker sends at the end of each day of the issue, figures of valid orders/bids to the registrar and the final position at the closure of the issue
After the basis of allotment is finalized, registrar sends the allocation details to the stock brokers through stock exchanges.
The brokers inform the successful bidders to fill the application forms and remit the money to brokers. The margin money paid earlier is adjusted
The applications are then forwarded by the brokers to the exchange.
On the pay-in day brokers remits the amount collected into the escrow account. The broker shall pay the application money on behalf of defaulted successful bidders
The clearing house debits this account and credits the proceeds to the company’s issue account
The registrar then after receipt of funds instructs the depository to credit the escrow securities account of each brokers. The brokers in turn credits the demat accounts of its clients with the depositary participants. The broker then confirms the same to the registrar
Process Overview of Public Issues in India
Methodologies for Making Issues in India
100% Retail (Fixed Price Issue)
Book Built (Price Discovery Issue)
Online IPOs
Bought out Deals
OTC issues
Fixed Price Offer - 100% Retail (Fixed Price Issue)
Issue is made by offering directly to the investors from public.
Advantages:
Wide dispersal of shareholding among retail investors.
No need to approach QIB’s to subscribe to the issue
Disadvantages:
High floatation costs as more investors need to be approached through marketing campaigns.
Lot more issue stationary has to be issued
Issue is made with fixed pricing
Book Built Offers (Price Discovery Issue)
Book building allows issuer to make a public issue through process of price discovery.
A Floor Price of the issue is determined in consultation with the merchant banker.
Companies can make an issue to the extent of 100% or 75% of Net Public Offer (NPO) through book build route. In case of 75% route the rest 25 % would be under retail route at the cut off price.
A company that does not fulfill the criteria for 100% retail issue has no option but to make an IPO through book built route.
Bought out Deals
Common occurrence in the IPO boom of early nineties.
Alternative to a straight IPO
A company places certain amount of stock with private investors with the understanding that these investors would take the company public by offering their shares for sale within an agreed time frame.
Investors are typically Investment banks, institutional investors such as Mutual funds, Non banking financial institutions, banks and financial institutions.
BOD is a recognized route for companies to go public on the OTC Exchange of India.
It provides several advantages to smaller companies:
In saving time
Reducing expenses of retail IPO
Assured of funds from the investors that are not guaranteed in a public issue unless it is fully underwritten
Normal maturity profile of 6-12 months.
Online IPOs
The entire process of receiving applications and application proceeds as well as making allotment are done online.
No involvement of the banking channels and registrar for the verification of applicants instead brokers of concerned exchange are used for all these.
Reduce time elements to as little as possible.
Company has to enter into a separate agreement to issue online IPOs.
Approvals and Appointments
Pre-Issue Procedures
Hold a board meeting, consider Public Issue, empower MD
Hold an EGM where shareholders approve and authorize the amount of funds to be raised by passing a special resolution under section 81 (A) of Companies Act.
Identify a good merchant banker, appoint as lead manager (LM) for the issue, enter into a MoU with LM.
In case of more than one LM for the issue, finalize the inter-se allocation of responsibilities between them
Role of Merchant Banker in issue management
Appointment of other required intermediaries, MoU and Inter- se allocation of Responsibilities
Issue structuring and pricing
Due Diligence
Preparation of Offer Document
Pre-Issue Compliance
Liaison with SEBI and Stock Exchange
Co-ordination with other functionaries
Issue Marketing
Functions during the Issue
Post Issue Compliance
Procedural Aspects of a 100% Retail IPO
LM starts Due Diligence on the company, checks all documents, supporting documents, certificates and all relevant information (2-3 weeks)
In parallel LM prepares draft prospectus / draft offer document
LM advises the company in appointments of other intermediaries-
Registrar to the issue (registered with SEBI)
Bankers to the issue (registered with SEBI)
Printer
Advertising agency
LM draws up the issue budget
Fees of LM, underwriters, registrar and bankers,
Brokerages
Postage, stationary
Issue marketing
LM finalizes draft prospectus, approval of BoD, filed with SEBI
SEBI conveys observations, objections regarding draft prospectus in 21 days, places draft prospectus on their website and invites comments from general public
Company makes listing applications to Stock Exchanges accompanied by 10 copies of draft prospectus. Draft prospectus uploaded on websites of LM, underwriters
Company enters agreement with registrar and Depositories (NSDL, CDSL) for offering shares in Demat mode
LM solicits underwriting from prospective underwriters (optional in case of Retail issue, mandatory in book-building)
Company carries out all modifications in draft prospectus suggested by SEBI, Stock exchanges
Get the approval of Board of the final format of Draft prospectus and file the same with ROC
File a second due diligence statement with SEBI at the same time
The prospectus filed with ROC has validity period of 90 days
LM and company decides plan of marketing the issue, release of advertisements, dispatch of stationary, finalizing the collection centers and date of opening the issue
Marketing of the issue
LM along with advertising agency
Press meetings, brokers’, investors’, journalists meetings
Advertisements regulated with DIP and rules of Stock Exchange
A mandatory advertisement 10 days prior to the opening of issue- ‘announcement advertisement’ (a.k.a. Abridged Prospectus)
Optional advertisements subject to certain rules
Post- Issue Procedures
2 reports are required to be furnished to SEBI post issue
The 3 day report from the day of closure of the issue
The 78 day report from the day of closure of the issue
in prescribed formats
LM must coordinate the process of collection of subscription figures from the bankers to the issue, processing of applications by the registrar, despatch of allotment letters and refund orders to all applicants within the prescribed time, attending to investor grievances and ensuring the listing of shares on the Stock exchange
LM should ensure the full subscription of issue before announcing closure
In case of undersubscribed issues LM should ensure that underwriters honour their commitments within 60 days from the date of closure.
LM has to furnish to SEBI the list of defaulted underwriters
LM ensures issue proceeds are kept in separate bank
LM releases the advertisements announcing the closure of the issue
Basis of allotment is finalized the responsibility of which lies on executive director and MD of the designated stock exchange along with LM and the registrar
LM shall ensure that the demat credit or despatch of shares and refund orders to the allottees is completed within 2 working days after the basis of allotment is finalised
LM shall ensure all steps for completion of all formalities for listing of shares at all stock exchanges completes within 7 days, an advertisement furnishing details of basis of allotment has to be issued in 10 days of finalizing the basis of allotment
Initial Public offer (IPO)
It is first time offer of equity shares to public by a company
It is a significant milestone in the life of the company.
Can be a source of finance.
Creates a new ownership opportunity called the market window and a class of investors called the ‘ retail investors’.
Can be a liquidity event.
Creates Market capitalization for the company.
Can act as an enhancement or deterrent for future fund raising.
Open up gates of hostile takeover attempts.
Makes future acquisition of stakes by the promoters quite expensive and cumbersome.
Brings with it additional costs of regulatory compliance, restrictions on future capital transactions and cumbersome procedures.
The Listing Decision
Two stages:
Pre-IPO stage- Do we need listing?
Strategic
Financial
Merchant Banking
Post-IPO stage-Continuance or discontinuance
Shall we continue listing?
Do we need listing?
The Strategic Dimension
Most fundamental and needs sufficient introspection.
A company may remain private if its business model allows it.
A company should go for an IPO only when it is mature enough for it. This depends on the following:
Does the company need the IPO as a liquidity event for its existing investors?
Has the company matured enough to unlock value?
Is the company’s business model retail-oriented?
Is the company’s visibility in the market sufficient enough for investors to perceive its business model to the full extent?
Is the company confident of strong financial growth in the future?
The Financial Dimension
Due to Business model :
So large operation that going public is inevitable in order to maintain balances in capital structure. eg: Cement, Steel, Pharma, etc.
May require not just one but multiple rounds of public offers.
Some start-up business looks at an IPO as a source of finance than as a strategic move. eg: Reliance Petroleum
Unlocking value through an IPO becomes the need of the hour.
All other options looks unattractive
Strategic sale of equity are not enough
Example of BPCL(Public issue) and HPCL (Strategic sale)
Evaluating how much capital is proposed to be raised through the IPO and its deployment.
IPO with well laid out investment plans sell better
If fund requirement is too large or too small
The Merchant Banking Dimension
Merchant bankers takes calls based upon:
Business Plan
Financial position of the company
Expected future performance
Prevailing Conditions in the Primary market:
Strong (1999-2000) ex: Wipro, Infosys
Depressed (2001-2002) ex: Postponement by BioCon India, TCS
Expected issue pricing
Size of the offer
Post-issue capital structure
Own placement strength
Follow on public offer
It is a public offer that is made by a listed company. Any offer to sale shares after the initial public offer is a follow on offer.
The different types of FPOs are –
A. Public issue
B. Offer for sale
C. Composite issue
Difference between a right issue and an FPO
In case of rights shares are offered only the existing registered shareholders.
In an FPO, general public are offered the shares.
Hence in an FPO some subscribers may be subscribing to the issue for the first time.
A composite issue is a combination of a rights and public issue at the same time and is also referred to as
Considerations for an FPO
Price of the offer has to align with the performance of the share in the market in the recent past. Factors that affect the pricing is the market capitalization , expected future profits , size of the issue, the addition to the floating stock, the expected future price, investors experience with the company etc.
Choice of a secondary public offer needs to be assessed with respect to other alternatives in the equity and the debt market.
Secondary offer adds to the equity base and would therefore affect the future market capitalization.
Pricing of the offer determines the extent to which the promoters can subscribe to the secondary public offer. DIP guidelines allow free pricing of secondary offers.
Timing of the issue is important and determines the size and pricing of the issue. In a strong market, company may look at secondary offer favourably.
Merchant banker takes a call on the appropriate timing of the issue so that it satisfies both the issuer and the investor.
Rights Issue
Made to existing share holders only.
Entitlement to apply for and receive additional shares.
It’s a RIGHT, not an OBLIGATION.
For ascertaining the right, record date is fixed.
Entitlement ratio is fixed e.g. 1:2
- Thus if a shareholder has 200 shares he is entitled for 100 shares.
Shareholder can exercise or renounce his right to a third party.
Renouncee is entitled to subscribe & receive rights shares.
If the right is neither exercised nor renounced, it lapses and the issue is undersubscribed to that extent.
Promoters can seek to apply for those shares. The impact is change in shareholding pattern.
Oversubscription can occur if shareholders apply for additional shares. The letter of offer should specify the right to apply for more shares.
Considerations for Issuer for Issuing Rights
Objective of the Issue: Fund raising, consolidation or shareholder reward.
Is this an adequate source of financing?
If seeking shareholder loyalty, compare vis-à-vis bonus issue & higher dividend payout.
Overall condition of the primary markets.
Likelihood of poor response and its effect on market price of share.
Analysis of alternate sources of funding such as private placement.
Investor Considerations for Investing in Rights Issue
Cost of rights share vis-à-vis carrying cost or renouncing price.
Future prospects of company & fund utilization.
Medium term expectations of company’s market performance.
Composite Issue
Composite issue is a simultaneous issue of a rights issue and a public issue by a listed company and is also known as “rights-cum-public issue”.
Company prices it according to the value that the share can command.
DIP guidelines provide that a company making a composite issue of capital may issue securities at differential prices in the rights issue and the public issue. Justification for differential pricing has to be provided for in the offer document for the public issue.
Promoters contribution shall, at the option of the promoters, be either 20% of the proposed public issue or 20% of the post issue capital. Rights component of the composite issue is excluded to calculate the Post issue capital .
Other provisions under the DIP guidelines, the Companies Act, SCRA and the listing guidelines apply to composite issues as they apply separately to a rights issue and a public issue separately.
Dividend and bonus track record of company.
OTC Issue
Companies making OTC issues are exempt from the eligibility norms discussed earlier. The following conditions should be fulfilled
The company should be sponsored by a member of OTCEI
It should appoint at least 2 market makers
Minimum promoters contribution shall be 20% of the post issue capital with a lock in of 3 years
Listing Criteria of the OTCEI are as follows
Minimum paid up capital of 30 lakh and the minimum offer to the public should be 25% of the issued capital or Rs 20 Lakh which ever is higher
Company should be sponsored by a merchant banker
Companies need not fulfill any dividend paying track record
Public Issue of Debt Securities
Rationale for Public offers of Debt Instruments
Accessing Capital market better option than raising term loans from financial Institutions and Banks.
a) Syndication process for term loans would be a longer process than accessing the capital markets. b) In case of buoyant primary debt market cost of public floatation would be cheaper than interest and other costs payable on term loans.
Accessing public issue market is better than private placement of debt securities.
Issue of Debt Convertibles
Sometimes a company cannot afford to expand its equity base immediately with a public equity offering. This happens in large capital intensive projects where gestation period to yield good cash flow is very long.
In the past several major projects such as Reliance Petroleum (first issue) Essar Oil, MRPL and other had relied on the debt convertible route to raise funds from the pubic issue market.
Debt Market for Public Offers and Private Placement
Capital market has three main segments.
The debt market
The equity market
The derivatives market
Debt markets are a source of funds for foreign issuers also.
Debt market can three components.
Domestic debt or bond market
Foreign bond market
Eurobond market
In domestic bond market, the issuers within the country make issues.
In foreign bond market, the issuers are from other countries and investors are residents of a country.
In Euro bond markets, the issuers as well as the currency do not belong to the country.
For example, India may make a euro issue of yen and Americans, who are holding yen may subscribe to the issue.
Foreign Bond Market
Local regulations of a host country have to allow issue of foreign bonds.
USA
Japan
Germany
Switzerland and
UK
are the largest markets for foreign bonds
Other countries that permit foreign bond issues
France
Belgium
Sweden
Spain
Netherlands
USA
Yankee Bonds
Japan
Samurai Bonds (through public issue)
Shibosai Bonds (through private placement)
Shogun Bonds (non-Yen denominated)
UK
Bulldogs
Spain
Matador Bonds
Netherlands
Rembrandt Bonds
US Foreign Bond market
Public issue requires compliance with local listing requirement of the SEC in the US.
This includes stringent disclosure requirements and compliance with US GAAP accounting.
144A
An alternative to public issue is 144A Route
Euro Bond Market
There are regulations in several countries that govern the issuance of euro bonds denominated in their currencies.
Secondary market trades in euro bonds are largely self regulated under the auspices of International Securities market association.
Equity Issues Through Depository Issues
Important Concepts Associated with Public Offer
Firm Allotments
Reservations
Net public offer
Lock-in
Basis of allotment
Fixed Price Offer
Book Built Offer
Firm Allotments and Reservations
Allotment and Reservation are tools for pre-marketing a sizable part of issue thereby bringing down the risk of the issue.
Allotment – Investor or category of investor are approached by lead manager or the issuer company to subscribe the issue on a firm basis. ‘FIRM’ - ability to get same quantity as subscribed for in full. Investors have to make commitment to bring in their firm subscription even before issue is floated. This indicates the offer document showing certain amount of share being set aside for such investors, balance available for public subscription.
Reservation - It’s a modification of allotment, where allotment is done on competitive basis among certain category of investors. Reservation is without any prior commitments. If there is an over-subscription, then allotment happens on pro-rata basis.
Permanent Employees (not exceeding 10% of issue size), shareholders of group companies (not exceeding 10%, no firm allotments), mutual funds, Foreign Institutional Investors, Banks and Financial Institution and Multilateral Institution are category of person which are eligible for allotment or reservation.
Lock-in of Shares
Concept of Lock-in of promoters’ share and other share capital is for purpose of preventing such shareholders in making an unfair gains or exits from company and also for providing stabilization period for company’s post-script issue.
Provisions of lock-in of promoters’ share and other share capital are provided in Page 234
Differential Pricing and Price Band
Any unlisted company making an IPO of equity shares or convertibles may issue such securities to applicants in the firm allotment category at a price different from price at which net offer to the public is made provided that the price at which the security is being offered to the applicants in firm allotment category is higher than the price at which net offer is being made to Indian Public.
A justification has to be furnished in offer document on the price differential for the firm allotment category
The issuer company can mention a price band of 20% (the cap should not be more than the floor by 20%) in the offer documents filed by SEBI and the actual price can be determined at a later date before filing of offer document with ROC (Registrar of Companies)
Public Issue
Offer for Sale
Right Issue
Preferential Allotment
Private Placement
QIBs
Offer Document
Green Shoe Option
Refers to the option of allocating shares in excess of the shares included in the public issue and operating a post-listing price stabilizing mechanism thru a Stabilizing Agent
The GSO can be exercised for a maximum of 15% of the size of the issue
The SA operates a special de-mat account for the purpose of allotment of shares and trading in case the GSO is exercised
SA uses the proceeds from allotment of shares to buyback shares from market to suck excess liquidity in any to stabilize the price
On-line IPO (e-IPO)
Applicants -> Brokers -> Stock Exchanges -> issuer company
There is change in only the procedure in which applications are made and proceeds are received the rest is same as Retail IPO
Applicant places order through the online system of the broker- application need not me submitted at this stage
The broker may collect a margin money from applicant which may be upto 100% of the bid amount
This margins are placed in escrow account of brokers with the clearing house bank
The broker sends at the end of each day of the issue, figures of valid orders/bids to the registrar and the final position at the closure of the issue
After the basis of allotment is finalized, registrar sends the allocation details to the stock brokers through stock exchanges.
The brokers inform the successful bidders to fill the application forms and remit the money to brokers. The margin money paid earlier is adjusted
The applications are then forwarded by the brokers to the exchange.
On the pay-in day brokers remits the amount collected into the escrow account. The broker shall pay the application money on behalf of defaulted successful bidders
The clearing house debits this account and credits the proceeds to the company’s issue account
The registrar then after receipt of funds instructs the depository to credit the escrow securities account of each brokers. The brokers in turn credits the demat accounts of its clients with the depositary participants. The broker then confirms the same to the registrar
Process Overview of Public Issues in India
Methodologies for Making Issues in India
100% Retail (Fixed Price Issue)
Book Built (Price Discovery Issue)
Online IPOs
Bought out Deals
OTC issues
Fixed Price Offer - 100% Retail (Fixed Price Issue)
Issue is made by offering directly to the investors from public.
Advantages:
Wide dispersal of shareholding among retail investors.
No need to approach QIB’s to subscribe to the issue
Disadvantages:
High floatation costs as more investors need to be approached through marketing campaigns.
Lot more issue stationary has to be issued
Issue is made with fixed pricing
Book Built Offers (Price Discovery Issue)
Book building allows issuer to make a public issue through process of price discovery.
A Floor Price of the issue is determined in consultation with the merchant banker.
Companies can make an issue to the extent of 100% or 75% of Net Public Offer (NPO) through book build route. In case of 75% route the rest 25 % would be under retail route at the cut off price.
A company that does not fulfill the criteria for 100% retail issue has no option but to make an IPO through book built route.
Bought out Deals
Common occurrence in the IPO boom of early nineties.
Alternative to a straight IPO
A company places certain amount of stock with private investors with the understanding that these investors would take the company public by offering their shares for sale within an agreed time frame.
Investors are typically Investment banks, institutional investors such as Mutual funds, Non banking financial institutions, banks and financial institutions.
BOD is a recognized route for companies to go public on the OTC Exchange of India.
It provides several advantages to smaller companies:
In saving time
Reducing expenses of retail IPO
Assured of funds from the investors that are not guaranteed in a public issue unless it is fully underwritten
Normal maturity profile of 6-12 months.
Online IPOs
The entire process of receiving applications and application proceeds as well as making allotment are done online.
No involvement of the banking channels and registrar for the verification of applicants instead brokers of concerned exchange are used for all these.
Reduce time elements to as little as possible.
Company has to enter into a separate agreement to issue online IPOs.
Approvals and Appointments
Pre-Issue Procedures
Hold a board meeting, consider Public Issue, empower MD
Hold an EGM where shareholders approve and authorize the amount of funds to be raised by passing a special resolution under section 81 (A) of Companies Act.
Identify a good merchant banker, appoint as lead manager (LM) for the issue, enter into a MoU with LM.
In case of more than one LM for the issue, finalize the inter-se allocation of responsibilities between them
Role of Merchant Banker in issue management
Appointment of other required intermediaries, MoU and Inter- se allocation of Responsibilities
Issue structuring and pricing
Due Diligence
Preparation of Offer Document
Pre-Issue Compliance
Liaison with SEBI and Stock Exchange
Co-ordination with other functionaries
Issue Marketing
Functions during the Issue
Post Issue Compliance
Procedural Aspects of a 100% Retail IPO
LM starts Due Diligence on the company, checks all documents, supporting documents, certificates and all relevant information (2-3 weeks)
In parallel LM prepares draft prospectus / draft offer document
LM advises the company in appointments of other intermediaries-
Registrar to the issue (registered with SEBI)
Bankers to the issue (registered with SEBI)
Printer
Advertising agency
LM draws up the issue budget
Fees of LM, underwriters, registrar and bankers,
Brokerages
Postage, stationary
Issue marketing
LM finalizes draft prospectus, approval of BoD, filed with SEBI
SEBI conveys observations, objections regarding draft prospectus in 21 days, places draft prospectus on their website and invites comments from general public
Company makes listing applications to Stock Exchanges accompanied by 10 copies of draft prospectus. Draft prospectus uploaded on websites of LM, underwriters
Company enters agreement with registrar and Depositories (NSDL, CDSL) for offering shares in Demat mode
LM solicits underwriting from prospective underwriters (optional in case of Retail issue, mandatory in book-building)
Company carries out all modifications in draft prospectus suggested by SEBI, Stock exchanges
Get the approval of Board of the final format of Draft prospectus and file the same with ROC
File a second due diligence statement with SEBI at the same time
The prospectus filed with ROC has validity period of 90 days
LM and company decides plan of marketing the issue, release of advertisements, dispatch of stationary, finalizing the collection centers and date of opening the issue
Marketing of the issue
LM along with advertising agency
Press meetings, brokers’, investors’, journalists meetings
Advertisements regulated with DIP and rules of Stock Exchange
A mandatory advertisement 10 days prior to the opening of issue- ‘announcement advertisement’ (a.k.a. Abridged Prospectus)
Optional advertisements subject to certain rules
Post- Issue Procedures
2 reports are required to be furnished to SEBI post issue
The 3 day report from the day of closure of the issue
The 78 day report from the day of closure of the issue
in prescribed formats
LM must coordinate the process of collection of subscription figures from the bankers to the issue, processing of applications by the registrar, despatch of allotment letters and refund orders to all applicants within the prescribed time, attending to investor grievances and ensuring the listing of shares on the Stock exchange
LM should ensure the full subscription of issue before announcing closure
In case of undersubscribed issues LM should ensure that underwriters honour their commitments within 60 days from the date of closure.
LM has to furnish to SEBI the list of defaulted underwriters
LM ensures issue proceeds are kept in separate bank
LM releases the advertisements announcing the closure of the issue
Basis of allotment is finalized the responsibility of which lies on executive director and MD of the designated stock exchange along with LM and the registrar
LM shall ensure that the demat credit or despatch of shares and refund orders to the allottees is completed within 2 working days after the basis of allotment is finalised
LM shall ensure all steps for completion of all formalities for listing of shares at all stock exchanges completes within 7 days, an advertisement furnishing details of basis of allotment has to be issued in 10 days of finalizing the basis of allotment
Listing of an Indian Company Issue on AIM
PRELIMINARY LEGAL CONSIDERATIONS ON THE LISTING OF AN INDIAN BUSINESS ON AIM
A presentation by A.R.A. Law
www.steptoe.com/attachment.html/3075/ARA_S&J+Presentation+(3).PPT
http://www.steptoe.com/assets/attachments/3075.PPT#449,1,PRELIMINARY LEGAL CONSIDERATIONS ON THE LISTING OF AN INDIAN BUSINESS ON AIM
A presentation by A.R.A. Law
www.steptoe.com/attachment.html/3075/ARA_S&J+Presentation+(3).PPT
http://www.steptoe.com/assets/attachments/3075.PPT#449,1,PRELIMINARY LEGAL CONSIDERATIONS ON THE LISTING OF AN INDIAN BUSINESS ON AIM
Foreign Currency Convertible Bonds (FCCBs)
Role of FCCBs in Indian Market Scenario
Ekta Gupta
National Law University
September 5, 2006
Abstract:
Efficient capital markets are a critical component for any developed economy and Indian capital markets today are amongst the best regulated markets wherein the regulatory framework has kept pace with the significant growth in the securities markets. The story of Indian capital market reveals an efficient trading and settlement infrastructure, high levels of disclosure and fostering an environment of innovation. In this back drop it is seen that a new trend of corporate financing is gaining ground. The sale of Foreign Currency Convertible Bonds by domestic companies and banks has surged over the last couple of years. Thus, this article in the first part seeks to examine some fundamental concepts related to Foreign Currency Convertible Bonds, viz, its nature, regulatory mechanism, tax treatment, advantages and disadvantages. The second part analyses whether Foreign Currency Convertible Bonds can be considered as a 'Golden instrument' for raising funds in all market scenario wherein it is concluded that Foreign Currency Convertible Bonds can be advantageous only in a booming market and cannot be the buzzword in a bearish market, which the Indian markets did experience a little while back. In a bearish market, listed companies may resort to Qualified Institutional Placements that have been introduced by SEBI vide guidelines dated May 8, 2006. Lastly, the article also examines the concerns arising out of sudden increase in access to foreign currency convertible bonds by Indian companies. In this regard it is concluded that Press Note released by the Finance Ministry on November 17, 2005 relaxing the pricing guidelines is indeed a step in the right direction.
Gupta, Ekta,Role of FCCBs in Indian Market Scenario(September 5, 2006).
Available at SSRN:
http://ssrn.com/abstract=928396
Ekta Gupta
National Law University
September 5, 2006
Abstract:
Efficient capital markets are a critical component for any developed economy and Indian capital markets today are amongst the best regulated markets wherein the regulatory framework has kept pace with the significant growth in the securities markets. The story of Indian capital market reveals an efficient trading and settlement infrastructure, high levels of disclosure and fostering an environment of innovation. In this back drop it is seen that a new trend of corporate financing is gaining ground. The sale of Foreign Currency Convertible Bonds by domestic companies and banks has surged over the last couple of years. Thus, this article in the first part seeks to examine some fundamental concepts related to Foreign Currency Convertible Bonds, viz, its nature, regulatory mechanism, tax treatment, advantages and disadvantages. The second part analyses whether Foreign Currency Convertible Bonds can be considered as a 'Golden instrument' for raising funds in all market scenario wherein it is concluded that Foreign Currency Convertible Bonds can be advantageous only in a booming market and cannot be the buzzword in a bearish market, which the Indian markets did experience a little while back. In a bearish market, listed companies may resort to Qualified Institutional Placements that have been introduced by SEBI vide guidelines dated May 8, 2006. Lastly, the article also examines the concerns arising out of sudden increase in access to foreign currency convertible bonds by Indian companies. In this regard it is concluded that Press Note released by the Finance Ministry on November 17, 2005 relaxing the pricing guidelines is indeed a step in the right direction.
Gupta, Ekta,Role of FCCBs in Indian Market Scenario(September 5, 2006).
Available at SSRN:
http://ssrn.com/abstract=928396
GDR Related News
April 2008
Depository receipts back in favour
Download the article from
http://www.citi.com/transactionservices/homepage/securitiesfunds/dep_rec_bk.pdf
Jul/Aug 2007
2,000th sponsored DR
Russia's state-controlled Vneshtorgbank (VTB) raised nearly $8 billion in its sale of a 22.5% stake in the company, making it Russia's seventh-largest company by market capitalization. VTB selected The Bank of New York as the depositary bank for its global depositary receipt program. Each GDR represents 2,000 of VTB's ordinary shares.
The GDRs, which trade on the London Stock Exchange,were the 2,000th sponsored DR program available to investors worldwide, according to The Bank of New York. They also were the largest DR offering ever from a bank, the second-largest DR offering from a Russian issuer and the second-largest DR offering in history, following Rosneft oil's $6.4 billion initial public offering in DR form in July 2006.
Global Finance Media Inc. Jul/Aug 2007
http://findarticles.com/p/articles/mi_qa3715/is_/ai_n19510848
November 6, 1994
Recognizing the growth of the market, the London Stock Exchange said in August1994 that it would begin allowing G.D.R.'s to be listed, much as big exchanges in the United States have long listed A.D.R.'s. East India Hotels was the first G.D.R. in London.
World Markets; Depository Receipts: Now, the World
By RICHARD W. STEVENSON, Published: November 6, 1994
New York Times
http://query.nytimes.com/gst/fullpage.html?res=9C02E4D6143EF935A35752C1A962958260&sec=&spon=&pagewanted=all
Depository receipts back in favour
Download the article from
http://www.citi.com/transactionservices/homepage/securitiesfunds/dep_rec_bk.pdf
Jul/Aug 2007
2,000th sponsored DR
Russia's state-controlled Vneshtorgbank (VTB) raised nearly $8 billion in its sale of a 22.5% stake in the company, making it Russia's seventh-largest company by market capitalization. VTB selected The Bank of New York as the depositary bank for its global depositary receipt program. Each GDR represents 2,000 of VTB's ordinary shares.
The GDRs, which trade on the London Stock Exchange,were the 2,000th sponsored DR program available to investors worldwide, according to The Bank of New York. They also were the largest DR offering ever from a bank, the second-largest DR offering from a Russian issuer and the second-largest DR offering in history, following Rosneft oil's $6.4 billion initial public offering in DR form in July 2006.
Global Finance Media Inc. Jul/Aug 2007
http://findarticles.com/p/articles/mi_qa3715/is_/ai_n19510848
November 6, 1994
Recognizing the growth of the market, the London Stock Exchange said in August1994 that it would begin allowing G.D.R.'s to be listed, much as big exchanges in the United States have long listed A.D.R.'s. East India Hotels was the first G.D.R. in London.
World Markets; Depository Receipts: Now, the World
By RICHARD W. STEVENSON, Published: November 6, 1994
New York Times
http://query.nytimes.com/gst/fullpage.html?res=9C02E4D6143EF935A35752C1A962958260&sec=&spon=&pagewanted=all
Recent GDR Issues from India
Thursday, Nov 08, 2007
The Hindu ePaper
L&T GDR issue price at $100
MUMBAI: Larsen & Toubro has priced its $400 million Global Depositary Shares (GDS) offering at $100 per share. Each GDS represents one equity share of the company of nominal value of Rs. 2 each. The GDS are proposed to be listed on the Luxembourg Stock Exchange.
http://www.hindu.com/2007/11/08/stories/2007110856441700.htm
The Hindu ePaper
L&T GDR issue price at $100
MUMBAI: Larsen & Toubro has priced its $400 million Global Depositary Shares (GDS) offering at $100 per share. Each GDS represents one equity share of the company of nominal value of Rs. 2 each. The GDS are proposed to be listed on the Luxembourg Stock Exchange.
http://www.hindu.com/2007/11/08/stories/2007110856441700.htm
Sunday, September 21, 2008
Auctions versus book building
11 auctions were conducted from 1999 up to Google’s 2004 extravaganza. They differ from those of bookbuilt IPOs in a number of respects. Issuers choosing the auction route left less money on the table and saved on underwriting fees. Underwriter spreads in the bookbuilding group ran about 7%, but spreads for the auction IPOs were significantly lower. Only three out of the 11 auction IPOs had spreads of 7%, and Google’s was just 2.8%. With the exception of a single issuer, the auction group faced lower underpricing and, in some cases, IPOs were overpriced. The authors found that the combination of underwriting spreads and underpricing averaged 9.62% for the auction IPOs and 15.6% for the bookbuilding sample. Some argue that underpricing brings better analyst coverage and reduces litigation risk, but the complete absence of litigation among the auction group trounced the bookbuilding sample’s litigation rate of 7.2%.
http://www.bowne.com/securitiesconnect/details.asp?storyID=1592
Reference
Bookbuilding Versus Auction Selling Methods: A Study Of US IPOs
By: Prof. Kuntara Pukthuanthong, Prof. Nikhil Varaiya, and Prof. Thomas Walker San Diego State University (KP, NV); Concordia University, Montreal, Canada (TW)
Venture Capital: International Journal of Entrepreneurial Finance - Vol. 9, No. 4, Pgs. 311-345
http://www.bowne.com/securitiesconnect/details.asp?storyID=1592
Reference
Bookbuilding Versus Auction Selling Methods: A Study Of US IPOs
By: Prof. Kuntara Pukthuanthong, Prof. Nikhil Varaiya, and Prof. Thomas Walker San Diego State University (KP, NV); Concordia University, Montreal, Canada (TW)
Venture Capital: International Journal of Entrepreneurial Finance - Vol. 9, No. 4, Pgs. 311-345
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