Question ID : 259

Lock in Period for Pre Issue Capital

A newly corporated company has the wants to issue shares through rights renounciation by directors to friends & ives. The total project cost is Rs. 90 Crores and will be fanced by Rs. 40 Crores Equity and r by Debt.

The company pns to go for an IPO August 2006. The IPO iwll be for Rs. 15 Crores. The promoters will brg Rs. 25 Crore of equity along with friends and ives.

As per the SEBI Guideles the promoters are required to have m. 25% of post issue capital lock for 3 years. this case it will come to Rs. 10 Crores. The company seeks to raise this excess from friends & ives.

My quion is that, will any equity raised now excess of the above Rs. 10 Crore attract LOCK ? If yes, for what period ?

Is there any way by which the excess equity brought by friends and ives be freed from LOCK either now or at the time of IPO ?

I requ my learned friends to guide me suitably to the ter of the people wantg to v the company. '

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