SEBI Entry Norms for IPO & FPO

Entry Norm I:  ‘Profitability Route’.

• Net tangible assets of at least Rs. 3 crores for three full years, of which not more than 50 per cent is held in monetary assets.
• Distributable profits in at least three out of the preceding five years.
• Net worth of at least Rs. 1 crore in three years.
• If there is a change in the company’s name, at least 50 per cent revenue for preceding one year should be earned from the new activity.
• The issue size should not exceed 5 times the pre-issue net worth as per the audited balance sheet of the last financial year.

Entry Norm II: ‘QIB Route’.

• Issue shall be through a book building route, with at least 50 per cent of the issue to be mandatorily allotted to the qualified institutional buyers (QIBs), failing which the money shall be refunded.
• The minimum post-issue face value capital shall be Rs. 10 crore or there shall be compulsory market making for at least 2 years.

OR

Norm III: ‘Appraisal Route’.

• The project is appraised and participated to the extent of 15 per cent by FIs/scheduled commercial banks of which at least 10 per cent comes from the appraiser(s). In addition, at least 10 per cent of the issue size shall be allotted to QIBs, failing which the full subscription monies shall be refunded.
• The minimum post-issue face value capital shall be Rs. 10 crore or there shall be a compulsory market making for at least 2 years.