What are the eligibility criteria for an unlisted company to make public issue?

The following are the qualifying requirements that an unlisted company must meet in order to make a public offering:

  1. The company’s pre-issue net worth should not be less than Rs. 1 crore, and it should have been maintained for the previous three out of five years.

  2. The net worth should be sufficient for the next two years.

  3. Profit records must be kept for at least three years out of the next five years.

  4. The issue size should not exceed 5 times the issue’s pre-issue net worth.

  5. If these conditions are not met, the firm can issue through the book-building process, but it must allocate at least 60% of the issue size to Qualified Institutional Buyers.

  • Minimum net worth of Rs 1 Crore in each preceding three full years.

  • Minimum net tangible assets, of at least Rs 3 Crores each, not more than 50% of which are held in monetary assets, in the preceding three full years.

  • Minimum Rs 15 Crores as average operating profit (before tax) in at least three out of five preceding years.

  • When a listed company goes for fresh issue of shares (Further Public Offer, FPO), it should ensure that the size of issue should not exceed five times the pre-issue net worth.

  • Also, in the case of FPO, if the company changes its name, minimum 50% of the revenue in preceding one year should be from the activity denoted by the new name.