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Security Analysis and Portfolio Management

Notes included in the offer document. The offer document filed thereafter with ROC is
called a 'prospectus'.
Promoters

A 'promoter' has been defined as a person or group of persons who are instrumental in
formation of the company, who enable the company to start its commercial operations by
bringing in the necessary funds required for the concern. The promoters are in the overall
control of the company, whose names are mentioned in the offer document. Any director
or officer discharging their functions in their professional capacity cannot be termed as
promoter. The meaning of the term 'promoter' is wide enough to cover the following
relationships:
(a) 'Promoter group' includes promoter, an immediate relative of the promoter (i.e.
any spouse of that person, or any parent, brother, sister or child of the person or of
the spouse).
(b) In case, promoter is a company, a subsidiary or holding company of that company.
(c) Any company in which the promoter holds 10% or more of the equity capital or
which holds 10% or more of the equity capital of the promoter.
(d) Any company in which a group of individuals or companies or combinations thereof
who holds 20% or more of the equity capital in that company also holds 20% or
more of the equity capital in that company also holds 20% or more of the equity
capital of the issuer company.
(e) In case, the promoter is an individual, any company in which 10% or more of the
share capital is held by the promoter or an immediate relative of the promoter or a
firm or HUF in which the promoter or any one or more of his immediate relative is
a member.

Promoters’ Contribution
Promoters' contribution in any public issue shall be in accordance with the following
provisions under SEBI's DIP Guidelines:

(a) Unlisted companies: In the public issue, the promoters shall contribute not less than
20% of the post issue capital.
(b) Offers for sale: The promoters’ share holding after offer for sale shall not be less than
20% of post issue capital.
(c) Listed companies: The promoters’ shall participate either to the extent of 20% of the
proposed issue or ensure post-issue shareholding to the extent of 20% of the post-
issue capital.
(d) Composite issues of listed companies: The 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 issue component of the composite issue shall be excluded while
calculating the post issue capital.
Free Pricing of Issues
In the post-liberalisation era, the companies are free to make any issue of capital in the
form they like and they can freely price the issues. The companies eligible to make public
issue can freely price their equity shares or any security convertible at a later date into
equity shares as stipulated in Chapter III of SEBI (Disclosure and Investor Protection)
Guidelines, 2000. As per the guidelines, the issuer can fix-up issue price in consultation of

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