The Bombay Stock Exchange (BSE) on December 13, 2022, issued a notification regarding the Guidance note on the inclusion of “Object of the issue” in case of Preferential issues and Qualified Institutions Placement. The issuers are advised to ensure that they follow the guidelines prescribed below:
o The purpose for which the fund is proposed to be raised shall be disclosed under the separate heading “Object of the issue”.
o Each object of the issue, for which funds are proposed to be raised shall be stated clearly and the same shall not be open-ended/ vague.
o The amount of funds proposed to be utilized against each object shall be stated clearly.
o Total amount of issue size allocated for different objects of the issue shall together be used only for the object of the issue as specified in the placement document/ notice to shareholders and the same cannot be added to General Corporate Purposes (GCP).
o The tentative timeline for utilization of issue proceeds for each of the objects shall be clearly stated. Till such time the issue proceeds are fully utilized, the issuer shall also disclose the mode in which such funds will be kept.
o The fund to be used for General Corporate Purposes (GCP), if any, shall not exceed 25% of the funds to be raised through the preferential issue or QIP, under the current issue.
The Exchange will be verifying compliance with the aforesaid disclosure requirements at the time of processing the application filed by the issuers under Regulation 28(1) of the SEBI (LODR) Regulations, 2018 seeking in-principle approval of the Exchange before making allotment of securities.