SEBI (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS 2009
CHAPTER III : PART IV
PART IV – RESTRICTION ON TRANSFERABILITY (LOCK-IN) OF PROMOTERS’ CONTRIBUTION, ETC.
Date of commencement of lock in and inscription of non-transferability.
35. (1) Save as otherwise provided in this Chapter, specified securities held by promoters and persons other than promoters shall not be transferable (hereinafter referred to as “lock-in’) from the date of allotment of the specified securities in the proposed public issue for the period stipulated in this Chapter .
(2) The certificate of specified securities which are subject to lock-in shall contain the inscription “non transferable” and the lock-in period and in case such specified securities are dematerialised, the issuer shall ensure that lock-in is recorded by the depository.
(3) Where the specified securities which are subject to lock-in are partly paid-up and the amount called-up on such specified securities is less than the amount called-up on the specified securities issued to the public, the “lock-in” shall end only on the expiry of three years after such specified securities have become pari-passu with the specified securities issued to the public.
Lock-in of specified securities held by promoters.
36. In a public issue, the specified securities held by promoters shall be locked-in for the period stipulated hereunder:
(a) minimum promoters’ contribution shall be locked-in for a period of three years from the date of commencement of commercial production or date of allotment in the public issue, whichever is later;
(b) promoters’ holding in excess of minimum promoters’ contribution shall be locked-in for a period of one year:
Provided that excess promoters’ contribution as provided in proviso to clause (b) of regulation 34 shall not be subject to lock-in.
Explanation: For the purposes of this clause, the expression “date of commencement of commercial production” means the last date of the month in which commercial production in a manufacturing company is expected to commence as stated in the offer document.
Lock-in of specified securities held by persons other than promoters.
37. In case of an initial public offer, the entire pre-issue capital held by persons other than promoters shall be locked-in for a period of one year:
Provided that nothing contained in this regulation shall apply to:
(a) equity shares allotted to employees under an employee stock option or employee stock purchase scheme of the issuer prior to the initial public offer, if the issuer has made full disclosures with respect to such options or scheme in accordance with Part A of Schedule VIII;
(b) equity shares held by a venture capital fund or a foreign venture capital investor for a period of at least one year prior to the date of filing the draft prospectus with the Board:
Explanation: For the purpose of clause (b), in case such equity shares have resulted pursuant to conversion of fully paid-up compulsorily convertible securities, the holding period of such convertible securities as well as that of resultant equity shares together shall be considered for the purpose of calculation of one year period and convertible securities shall be deemed to be fully paid-up, if the entire consideration payable thereon has been paid and no further consideration is payable at the time of their conversion.
Lock-in of specified securities lent to stabilising agent under green shoe option.
38. The lock-in provisions of this Chapter shall not apply with respect to the specified securities lent to stabilising agent for the purpose of green shoe option, during the period starting from the date of lending of such specified securities and ending on the date on which they are returned to the lender in terms of sub-regulation (5) or (6) of regulation 45:
Provided that the specified securities shall be locked-in for the remaining period from the date on which they are returned to the lender.
Pledge of locked-in specified securities.
39. Specified securities held by promoters and locked-in may be pledged with any scheduled commercial bank or public financial institution as collateral security for loan granted by such bank or institution, subject to the following:
(a) if the specified securities are locked-in in terms of clause(a) of regulation 36, the loan has been granted by such bank or institution for the purpose of financing one or more of the objects of the issue and pledge of specified securities is one of the terms of sanction of the loan;
(b) if the specified securities are locked-in in terms of clause (b) of regulation 36 and the pledge of specified securities is one of the terms of sanction of the loan.
Transferability of locked-in specified securities.
40. Subject to the provisions of Securities and Exchange Board of India (Substantial Acquisition of shares and Takeovers) Regulations, 1997, the specified securities held by promoters and locked-in as per regulation 36 may be transferred to another promoter or any person of the promoter group or a new promoter or a person in control of the issuer and the specified securities held by persons other than promoters and locked-in as per regulation 37 may be transferred to any other person holding the specified securities which are locked-in along with the securities proposed to be transferred:
Provided that lock-in on such specified securities shall continue for the remaining period with the transferee and such transferee shall not be eligible to transfer them till the lock-in period stipulated in these regulations has expired.