What are eligibility norms for making an IPO?
SEBI has laid down eligibility norms for entities planning to enter the primary market through public issues. An unlisted company needs to satisfy following criteria to be eligible for making a public issue: • Net tangible assets of at least Rs 3 crore for three full years • Distributable profits in at least three years • Net worth of at least Rs 1 crore in three years • If change in name, at least 50 per cent of revenue for preceding one year should be from the new activity • The issue size should not exceed five times the pre-issue net worth SEBI also provides alternate routes to the companies not satisfying any of the above parameters, for accessing the primary market. The alternative conditions are as follows: • Issue shall be made through book-building route, with at least 50 per cent to be mandatory allotted to the QIBs. • The minimum post-issue face value capital shall be Rs 10 crore or there shall be a compulsory market-making for at least two years.
