Promoter The person who conceived the idea of starting a business and organizes the setting up of a new company is called promoter of company.
The promoters’ contribution in any issue shall be as per the
provisions existing on
Date of filing of prospectus with the Registrar of Company or date
of filing of letter of offer with the designated stock exchange.
Date of filing of draft offer document with the SEBI in other
cases.
The rates of promoters’ contribution are as under:
In the above cases a minimum contribution is ` 25,000/- per application for each individual
and ` 1,00,000/- from firms &
companies.
Promoters’ Contribution
Before Public Issue
The promoters should bring in their contribution (including
premium) in full at least one day before the public issue opens.
The contribution would be kept in an escrow account with a bank.
The contribution will be released to the company along with the
public issue process.
Where the contribution has been brought prior to the public issue
and has already been used, the issuer company in their offer document should
disclose the use of such funds in the cash flow statement submitted along with
offer document.
The shares should be allotted to the promoters against the money
received after passing a resolution by the board of directors.
The resolution and a certificate of the charted accountant for
having brought in promoters contribution should be filed with SEBI before the
issue opens.
Exemption from requirement of promoter contribution is allowed in
the following three cases
Where no identifiable promoter/promoter group exists.
Rights issue
Public issue by a company listed on a stock exchange for at least 3
years with a record of dividend payment for at least 3 immediately preceding
years.
Lock-in Requirement of
Promoters’ Contribution
Any issue of capital to the public
Minimum lock-in period is 3 years
The lock-in-period starts from the date of allotment in the
proposed issue.
The lock-in-period ends on completion of three years from the date
of commencement of commercial production or date of allotment in the public issue
whichever is later.
Public issue by unlisted company, Excess promoter’s contribution
would be locked in for 1 year.
Public issue by a listed company, Lock in period is 1 year IV.
Pre-issue share capital of an unlisted company
The pre-issue share capital other than locked in as promoter’s
contribution would be locked in for one year from the date of allotment.
The pre-issue share capital other than locked in as promoter’s
contribution would be locked in for one year from the date of allotment.
Securities issued on firm allotment basis
Lock in period is one year from the date of commencement of
commercial production or date of allotment in public issue or whichever is
later.
Requirements with Respect to
Lock-in
The locked-in securities may be pledged only with banks/financial
institutions as collateral security for loans granted by them.
The minimum promoters’ contribution in public issue locked in may
be pledged if the purpose of the loan is for financing the object of the issue.
The locked in shares held by the persons other than the promoters
may be transferred to any other person holding locked in shares. However, the
locked in period should be continued after the transfer also for the remaining
period.
Locked in shares held by promoters may be transferred to and
amongst promoter/promoters group or new promoter/persons in control of the
company. However, the lock-in-period should be continued in the hands of the
transferee for the remaining period.