Initial Public Offering (IPO)

By: Mahima Bheemaiah

What is an IPO?

Most companies that kick off their business starts with a limited source of capital and resources, but soon these companies over a period of time grow into a sustainable business and will need more capital to expand and to grow their business. These funds can be raised through private placements and by also taking loans but when a company needs much more money for its business then it issues securities to the general public. This raising of fresh funds through the public is done through the primary market. Funds are raised through retail investors, qualified institutional buyers and non-institutional investors. The primary market is nothing but a capital market where a company issues securities to the general public for the first time and which is not previously traded in the stock exchanges. Securities are directly issued to the investors through the company. The primary market is also known as the New Issue Market (NIM). The secondary market is where the trading of the stock takes place and keeps varying from time to time. The initial raising of capital is done through the stock market where the general public is allotted shares of that respective company. This process of initially raising capital is known as “Initial Public Offering”.

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Initial Public Offerings or in its abbreviated form called ‘IPO’ raises funds by listing a company in the stock market exchange and by selling securities to the people who have been allotted their respective shares. Only a limited number of shares are available and are allotted in a random process without any bias. Securities could be shares, stock, debentures, bonds etc., but in an IPO it is only the selling of shares to the public. Only a public company is allowed to raise funds through the stock market and a private company cannot do so. IPO raises funds by a company to fulfil its long term goals.

IPO is a fundamental aspect of Capital Markets. It is the very first step for a public company to grow its funds for the development of a company. A company raises capital for the growth of the business, for new investments, to expand their business, to reimburse their debt, for research and development, to acquire any company for strategic planning etc. It can also help in expanding their brand name which provides companies with a huge amount of publicity which may help in securing better terms in lenders. In terms of the economy, when a large number of IPOs are issued, it is a sign of a healthy stock market and economy.

In an IPO the relationship is directly between a shareholder and the company. A shareholder carries the risk factor associated with the shares of the company. A shareholder becomes the owner of a company when he acquires the shares of the company, hence the risk factor which comes with it. If a company performs well in a financial year, these shareholders will also get dividends or bonus shares according to the number of shares they hold in that company. Along with it if there is an increase in demand for the shares of that particular company then the profits of the capital returns will also add to the advantage of the shareholders. A company is liable to its shareholders and must disclose requirements such as filing quarterly and annual financial reports. The money that flows into a company from its investors is known as the ‘Share Capital’ of a company. IPO is the largest source of funds to raise capital for a company.

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While IPO seems like an easy option for a company to raise the capital it does have its share of ups and downs. A company cannot raise capital as and when it wants to. Filing an IPO comes with huge costs and resources. If a company is not well-advised by its financial advisors the company could flop in the open market and might lose out financially. Advantages of going public could be for 1) Easier raising of funds 2) Exit for existing investors 3) Liquidity 4) Increased trust of shareholders 5) Possibilities of takeovers 6) Employee motivation through ESOPs 7) Enhanced visibility and 8) Cost-effective way of raising funds compared to bank loans. Some of the disadvantages of going public can be 1) Loss of Autonomous control over the company and 2) Increase of Compliance Requirements.

What is the process of an IPO?

An IPO process in India typically takes at least seven to nine months. However, the timeline may vary depending on the transaction involved, compliance with the law, preparation of financial statements, receipt of all necessary regulatory approvals and other market conditions. The first step while applying for an IPO is to recruit merchant bankers. He is responsible for making sure the company follows the rules and regulations which goes from application till the listing date. The merchant banker and the company go and apply to the SEBI with their registration application which talks about the health of the company. After this process, the SEBI needs to give their approval for the listing of the company. Once the nod from SEBI is acquired then the company needs to draft a prospectus and this prospectus needs to be filed with SEBI at least after 30 days, it needs to be filed with the Registrar of Companies (ROC) and with the stock exchanges. If it’s a red herring prospectus then it needs to be filed at least 3 days before the ROC before listing takes place. Once the prospectus is issued which contains information about the company which talks about what the company has done so far, its management, the goals it wants to achieve, the risks associated with the shares of the company etc. This is followed by an IPO roadshow or simple marketing of the company, this could be advertising on TV, radio, newspaper etc., so that the general public comes to know about it. Further, the company needs to fix the price range to the shares, this process is known as the book-building process. SEBI guidelines define Book Building as “a process is undertaken by which a demand for the securities proposed to be issued by a body corporate is elicited and built-up and the price for such securities is assessed for the determination of the quantum of such securities to be issued employing a notice, circular, advertisement, document or information memoranda or offer document”.2 In this process bids are placed by the investors which could be above or below the floor price, and once the bidding ends a final offer price is fixed. And lastly, the listing day is when the company gets listed on a stock market exchange and according to the demand and supply of the market participants, the share price may be premium or discount.

Legal Framework over IPO

A company while filling for IPO is mainly regulated by the Securities and Exchange Board of India (SEBI) addition with it, it is also regulated by Securities Contract (Regulations) Act, 1956, Securities Contract (Regulations) Rules, 1957 and Companies Act, 2013. The SEBI ICDR (Issue of Capital and Disclosure Requirement), Regulations 2018 deals with all aspects of the IPO. This Act provides detailed provisions governing an IPO. They provide detailed provisions related to disclosure requirements, opening and closure of issuance, publicity guidelines etc. The other Act is the SEBI LODR (Listing Obligations and Disclosure Requirements) Regulations, 2015 deals with disclosing details of a company when a company is going to list itself in the stock exchange. The Listing Regulations cover principles, common obligations and continuing disclosure requirements for all entities that have already been listed on any of the stock exchanges in the country.

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IPO during Covid Outbreak

December 2019 saw the rise of a new virus called Covid-19. This outbreak disrupted the entire world. Everything came to a standstill when restrictions were imposed due to Covid. There was uncertainty everywhere around the world. When the lockdown was imposed in March of 2020 nobody expected that it would prolong around for months together and would still be looming around in the environment even today. Many sectors were affected by the impact of the Covid such as the manufacturing sector, agricultural sector, service sector and the list goes on and on.

The market was low during this period and took time to recover from the sudden crash in the market. The next few month’s companies were not listing themselves and IPO’s in India which was already staggering due to prolonged slowdown and also due to threat to financial stability only saw 146 IPO’s in the fiscal year of 2019-2020 which was little higher than the previous year. The past 3 years saw a downfall of IPO with the least in a year being 116 IPO’s. The start of 2020 saw the listing of 50 IPO’s, but after the lockdown was imposed the markets were very low. The next four months of FY2020 saw only 19 companies get listed in the stock exchanges, which was a 62% downfall compared to the previous fiscal year.

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The second half of the year saw a rise in IPO’s even though there was still a rise in Covid cases. A few of the company’s IPO was even oversubscribed. This was due to excess liquidity, positivity in the markets and positive sentiments that has resulted in even companies which were impacted by Covid-19 raising funds. There was also a rise in retail investors during this period it was reported by Zerodha that about 250,000 accounts were opened during the month of April 2020 alone which took them about 6 years since the inception of their company to gain their first 100,000 investors. Many young investors have joined the market during this period due to increased awareness and also due to a lot of social media platforms have been promoting and teaching how to trade in the market during the pandemic. The increase in user growth can also be attributed to the easy access to these platforms. Not only in India, but even the global markets saw a rise in IPO. One of the keys to raising in IPO’s is due to sectorial resilience that is a lot of pharmaceuticals, medical and biotech industries and chemical as well as technology sector were welcomed in the second part of 2020 with companies like Chemcon Specialty Chemicals Ltd., Mazagon Dock Shipbuilders and Happiest Minds Technologies Ltd was the most-subscribed IPO’s in 2020.

IPO post-Covid

Post-2020, there was a rise in IPO’s in the country. Not only was there a raise but there was stellar growth in IPO as compared to the previous few years. With the second wave still creating panic amongst the public, there seemed like no stop for IPO’s being listed in the stock exchanges.

In 2021 alone, 63 companies collectively raised 1.2 lakh crore through Initial Public Offerings-the highest amount raised in a single calendar year. December was the busiest month for IPO with 11 companies offering their securities through the primary market. Anuj Kapoor, head of investment banking at UBS India, told Bloomberg News that companies will raise twice the money in comparison to last year.5 Many companies have opted for IPOs since the end of 2020, primarily due to the impact of the Covid-19 pandemic on business and exuberant stock market activity. Due to the high number of first-time retail investors and huge foreign influx investors as well as due to excellent performance seen in the market a high number of companies issued securities through IPO. Some of the companies that excelled in the market are Nazara Technologies, Sona BLW Precision, FSN E-Commerce Ventures, and Tatva Chintan Pharma Company etc. Even though the Covid pandemic continues to wreak havoc on India’s economy, the domestic market still remains very optimistic, hence giving confidence to the issuer.

Most of these companies are raising capital due to losses suffered due to the pandemic as well as expanding business due to an increase in demand. Also high retail investors coupled with liquidity makes it a perfect platform for companies to use this space now for companies to go public. However, heading into 2022 the markets can still be volatile with omicron cases spreading and due to high inflation further raising and it could be that central banks may raise interest rates which could curb liquidity. Still, it is expected that IPO’S in 2022 might be vibrant and robust just like in the year 2021.

Regulation Changes by SEBI to IPO’s

2021 ended with a bang for IPO’s in the country. It was a stellar year with 63 companies listed in the stock exchanges. A lot of new-age companies listed their securities in the market with companies such as Zomato, Paytm etc., introducing themselves in the primary markets. SEBI has come up with new regulations to curb the listing of companies.

To enhance the growth and development of public markets as well as to keep transparency and to remove ambiguity before going public and also keeping in mind the best interests of retail investors, SEBI has made amendments to an already existing volatile market.

SEBI has introduced a maximum cap limit of 35% to use from the equity-issuance proceeding (25% towards unidentified acquisition) for acquisition where there was no regulation before the amendment.6 SEBI is of the view that raising funds for unidentified acquisitions leads to ambiguity in IPO objectives. Limits are also imposed on the existing investors of the company to sell their shares through OFS (Offer for Shares). The purpose of doing this is to instil confidence in the investors and can also let pre-IPO investors look for an alternate form of selling their shares.

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From 1st April 2022, half the anchor investors should have a lock-in period of 90 days from the previous existing 30 days. While the remaining half will go through a 30 day lock-in period. This is done with the intention to make investors stay invested for a longer period and to provide confidence to the other investors. SEBI had proposed to introduce a minimum price band in all public issues, with the upper one at least 5% more than the floor price, so that the process will be more dynamic and flexible with the final price falling within or outside the scope of price band depending upon the demand.7 Regulations have also been done to preferential shares by relaxing pricing norms and lock-ins requirements for promoters, to make it easier for companies to raise funds.


India has become a global hotspot for IPOs. Global investors are also eyeing IPO’s in India. India has generated triple-digit annualised profit through IPO’s. IPO’s offer the biggest opportunity to raise funds for a company. Some IPO’s are a success and some can tank at the market. All of this depends upon the market sentiments. The LIC of India is coming out with the biggest IPO during the month of Feb/Mar 2022 with an issue size of Rs.1 lakh crores.

Some of these provisions which are done by SEBI are in the wake of frenzy number of IPO’s going public and due to high valuations in the markets. To keep a tab on companies and to curb their regulations these changes are placed so that the capital markets are not impacted in the long term. Hopefully, with these changes, the current year IPO’s does not get impacted due to these regulations.

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Blog Intellectual Property Law

Role of IP in E-Commerce

By: Syeda Fauzia


What are Intellectual property Rights?

Intellectual Property Rights (IPR) would refer to anything and everything that is the conception of the human mind which creates an exclusive right bestowed upon the person over the creations of their intellect. According to the Oxford Dictionary, “intellectual property is an intangible property as a result of human creativity.” Intellectual Property is of various kinds, few significant ones being Copyrights, Trademark and Patents. IPR also include inventions of a product or process, a start-up business, creating new music or lyrics of a song and many more.

What is E-Commerce? 

Electronic Commerce or E-Commerce as simply told is where commercial transactions are conducted through online mode. These would include conducting or establishing businesses, exchanging goods and services or both primarily over the internet. Examples For E-commerce would include platforms such as: Amazon, Swiggy, Zomato and so forth.

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How are IPR and E-commerce interlinked? Let’s find out!

In today’s world, economies are constantly growing and changing. Internet as such plays a vital role in the development of the same. That being the case, it is necessary to understand that IPR plays a crucial role in the process of conducting e-commerce business and its impact in the virtual world. It is necessary to keep a tab on E-commerce along with the technology infrastructure in such a manner that the value of the intellectual property is not disregarded. It is crucial than ever that there needs to be a constant process of improvement in this technicality of internet access.

The methodology to understand the role of Intellectual Property in E-commerce is based on certain aspects. They are:

  1. Protection of business

IPR plays an important role in safeguarding the core business interest of a company including all its affiliates/subsidiaries, its domain in the corporate world. More fully against unfair competition amongst the businesses. In case there is no application of IPR or the IPR laws are not abided by, it will lead to severe violations of IPR and the consequences will surely affect the goodwill of a Company. That means to say that IPR plays a significant role in the digital economy. Without IPR in place, anything and everything can be pilfered. It may extend from design to software. The Owners may be perplexed by such duplication and stealing and then the same being floated over the virtual domain. The Owners will never be recognized for their unique innovations.

  1. Safeguarding the ownership of the factors involved in the business development.

There would be several factors that enable a company to be structured and with Intellectual Property law in place, especially for the e-commerce transactions helps to safeguard the digital and technical components which are critical to the company. For instance, there can be software that is connected to networks/routers, software designs, software programs, HTML codes etc. All these factors may be available in different forms and may contain an intellectual property right that not only needs to be protected but to be continued to be protected. This will enable E-commerce to run efficiently and smoothly. Thus, the IPR coated E-commerce safeguards these important factors which are essentially the enablers.

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  1. Protection of IPR

Every E-Commerce business recognizes IPR on all such creations/innovations especially the patents, copyrights, marks and trade secrets. A product that is developed by a company or an individual and commercializing the product involves the development of a variety of technologies so as to protect the product in the public domain. In such cases, the companies/individuals turn up to technology providers who will enter into licensing Agreements wherein certain rights are given for a certain period of time and for a specific purpose. The License Agreement facilitates the owner of the product to safeguard his intellectual property rights in his products by way of acceptance of the owner’s standard terms and conditions wherein the IPR protection is deemed a material term of the contract.

  1. Preservation of patent portfolios and trademarks

If a business has to capture the market in the e-commerce arena, IPR creation becomes an impeccable asset to the Company. The Company will own the portfolio of such intellectual property eg: by Patent or trademark registration. This enhances the company’s credibility and of course will lead to significant development in the company’s financial position as the online business world catches the company that shows their business in the light of the preservation of their patent portfolios and trademarks.

IPR and E-Commerce

Several Companies believe in the fact that their intellectual properties are worthy to a great extent such that the protection of the tangible assets owned maybe a secondary priority. This is very much true in the global market and with the recent happening of online businesses because the intellectual property rights and the law that exists with regard to the same enables the companies from keeping their trade secrets protected and disallows any unfair competition.

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IPR plays an important role in E-commerce in today’s digital economy. The laws that govern the IPR has brought businesses globally to function by supporting new creations but also guarding the tedious inputs that are gone into by the creator of such intellectual property. The laws pertaining to Intellectual Property Rights allows the law to block others from stealing the Intellectual property of the owner. So that there is no impact on the financial position of the inventor and their struggle in bringing the goodwill in the b2b market which is available in the electronic network.

Fundamentals of IPR in e-commerce:

E-Commerce is a great enabler of a business. However, it is the owner who is solely responsible for protecting intellectual property rights. If the owner while revealing the intellectual property to the public or in any media through E-commerce fails to protect it beforehand. This becomes fatal and gives scope for the others to use the owner’s intellectual property unfairly much before filing for its protection. There may not be any legal solution that the owner can adapt and also leaving the culprits to walk away freely with no reprimand whatsoever. No trade secrets can be protected once it is in the public domain. The owner loses all his rights against the virtual world. Eg secrets of a Software algorithm if shared, then such software algorithms cannot be protected.

Breach of Intellectual property

Any website that involves transactions that are mostly buying or selling online is a part of E-commerce websites. Companies while doing e-business may knowingly or unknowingly tend to violate the intellectual property rights by displaying the images, designs or even products of other companies. The most common example is that of Chinese products that look similar but are just a duplication of the original product. Such companies should carefully ensure that they do their due diligence effectively to avoid any infringements of the owner’s intellectual property rights and also that they do not violate the laws that protect the intellectual property in the country of origin of the product.  They should be able to show that the sale is on an original development and that the intellectual property owner is well aware and there is permission to sell in the online platform.

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Protection of IPR under E-commerce

IPR in retail and e-commerce deals with buying and selling products through a physical shop and a website, respectively[1]. In retail also a owner needs to protect his intellectual property rights. Iit is no different that is for E-commerce and should various types of intellectual properties. The following states the usual IPR in E-commerce.

Various patent models protects E-commerce like search engines etc. Patent Law or the Copyrights Act depend from country to country and their IPR laws may be divergent in application. Eg. A website design protected by copyright law. The copyright protection is available under the copyright law for the graphics, designs, materials, audio or video clippings, photographs etc. Therefore the companies in e commerce world can protect their database under such copyright laws as applicable in their specific country.

Protection of brands:

Features that are posted on their application and/or their websites under the Trademark Law. the Intellectual Property Rights also encompasses protection of webpages, displays that are computer-generated, graphics, graphical user interfaces. This may also be protected under at the Industrial Design Laws as per the applicability in their respective country.

There would be certain websites which will have hidden characteristics like graphics that are confidential in nature, source codes, flow charts, data structure, algorithms, various technical descriptions, manuals, contents etc to name a few, are entirely protected under various Trade Secret Laws and opens up the various other laws in protection of such intellectual property rights.

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In today’s world there is no denying of the fact that achievement of fair and ethical compliance of online businesses and practices cannot be accomplished without the effective use of Intellectual Property Laws. The society is more relying on e commerce and not only the E- businesses development wherein the retail activity is drastically reduced. Like the pandemic struck economy wherein the E-commerce led to significant growth in the virtual market. Making it more diverse and dynamic approach of online platforms.

As the growth of online business expands the Intellectual Property Rights facilitates the companies to protect and monitor their trade activities that are especially to maintain secrecy. IP rights in e-commerce also allow IPR owners to claim a share of the company’s profits. The Implementation of intellectual property rights will focus on the features that are exclusive and are unavailable to others and thus making the implementation of E-Commerce activity in the public domain successfully. The Legal protection of intellectual property rights brings in sturdiness in the usage of intellectual property which helps in not only in licensing, contracting, outsourcing but also helps in building strategic relationships, developing new concepts which in return enhances the sales and E-Commerce business by bringing in features that are unavailable to its competitors. This enables a healthy competition in the internet world and bringing in profits to the right owners of the intellectual property. Therefore Intellectual property stands as a guard to the E-Commerce and enhances fair play in the economy while adopting right measures of protection if Intellectual Property Rights.

 [1] What’s the Role of Intellectual Property in Ecommerce? (



The Effect of Artificial Intelligence on Human Beings and Society

Individuals today live in the world of Artificial Intelligence (AI). It permeates our lives in numerous ways, either directly or indirectly, by performing tasks that, until quite recently, could only be performed by a human with specialized knowledge and training. Some of the examples of the use of AI in our daily lives include spam filters, Alexa, Siri, driverless cars, automatic vacuum cleaners etc. These technologies are used in different sectors like technological industries, healthcare, education, transportation, defense, law and agriculture, among many others. This list keeps on increasing with time owing to the technological advancements taking place in the modern world.

The increasing ubiquity and rapidly expanding commercial potential of AI in different sectors has spurred massive private sector investment in the AI projects. The potential for further rapid advances in AI technology has prompted expressions of alarm, wherein some scholars highlight the role of government in regulating the development of AI and putting restrictions on AI operations.

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Before understanding what steps have been taken by different jurisdictions to address the implications of growing use of AI, it is important to understand exactly what issues relating to AI needs government deliberation. Broadly, the most significant issues can be listed as- data protection concerns, the issue of biasness, the challenges to the Intellectual Property regime, the issue of civil liability as well as the impact of AI in the criminal justice system.

As AI continues to find its way into our daily lives, its propensity to interfere with human rights only gets more severe. Privacy is recognized as an international human right that is essential to human dignity and is inalienable. Data protection also forms an intrinsic part of an individual’s privacy as privacy can be guaranteed only when the personal and sensitive personal data of an individual is protected. Taking this implication into consideration, many jurisdictions now recognize the right to data protection, as part of right to privacy, and therefore, a fundamental right. The increasing use of AI creates an issue in the domain of data protection as the AI systems are often trained through access to and analysis of big data sets. This makes the right to data protection susceptible to violation as there is a possibility of leak of personal data or sensitive personal data of an individual by an AI.

Machine learning is a type of artificial intelligence which uses data sets to understand the pattern and learns to perform a particular task from it. Because machine learning algorithms use data sets to derive a conclusion, if the data set provided to the machine learning system is itself biased, the system will provide biased results. Furthermore, since AI is a technology, it is susceptible to minute measurement errors. However, such minute errors might lead to a big problem with millions of users, when thousands could be affected by error rates. These two issues create biased results. For example, Google Photos’ image recognition software, in 2015, labelled photos of black people as ‘gorillas’. Owing to the complex software model, the developers were unable to resolve the issue. Therefore, the only recourse available was to remove any monkey-related words from the data which was fed to the AI.[1]

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With respect to the impact of AI in the intellectual property (IP) regime, there are two sets of implications. Firstly, the impact of law on the creations of artificial intelligence, and secondly, the impact of AI on law i.e. how AI technology is being used in the field of law. With respect to the former, there is much debate going on around the world with respect to giving the AI the IP rights of its own creations, without human intervention. Since some types of complex AI can ‘invent’ or ‘create’ creative work without human involvement, there is a unanimity in addressing the legal status of such invention or creation. This is where the role of patent and copyright regime comes into picture. Although a number of applications mentioning AI as an inventor, have been filed in the patent offices of different jurisdictions, however, these jurisdictions have shown their reluctance in granting the AI intellectual property rights. In the similar way, courts in various jurisdictions have reiterated that copyright can only be granted for works which involve human as a creator. However, it should be kept in mind that AI technology is developing and in future, there might be cases where AI invents or creates something which the programmer of such AI has no idea about, or has no role to play. In such a situation, is it justified to not develop the IP regime to accommodate such inventions and creations.

There are many documented cases of AI gone wrong in the criminal justice system. Machine learning is often used for risk scoring the defendants as a means to remove human bias prevalent in judges while adjudicating cases with respect to sentencing and bail. Predictive policing, on the other hand, is used as a measure to allocate police resources to prevent crime. However, the conclusions arrived at using such AI systems in the criminal justice process re-introduces the element of bias against the accused, which these AI systems were aimed at addressing. Another issue with respect to the intersection of AI and criminal law is the ambiguity with respect to the criminal liability in case AI does an act, which, if done by a human, would constitute an offence under the criminal law.

Lastly, the issue of civil liability of AI highlights the situation where the traditional concepts of conceptualizing liability is being adopted by the courts if a product liability claim involves an AI.

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[1] WIRED, google-photos-remains-blind/ (last visited Feb. 1, 2021).