SEBI recommends net tangible assets as a criterion for IPOs

By Our Markets Bureau | 26 Mar 2003

1

Mumbai: The Securities and Exchange Board of India (SEBI) committee has recommended net tangible assets (NTA) as a key eligibility criterion for companies planning to come out with an initial public offering (IPO).

The draft report of the Primary Market Advisory Committee of SEBI recommended that companies coming out with an IPO should have a minimum NTA of Rs 3 crore in each of the preceding two full years, of which not more than 50 per cent is held in monetary assets.

NTA includes all assets of a company other than intangible assets, not eligible to be recognised as assets, as defined in terms of Accounting Standard on Intangible Assets. According to the committee, tangible existence of a company for a reasonable period is a good eligibility norm, as it would also eliminate fly-by-night operators.

The NTA criterion should further ensure the physical existence of the company over a longer term and also ensure that the company is engaged in a genuine business activity. Other than the NTA of Rs 3 crore, the company will be required to have a net worth of at least Rs 1 crore in each of the previous two years.


Business History Videos

History of hovercraft Part 3...

Today I shall talk a bit more about the military plans for ...

By Kiron Kasbekar | Presenter: Kiron Kasbekar

History of hovercraft Part 2...

In this episode of our history of hovercraft, we shall exam...

By Kiron Kasbekar | Presenter: Kiron Kasbekar

History of Hovercraft Part 1...

If you’ve been a James Bond movie fan, you may recall seein...

By Kiron Kasbekar | Presenter: Kiron Kasbekar

History of Trams in India | ...

The video I am presenting to you is based on a script writt...

By Aniket Gupta | Presenter: Sheetal Gaikwad

view more