SEBI is examining to increase the minimum public offer size to 25% of post-issue capital of a company, in case of a public issue. Currently media, technolofy etc. sector companies are allowed to offer only minimum 10% of their post-issue capital to be eligible for listing. The delisting committee of SEBI has recommended that in all companies there should be a minimum 25% public shareholding. Earlier the limit was reduced to 10% with the reason that these sector companies do not require very large funds and offering 25%, with the high prices which they command, they will have to raise very large amount for getting listing, which large amount of funding they do not require. another reason was stated to be that abroad with 10% offering these companies are eligible to be listed. Now there does not seem any reason for this reversal in the decision. there are different views prevailing among chambers of commerce on this issue.

Amendment to the Listing Agreement

Mittal Court, B Wing, First Floor,
224, Nariman Point, Mumbai 400 021

SMDRP/Policy/Cir- 47 /01
October 04, 2001


The Executive Director/President/Managing Director
Of all the Stock Exchanges

Dear Sir/Madam,

SUB : Amendment to the Listing Agreement

The Accounting Standards Committee of SEBI has recommended certain amendments in the Clause 41 of the Listing Agreement. It has been decided to implement the following recommendations of the Committee:

1. Amendment to Clause 41 of the Listing Agreement - Quarterly un-audited financial results:

 A. Alternative format for un-audited financial results:

The manufacturing and trading/service companies which  have followed functional (secondary) classification of expenditure in the annual profit and loss account in their most recent annual report may furnish un-audited financial results on a quarterly basis in the alternative format enclosed at Annexure I.

 B. Qualifications in Audit Reports:

Companies shall be required to disclose the audit qualifications along with the audited financial results published under Clause 41 of the Listing Agreement in addition to the explanatory statement as to how audit qualifications in respect of the audited accounts of the previous accounting year have been addressed in the financial results.

The Exchanges are advised to incorporate the above amendments in the Clause 41 of the listing agreement immediately and also confirm the compliance.

2. Clarification regarding Segment Reporting :

The Accounting Standard- 17 on Segment Reporting issued by The Institute of Chartered Accountants of India (ICAI) is mandatory with effect from April 01, 2001 and clarification has been sought whether companies, whose accounting year has commenced before April 01, 2001 and to whom the Standard is not applicable for the current year, are required to disclose segmental information in respect of the previous quarters along with the un-audited financial results for the quarters ending on or after September 30, 2001.

It is clarified that::

1. in respect of all the companies including companies whose accounting year has commenced before April 01, 2001, segment information prescribed under Clause 41 shall be given for the quarters ending on or after September 30, 2001.

2. in respect of companies whose accounting year has commenced on or after April 01, 2001, cumulative segment information (i.e. year to date figures) for the current year in addition to the segment information for the current quarter shall be given beginning with the quarter ended September 30, 2001.

3. in respect of companies whose accounting year has commenced before April 01, 2001, cumulative segment information shall be given for the period commencing from July 01, 2001 (i.e. from July 01, 2001 to the end of the current quarter) in addition to the segment information for the current quarter.

The Exchanges are advised to take note of the above clarifications regarding disclosure of segment information prescribed under Clause 41 of the Listing Agreement and ensure compliance by companies.

Yours faithfully,
General Manager
Secondary Market Department
Encl : as above

Annexure I

Alternative  format  of   un-audited  financial  results  for manufacturing and trading/ service  companies,   which  have followed functional (secondary)  classification  of  expenditure   in the  annual  profit  and  loss account published in their most recent annual report.


(Rs. In Lakhs)




3 Months Ended


Corresponding 3 Months in the Previous year.


Year To date Figures for current period


Year to date

Figures for the Previous year


Previous Accounting Year.



Net Income from Sales/Services 







Cost of Sales/Services Increase/decrease in stock in trade Consumption of raw materials

Other expenditure







Gross Profit







General Administrative Expenses







Selling and Distribution Expenses







Operating Profit before interest and depreciation





















Operating Profit after interest and depreciation 







Other Income







Profit (+)/Loss(-) before tax 







Provision for taxation







Net Profit (+)/Loss (-)







Paid-up equity share capital







Reserves excluding revaluation reserves (as per balance sheet) of previous accounting year to be given in column (5)







Basic and diluted EPS for the period, for the year to date and for the previous year (not to be annualised)







Aggregate of non promoters shareholding* (applicable for half yearly results)

Number of shares

Percentage of shareholding






* non promoter shareholding as classified under category B in the shareholding pattern in clause 35 of the  listing agreement.

Notes :

a.        Indicate by way of note total expenditure incurred on

    i.    Staff Cost

   ii.    Any item of expenditure which exceeds 10% of the total expenditure.

 This information shall be given in respect of all the periods included at the above statement.


 a.  Any event or transaction that is material to an understanding of the results for the quarter including completion of expansion and diversification programes, strikes, lock-outs, change in management, change in capital structure etc, shall be disclosed. Similar material event or transactions subsequent to the end of the quarter, the effect whereof is not reflected in the results for the quarter shall also be disclosed.

b.  All material non-recurring/abnormal income/gain and expenditure/loss and effect of all changes in accounting practices affecting the profits materially must be disclosed separately.

c.  In case of companies whose revenues are subject to material seasonal variations, they shall disclose the seasonal nature of their activities and may also supplement their unaudited financial results with information for 12 month periods ended at the interim date (last day of the quarter) for the current and preceding years on a rolling basis.

d.  Company shall give the following information in respect of dividend paid or recommended for the year including interim dividends declared :

i. Amount of Dividend distributed or proposed distinguishing between different classes of shares and  Dividend per share also indicating nominal value per share.

ii. Where Dividend is paid or proposed pro-rata for shares allotted during the year, the date of allotment, number of shares allotted pro-rata amount of dividend per share and the aggregate amount of dividend paid or proposed on pro-rata basis.

e. The effect of changes in composition of the company during the quarter, including business combinations, acquisitions or disposal of subsidiaries and long term investments, restructuring and discontinuing operations shall be disclosed.

f.  If there is any qualifications by the Auditors, in respect of the Audited Accounts of the previous accounting year which has a material impact on the profit disclosed in such accounts, then the company shall disclose the same along with the unaudited quarterly results and give explanation as to how such qualifications has been addressed in the unaudited financial results.

g. If the company is yet to commence commercial production, then instead of the quarterly results, the company should give particulars of the status of the project, its implementation and the expected date of commissioning of the project.

h.  The un-audited results sent to Stock Exchange/s and published in newspapers should be based on the same set of accounting policies as those followed in the previous year. In case, there are changes in the accounting policies, the results of previous year will be recast as per the present accounting policies, to make it comparable with current year results.

i.    If the period of the Financial Year is more than 12 months and not exceeding 15 months there will be 5 Quarters and is more than 15 months but not exceeding 18 months there will be 6 Quarters and the financial results will be intimated to the Exchange and published in the News papers accordingly. Half yearly results which are required to be subjected to the "Limited Review" by the Auditors shall be prepared for the first two quarters where the Financial Year does not exceed 15 months and for the first two quarters and also separately for the third and fourth quarters where the Financial Year exceeds 15 months.

BSE to encourage Small Capital Companies
At present, The Stock Exchange, Mumbai (BSE) allows listing of shares of the companies with a post issue capital of Rs. 10 crores or a post issue capital Rs. 5 crores with a market capitalization of Rs. 50 crores.

In a significant move to facilitate grounds for higher business activity in the Indian Economy, through small enterprises the Exchange has permitted listing of the shares issued by the small cap companies from the capital markets.

BSE has designed a unique scheme and has plans to create a distinct securities segment of small cap companies. These companies would be required to meet the SEBI guidelines for making Initial Public Offer (IPO) which are broadly discussed in Annexure I.

In addition to the SEBI prescribed requirements, BSE has prescribed the following additional requirements:

        The minimum post issue paid up capital of the company should be Rs. 3 crores.

        The Companies should have a minimum turnover of Rs. 3 crores in each of the previous 3 years.

        A due- diligence to be done by an Exchange appointed independent team of CAs or merchant banker. This team may also include Exchange representative. The due-diligence exercise may include plant/site/office visit of the company over and above the existing statutory requirement in this regard. This may be waived if a Financial Institution or Scheduled Commercial Bank has appraised the project in the preceding 12 months.

        Minimum public shareholders 500.

        The Company would be required to hold a shareholders' meeting at least once in a year in Mumbai.

The Exchange would however vet the listing applications on a case- to -case basis and reserves the right to reject any application for listing without assigning reasons therefor.

Dr. Manoj Vaish, Chief Executive Officer (CEO) and Executive Director (ED), BSE says, "The role of small enterprises in any economy is crucial for the growth. The companies which at present may be small in size hold good potential of growing big and handling large business activity. Some of these companies would eventually attain international size and be the engine of growth for the economy."

He adds, "This measure would enable raising of fresh capital by small companies, which would help the growth in the economy and overall development of the country. This would also enable the companies, which are currently listed only at RSEs to have national presence through BSE's trading platform."

September 29, 2003

Annexure I

The minimum criteria prescribed by SEBI for making Initial Public Offer (IPO) by unlisted companies are: -

Route A

The company should meet all the following requirements:

  1. Net tangible assets of at least Rs. 3 crores in each of the preceding 3 years.
  2. A track record of distributable profits for at least 3 out of preceding 5 years;
  3. A net worth of at least Rs. 1 crore in each of the preceding 3 years.
  4. In case of name change within the last one year, atleast 50% of the revenue for the preceding 1-year is earned from the activity suggested by the new name.
  5. The proposed issue and all previous issues made in the same financial year in terms of size should not exceed five (5) times its pre-issue networth.


Route B

The company should meet both the condition (a) and (b) given below:

  1. The issue is made through the book building and at least 50% should be allotted to the Qualified Institutional Buyers (QIBs).


The "project" has at least 15% participation by Financial Institutions/ Scheduled Commercial Banks, of which at least 10% comes from the appraiser(s). In addition to this, at least 10% of the issue size shall be allotted to QIBs


  1. The minimum post-issue face value capital of the company shall be Rs. 10 crores


There shall be a compulsory market- making for at least 2 years from the date of listing of the shares.

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