The main entry norms for companies making a public issue (IPO or FPO)

The main entry norms for companies making a public issue (IPO or FPO)
are summarized as under:

Entry Norm I (EN I): The company shall meet the following
requirements:
(a) Net Tangible Assets of at least Rs. 3 crores for 3 full years.
(b) Distributable profits in atleast three years
(c) Net worth of at least Rs. 1 crore in three years
(d) If change in name, atleast 50% revenue for preceding 1 year should
be from the new activity.
(e) The issue size does not exceed 5 times the pre- issue net worth
To provide sufficient flexibility and also to ensure that genuine companies
do not suffer on account of rigidity of the parameters, SEBI has provided
two other alternative routes to company not satisfying any of the above
conditions, for accessing the primary Market, as under:

Entry Norm II (EN II):
(a) Issue shall be through book building route, with at least 50% to be
mandatory allotted to the Qualified Institutional Buyers (QIBs).
(b) The minimum post-issue face value capital shall be Rs. 10 crore or
there shall be a compulsory market-making for at least 2 years
OR

Entry Norm III (EN III):
(a) The “project” is appraised and participated to the extent of 15% by
FIs/Scheduled Commercial Banks of which at least 10% comes from
the appraiser(s).
(b) The minimum post-issue face value capital shall be Rs. 10 crore or
there shall be a compulsory market-making for at least 2 years.
In addition to satisfying the aforesaid eligibility norms, the company shall
also satisfy the criteria of having at least 1000 prospective allotees in its
issue
b. Is there any category of entities which are exempted from the
aforesaid eligibility norms?
Yes, SEBI (DIP) guidelines have provided certain exemptions from the
eligibility norms. The following are eligible for exemption from entry
norms.
Frequently Asked Questions on Issues and use of ECS for Refunds – For Reference Only 4
(a) Private Sector Banks
(b) Public sector banks
(c) An infrastructure company whose project has been appraised by a
PFI or IDFC or IL&FS or a bank which was earlier a PFI and not less
than 5% of the project cost is financed by any of these institutions.
(d) Rights issue by a listed company