Further Public Offer
CHAPTER IV - FURTHER PUBLIC OFFER
PART I: ELIGIBILITY REQUIREMENTS
Regulation 101. Reference Date
Compliance Requirements for Further Public Offer
This provision applies to an issuer making a Further Public Offer (FPO) of specified securities.
The issuer must satisfy all the conditions prescribed under this Chapter.
These conditions must be satisfied at two different stages:
On the date of filing the draft offer document with SEBI; and
On the date of filing the final offer document with the Registrar of Companies (RoC).
Therefore, satisfying the requirements only when the draft offer document is filed is not enough.
The issuer must continue to remain compliant until the offer document is filed with the RoC.
“Unless otherwise provided in this Chapter” means that if another provision in the Chapter specifically provides a different compliance requirement or timing, that specific provision will prevail.
Example
An issuer files its draft offer document with SEBI on 1 September.
On that date, it satisfies all applicable FPO conditions.
Before filing the final offer document with the RoC, the issuer must continue to satisfy those conditions.
If the final offer document is filed with the RoC on 20 September, the issuer must satisfy the Chapter's conditions on 20 September as well.
Regulation 102. Entities not eligible to make a further public offer
Ineligibility to Make a Further Public Offer
An issuer cannot make a Further Public Offer (FPO) if any of the following disqualifying conditions exist:
(a) Issuer, promoters, promoter group, directors or selling shareholders are debarred by SEBI
The issuer itself must not be debarred from accessing the capital market by SEBI.
Its promoters and promoter group must also not be debarred.
Its directors must not be debarred.
Selling shareholders involved in the FPO must also not be debarred.
If any of these persons/entities is under a SEBI debarment from accessing the capital market, the issuer becomes ineligible for the FPO.
(b) Promoter/director connected with another debarred company
A promoter or director of the issuer must not simultaneously be a promoter or director of another company that is debarred by SEBI from accessing the capital market.
Therefore, the restriction can arise even when the issuer itself has not been debarred.
The disqualification comes from the person's association with another debarred company.
(c) Issuer, promoter or director is a wilful defaulter or fraudulent borrower
The issuer itself must not be a wilful defaulter or fraudulent borrower.
Its promoters must also not fall into either category.
Its directors must also not fall into either category.
If any such person/entity has the specified status, the issuer cannot make the FPO.
(d) Promoter or director is a fugitive economic offender
None of the issuer's promoters or directors can be a fugitive economic offender.
The presence of even one promoter or director having this status makes the issuer ineligible for the FPO.
Regulation 103. Eligibility requirements for further public offer
103(1).
Restriction on Change of Name Before FPO
An issuer is eligible to make a Further Public Offer (FPO) only if it has not changed its name during the one-year period immediately preceding the filing of the relevant offer document.
The one-year period is counted backwards from the date on which the relevant offer document is filed.
Therefore, if the issuer changed its name within the preceding one year, it would not satisfy this eligibility condition.
The purpose is to ensure stability and transparency regarding the issuer's identity before it approaches the public for further funds.
Example
Company changes its name on 1 January 2026.
It proposes to file its FPO offer document on 1 September 2026.
The name change occurred only 8 months before filing.
Therefore, the issuer does not satisfy this condition.
If the name was changed on 1 August 2025 and the offer document is filed on 1 September 2026, more than one year has passed.
The issuer satisfies this particular condition.
Exception When the Issuer Has Changed Its Name
An issuer that has changed its name within the one-year period before filing the FPO offer document is generally not eligible to make a Further Public Offer.
However, an exception is available if the issuer satisfies the 50% revenue condition.
At least 50% of the issuer’s revenue during the preceding one full year must have been earned from the activity indicated by its new name.
The test is based on revenue, not simply on whether the company has started or proposed to start a new business.
The relevant period is the one full year immediately preceding the filing of the relevant offer document.
Example
ABC Ltd. changes its name to “ABC Renewable Energy Ltd.”
The new name indicates that the company is engaged in renewable energy activities.
During the preceding one full year:
Total revenue = ₹100 crore.
Revenue from renewable energy activities = ₹60 crore.
Since 60% of the revenue came from the activity indicated by the new name, the 50% requirement is satisfied.
Therefore, the issuer may make the FPO despite having changed its name within the preceding one-year period.
If:
Total revenue = ₹100 crore.
Revenue from the activity indicated by the new name = ₹40 crore.
Only 40% of revenue comes from that activity.
The 50% threshold is not satisfied, so the issuer cannot rely on this exception.
103(2).
FPO Where the 50% Revenue Condition Is Not Satisfied
This provision applies when the issuer has changed its name within the one-year period before filing the relevant offer document but does not satisfy the 50% revenue condition under the proviso to sub-regulation (1).
Such an issuer can still make a Further Public Offer (FPO), but only if it satisfies additional conditions.
Book Building Process
The FPO must be made through the book building process.
The issuer cannot use another issue mechanism for relying on this exception.
Through book building, investors submit bids at different prices within the specified price range, helping determine the final issue price.
Minimum 75% Allotment to QIBs
The issuer must undertake to allot at least 75% of the net offer to Qualified Institutional Buyers (QIBs).
“Net offer” refers to the portion of the issue available for subscription after the prescribed exclusions/reservations.
Therefore, at least 75% of the net offer must be successfully allotted to QIBs.
Refund if 75% QIB Allotment Is Not Achieved
The issuer must also undertake to refund the full subscription money if it fails to make the required minimum 75% allotment to QIBs.
Therefore, the issuer cannot simply proceed with a lower QIB allotment and retain the remaining subscription money.
Regulation 104. General conditions
104(1).
An issuer making a further public offer shall ensure that:
(a).
In-Principle Approval and Designated Stock Exchange
The issuer making the public issue must apply to one or more stock exchanges for in-principle approval for listing its specified securities.
“In-principle approval” means the stock exchange gives its initial approval for the proposed securities to be listed, subject to fulfilment of the applicable requirements.
The issuer may approach one or more stock exchanges for this approval.
From the stock exchanges approached, the issuer must choose one stock exchange as the designated stock exchange.
The designated stock exchange becomes the primary exchange responsible for certain issue-related functions under the SEBI ICDR Regulations.
The selection of the designated stock exchange must be made in accordance with Schedule XIX.
Example:
Company X proposes an FPO.
It applies to Stock Exchange A and Stock Exchange B for in-principle listing approval.
Both exchanges provide the required approval.
Company X chooses Stock Exchange A as its designated stock exchange in accordance with Schedule XIX.
Stock Exchange A will then perform the functions assigned to the designated stock exchange under the regulations.
(b).
Agreement with a Depository for Dematerialisation
The issuer must enter into an agreement with a depository for dematerialisation of its specified securities.
The agreement must cover both:
Specified securities that have already been issued; and
Specified securities that the issuer proposes to issue through the FPO.
“Dematerialisation” means converting securities from physical form into electronic form and maintaining them in investors’ demat accounts.
This ensures that the securities issued to investors can be held and transferred electronically through the depository system.
The requirement covers existing securities as well as the new securities proposed to be issued.
Example:
Company X already has 10 lakh equity shares issued.
It proposes to issue another 2 lakh equity shares through an FPO.
Company X must have an agreement with a depository covering the dematerialisation of both the existing 10 lakh shares and the 2 lakh shares proposed to be issued.
(c).
Existing Partly Paid-up Equity Shares
The issuer must ensure that all its existing partly paid-up equity shares are dealt with before making the FPO.
Such shares must have either:
Been fully paid-up; or
Been forfeited.
The issuer cannot leave any existing equity shares partly paid-up at the time of the FPO.
“Partly paid-up” means the shareholder has paid only part of the amount due on the shares, with some amount still outstanding.
Example:
Company X has 1 lakh existing equity shares.
10,000 shares are partly paid-up, with ₹5 still unpaid on each share.
Before the FPO, Company X must either:
Collect the remaining ₹5 and make them fully paid-up; or
Forfeit those shares in accordance with applicable law.
(d).
Firm Arrangement of Finance for the Project
The issuer must have firm arrangements for financing the specific project proposed to be funded from the issue proceeds.
These arrangements must cover at least 75% of the stated means of finance for the project.
The finance arrangements must be through verifiable means, meaning the issuer must be able to provide evidence that the required funding has actually been arranged.
The 75% calculation excludes:
The amount proposed to be raised through the public issue; and
Existing identifiable internal accruals of the issuer.
Therefore, the issuer cannot count the proposed public issue proceeds towards the 75% requirement.
It also cannot count existing identifiable internal accruals towards this 75% requirement.
Example:
Total project cost = ₹100 crore.
Stated means of finance = ₹100 crore.
75% = ₹75 crore.
The issuer must have firm, verifiable financing arrangements for ₹75 crore.
The proposed public issue amount and existing identifiable internal accruals are excluded while determining this ₹75 crore.
Explanation:
Finance for the Specific Project”
“Finance for the specific project” means finance required only for capital expenditure.
Capital expenditure means expenditure incurred to create, acquire or improve long-term assets of the project.
Therefore, the 75% financing requirement relates only to the project’s capital expenditure.
Expenses such as routine operating costs, salaries, working expenses or other revenue expenditure are not considered as “finance for the specific project” for this purpose.
Example:
A company plans a ₹100 crore project.
₹70 crore is required for construction of a factory and purchase of machinery.
₹30 crore is required for salaries, electricity and other operating expenses.
Only the ₹70 crore capital expenditure is considered as “finance for the specific project.”
104(2).
Limit on General Corporate Purposes
The issuer may use a portion of the issue proceeds for “general corporate purposes”.
The amount allocated for general corporate purposes cannot exceed 25% of the total amount being raised through the issue.
The amount and purpose of such utilisation must be disclosed in both:
Draft Offer Document; and
Offer Document.
Therefore, the issuer cannot allocate more than one-fourth of the issue proceeds towards general corporate purposes.
Example:
Total amount being raised = ₹100 crore.
Maximum permitted for general corporate purposes = 25% of ₹100 crore = ₹25 crore.
The remaining ₹75 crore must be allocated towards other disclosed objects of the issue.
104(3).
Limit on General Corporate Purposes and Unidentified Acquisition/Investment
The issuer can allocate issue proceeds towards:
(i) General corporate purposes; and
(ii) Objects where the issuer has not yet identified the acquisition or investment target.
The combined amount allocated for both these purposes cannot exceed 35% of the total amount being raised.
These purposes and the proposed amounts must be disclosed in:
Draft Offer Document; and
Offer Document.
The 35% limit applies to the combined amount, not separately to each category.
Example:
Total amount being raised = ₹100 crore.
Maximum amount for:
General corporate purposes; and
Unidentified acquisition/investment targets
= ₹35 crore in total.
The issuer cannot allocate ₹25 crore to general corporate purposes and ₹20 crore to unidentified acquisitions, because the combined amount would be ₹45 crore.
Limit on Unidentified Acquisition or Investment
The issuer may raise funds for acquisition or investment purposes even if the specific target has not yet been identified.
However, the amount allocated for such unidentified acquisition/investment cannot exceed 25% of the total amount being raised.
This limit is separate from the overall 35% combined limit for:
General corporate purposes; and
Unidentified acquisition/investment targets.
The proposed use and amount must be disclosed in:
Draft Offer Document; and
Offer Document.
Example:
Total amount being raised = ₹100 crore.
Maximum for unidentified acquisition/investment = ₹25 crore.
The issuer cannot allocate ₹30 crore for such unidentified targets, even though the overall combined limit may permit up to ₹35 crore.
Exception Where Acquisition or Strategic Investment Is Identified
The 35% and 25% limits do not apply when the proposed acquisition or strategic investment has already been identified.
The issuer must know the specific acquisition target or investment at the time of filing the offer documents.
The issuer must make suitable and specific disclosures about the proposed acquisition or investment.
These disclosures must be made in both:
Draft Offer Document; and
Offer Document.
Therefore, the higher limits are relevant only where the acquisition/investment target has not been identified.
Example:
Issue size = ₹100 crore.
Company identifies a specific company that it proposes to acquire for ₹40 crore.
Since the acquisition target is identified and properly disclosed in the offer documents, the 25% limit for unidentified acquisitions does not apply.
Explanation:
For the purposes of this regulation, “project” means the object for which monies are proposed to be raised to cover the objects of the issue.
Regulation 105. Additional conditions for an offer for sale
Minimum Holding Period for Shares Offered for Sale
Only fully paid-up equity shares can be offered for sale to the public by the selling shareholder(s).
The selling shareholder(s) must have held these shares for at least 1 year before filing the Draft Offer Document.
Therefore, shares acquired by a selling shareholder less than 1 year before filing the Draft Offer Document cannot be offered for sale to the public under this provision.
The 1-year period is calculated backwards from the date of filing the Draft Offer Document.
Example:
Draft Offer Document filed on 1 September 2026.
Selling shareholder acquired the shares on 1 August 2025.
Holding period = less than 1 year, so these shares cannot be offered for sale.
If the shares were acquired on 1 July 2025, the 1-year requirement is satisfied.
Holding Period for Shares Received from Convertible Securities
The 1-year holding requirement can also be satisfied where the equity shares offered for sale were received by converting or exchanging fully paid-up compulsorily convertible securities.
This includes equity shares received through conversion or exchange of:
Fully paid-up compulsorily convertible securities; and
Depository receipts.
For calculating the required 1-year holding period, the holding period of the original convertible securities/depository receipts is added to the holding period of the resulting equity shares.
Therefore, the seller does not need to hold the resultant equity shares separately for a full 1 year.
Example:
Convertible securities held for 8 months.
They are converted into equity shares.
Resultant equity shares held for another 4 months.
Total holding period = 8 + 4 = 12 months.
The 1-year requirement is satisfied.
One-Year Holding Period Must Be Completed Before Filing
The required 1-year holding period must already be completed when the Draft Offer Document is filed.
The selling shareholder cannot complete the remaining holding period after filing the Draft Offer Document.
For shares received from convertible securities, the combined holding period of the convertible securities and resultant equity shares must therefore total at least 1 year by the filing date.
Example:
Draft Offer Document filed on 1 September 2026.
Seller has held the relevant securities for only 10 months on that date.
The seller cannot wait another 2 months and then offer the shares for sale.
The 1-year requirement must have been satisfied on 1 September 2026 itself.
Explanation:
Conversion Must Be Completed Before Filing the Offer Document
If equity shares are being offered for sale after conversion or exchange of fully paid-up compulsorily convertible securities, the conversion or exchange must be completed before filing the Offer Document.
The relevant Offer Document depends on the type of issue:
Book-built issue: Red Herring Prospectus (RHP).
Fixed-price issue: Prospectus.
Therefore, the equity shares must actually come into existence through conversion/exchange before the relevant Offer Document is filed.
However, the Draft Offer Document must contain full disclosures regarding the terms of such conversion or exchange.
These disclosures should clearly enable investors to understand how and on what terms the convertible securities will be converted/exchanged into equity shares.
Example:
A selling shareholder holds fully paid-up compulsorily convertible debentures (CCDs).
The shareholder wants to sell the equity shares that will arise from conversion of these CCDs in the public issue.
The CCDs must be converted into equity shares before filing the RHP/prospectus.
The Draft Offer Document must already disclose the complete terms of conversion.
Provided further that the requirement of holding the equity shares for a period of one year shall not apply:
(a).
Offer for Sale by Government Infrastructure Entities
This provision applies to an Offer for Sale (OFS) involving certain government-controlled entities.
It covers:
A government company;
A statutory authority;
A statutory corporation; or
A Special Purpose Vehicle (SPV) set up and controlled by one or more of these entities.
The entity must be engaged in the infrastructure sector.
Therefore, an OFS by a government-controlled infrastructure entity is covered under this specific provision.
Example:
A government company owns shares in an infrastructure SPV.
The SPV was set up and is controlled by the government company.
If the government company offers those shares to the public through an OFS, this provision can apply.
(b).
Shares Acquired Under an Approved Scheme
This exception applies where equity shares are offered for sale and those shares were acquired under a scheme approved under Sections 230 to 234 of the Companies Act, 2013.
It covers shares acquired:
Directly as equity shares; or
Through conversion of fully paid-up compulsorily convertible securities.
The scheme may be approved by:
A High Court;
A Tribunal; or
The Central Government, as applicable.
The shares or securities must have been received in lieu of:
Business; and
Invested capital.
The business and invested capital being exchanged under the scheme must have been in existence for more than 1 year before the scheme was approved.
Example:
Company A has a business and invested capital that have existed for more than 1 year.
Under a scheme approved under Sections 230–234, Company A receives equity shares in Company B in exchange for that business and invested capital.
Company A can subsequently offer those equity shares for sale, subject to the other applicable requirements.
(c).
Bonus Shares Offered for Sale
Equity shares received through a bonus issue can also be offered for sale.
The underlying securities on which the bonus shares were issued must have been held for at least 1 year before filing the Draft Offer Document with the Board.
This exception is subject to two conditions:
(i) The bonus shares must be issued out of:
Free reserves; or
Share premium existing in the issuer’s books of account at the end of the financial year immediately preceding the financial year in which the Draft Offer Document is filed.
(ii) The bonus shares must not be issued by using:
Revaluation reserves; or
Unrealised profits of the issuer.
Example:
A shareholder has held the original equity shares for more than 1 year.
The company issues bonus shares against those shares.
If the bonus shares are issued from eligible free reserves/share premium and not from revaluation reserves or unrealised profits, those bonus shares may be offered for sale.
