Eligibility Requirements To Be Complied With For IPO Under ICDR, 2018

Eligibility Requirements for an Initial Public Offer (IPO):

1. The issuer has net tangible assets of atleast Rs. 3 crores on a restated and consolidated basis, in each of the preceding three full years of (12 months each) of which not more than 50% is held in monetary assets; However, if more than 50% of the net tangible assets are held in monetary assets, the issuer has utilized or made firm commitments to utilize such excess monetary assets in its business or project. This limit of 50% shall not apply in case of IPO is made entirely through an offer for sale.
2. The issuer has an average operating profit of at least Rs.15 crores, calculated on a restated and consolidated basis, during the three preceding years with operating profit in each of the three preceding years;
3. The issuer has a networth of atleast Rs.1 crore in each of the preceding 3 full years, calculated on a restated and consolidated basis.
4. In case the issuer has changed its name within the last one year, atleast 50% of the revenue calculated on a restated and consolidated basis, for the preceding one full year has been earned by it from the activity indicated by the new name.

Entities Not Eligible to make an Initial Public Offer (IPO):

1. If the issuer, any of its promoters, promoter group, selling shareholders are debarred from accessing the capital market by SEBI.
2. If any of the promoters or directors of the issuer is a promoter or a director of any other company which is debarred from accessing the capital market by SEBI.
3. If the issuer or any of its promoters or directors is a wilful defaulter or a fraudulent borrower.
4. If any of the promoters or directors of the issuer is a fugitive offender.
5. If there are any outstanding convertible securities or any other right which would entitle any person with any option to receive equity shares of the issuer except outstanding options granted to the employees under an employee stock option scheme and fully paid-up outstanding convertible securities which are required to be converted on or before the date of filing of the Red Herring Prospectus or the Prospectus.

General Conditions:

An issuer making an initial public offer shall ensure that:
a) it has made an application to one or more stock exchanges to seek an in-principle approval for listing of its specified securities on such stock exchanges and has chosen one of them as the Designated stock exchange;
b) it has entered into an agreement with a depository for dematerialisation of the specified securities already issued and proposed to be issued;
c) all its specified securities held by the promoters are in dematerialised form prior to filing of the offer document;

d) all its existing partly paid-up equity shares have either been fully paid-up or have been forfeited;
e) it has made firm arrangements of finance through verifiable means towards 75% of the stated means of finance for a specific project proposed to be funded from the issue proceeds, excluding the amount to be raised through the proposed public issue or through existing identifiable internal accruals.
f) The amount for general corporate purposes, as mentioned in objects of the issue in the draft offer document and the offer document shall not exceed 25% of the amount being raised by the issuer.
g) The amount for general corporate purposes, and such objects where the issuer company has not identified acquisition or investment target, as mentioned in objects of the issue in the draft offer document and the offer document, shall not exceed thirty five per cent. of the amount being raised by the issuer. However, the amount raised for such objects where the issuer company has not identified acquisition or investment target, as mentioned in objects of the issue in the draft offer document and the offer document, shall not exceed twenty five per cent. of the amount being raised by the issuer.

Further, such limits shall not apply if the proposed acquisition or strategic investment object has been identified and suitable specific disclosures about such acquisitions or investments are made in the draft offer document and the offer document at the time of filing of offer documents.