Chapter XIV

Any company making an initial public offer of equity share or any other security convertible at a later date into equity shares and proposing to list them on the Over The Counter Exchange of India (OTCEI) shall comply with all the requirements specified in these guidelines:

Any company making an initial public offer of equity share or any other security convertible at a later date into equity shares and proposing to list them on the OTCEI, is exempted from the eligibility norms specified in Clause 2.2 of Chapter II of these guidelines subject to its fulfilling the following besides the listing criteria laid down by the OTCEI:

1. it is sponsored by a member of the OTCEI and;

2. has appointed at least two market makers (one compulsory and one additional market maker).

Any offer for sale of equity share or any other security convertible at a later date into equity shares resulting out of a Bought out Deal (BOD) registered with the OTCEI is exempted from the eligibility norms specified in Clause 2.2 of Chapter II of these guidelines subject to the fulfilment of the listing criteria laid down by the OTCEI. Provided that the issuer company which has made issue of capital under Clause 14.1.1 & 14.1.2 above, shall not delist its securities from OTCEI for a minimum period of three years from the date of admission to dealing of such securities on OTCEI..

Any offer for sale of equity share or any other security convertible at a later date into equity shares resulting out of a Bought out Deal (BOD) registered with OTCEI is exempted from the pricing norms specified in Clause 3.2 of Chapter III of these guidelines subject to the following conditions:

1. The promoters after such issue shall retain at least 20% of the total issued capital with the lock-in of three years from the date of the allotment of securities in the proposed issue; and

2. At least two market makers (One Compulsory and one additional market maker) are appointed in accordance with the Market Making guidelines stipulated by the OTCEI.

In case of securities proposed to be listed on OTCEI , for the purpose of Clause (6.12.1) of Chapter VI of these guidelines, projections based on the appraisal done by the sponsor who undertakes to do market making activity in the securities offered in the proposed issue can be included in the offer document subject to compliance with other conditions contained in the said clause.

A listed company proposing to issue bonus shares shall comply with the following:

1. No company shall, pending conversion of FCDs/PCDs, issue any shares by way of bonus unless similar benefit is extended to the holders of such FCDs/PCDs, through reservation of shares in proportion to such convertible part of FCDs or PCDs.

2. The shares so reserved may be issued at the time of conversion(s) of such debentures on the same terms on which the bonus issues were made.

The bonus issue shall be made out of free reserves built out of the genuine profits or share premium collected in cash only. Reserves created by revaluation of fixed assets are not capitalised. The declaration of bonus issue, in lieu of dividend, is not made. The bonus issue is not made unless the partly-paid shares, if any existing, are made fully paid-up.

The Company -

1. has not defaulted in payment of interest or principal in respect of fixed deposits and interest on existing debentures or principal on redemption thereof and

2. (b) has sufficient reason to believe that it has not defaulted in respect of the payment of statutory dues of the employees such as contribution to provident fund, gratuity, bonus etc.

A company which announces its bonus issue after the approval of the Board of Directors must implement the proposal within a period of six months from the date of such approval and shall not have the option of changing the decision.

The Articles of Association of the company shall contain a provision for capitalisation of reserves, etc. If there is no such provision in the Articles the company shall pass a Resolution at its general body meeting making provisions in the Articles of Associations for capitalisation.

Consequent to the issue of Bonus shares if the subscribed and paid-up capital exceed the authorised share capital, a Resolution shall be passed by the company at its general body meeting for increasing the authorised Capital.

A certificate duly signed by the issuer company and counter signed by statutory auditor or by Company Secretary in practice to the effect that all the above provisions have been complied with shall be forwarded to the Board.