Sigma Ltd. is an unlisted company and is having 2,00,000 equity shares. The company does not have any past experience of any kind of initial public offer. However, the management wants to launch an IPO of 5,000 convertib

According to the provisions of Regulation 9 of the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018, an issuer can make an initial public offer of convertible debt instruments without making a prior public issue of its equity shares and listing thereof. However, the issuer must not be in default of payment of interest or repayment of principal amount in respect of debt instruments issued by it to the public, if any, for a period of more than six months. In addition to other requirements laid down in these regulations, an issuer making an initial public offer of convertible debt instruments shall also comply with the following conditions: The issuer has obtained credit rating from at least one credit rating agency. The issuer has appointed at least one debenture trustee in accordance with the provisions of the Companies Act, 2013 and the SEBI (Debenture Trustees) Regulations, 1993. The issuer shall create a debenture redemption reserve in accordance with the provisions of the Companies Act, 2013 and rules made thereunder. If the issuer proposes to create a charge or security on its assets in respect of secured convertible debt instruments, it shall ensure that such assets are sufficient to discharge the principal amount at all times and are free from any encumbrance. The issuer shall redeem the convertible debt instruments in terms of the offer document. Conclusion: Thus, in the given case, Sigma Ltd. can launch its IPO of 5,000 convertible debt instruments each convertible into 2 equity shares, without having a prior public issue, provided it complies with all the requirements as stated above.