Lead book runner: An essential requirement for a 100 percent book building process is the appointment of a lead book runner by the issuer. The book runner is primarily responsible for book building in order to determine the appropriate price and quantum of issue. For this purpose, a syndicate is formed. SEBI registered underwriters and other eligible merchant bankers are appointed by the book runner as members of the syndicate. In the event of any under subscription of issue, the lead merchant bankers have to fill the shortfall. The book runners are responsible for incorporating any changes in the draft prospectus that might be suggested by SEBI.
In addition, they are also responsible for maintenance of records relating to the book building process, which may be inspected by SEBI to examine the modalities of book building adopted by the company.
Conditions: It is possible for an issuer to make a public issue through the 100 percent book building process by fulfilling the following conditions:
1) The minimum capital to be raised must be Rs 25 crores
2) Reservation or firm allotment to promoters can be made only according to the guidelines of the SEBI i.e. to permanent employees of the issuer company, and in the case of new companies, to the permanent employees of the promoting company.
3) Allotment can also be made either on a competitive basis or on firm allotment basis to the shareholders of the promoting companies in the case of a new company, or to the shareholders of group companies in the case of existing companies.
4) Eligible merchant bankers shall be appointed as the lead book runners and their names shall be mentioned in the draft prospectus to be filed with the SEBI.