Critically examine the following: 'An unlisted company may make an initial public offer of equity shares only subject to certain conditions'.

Eligibility requirements for an initial public offer on Main Board As per Regulation 6(1) of SEBI (Issue of Capital & Disclosure Requirement) Regulations 2018, an unlisted company may make an Initial Public Offer (IPO) only if it meets all the following conditions: It has net tangible assets of at least ₹ 3 crore, calculated on a restated and consolidated basis, in each of the preceding three full years (of twelve months each), of which not more than fifty per cent. are held in monetary assets. Provided that if more than fifty per cent of the net tangible assets are held in monetary assets, the issuer has utilised or made firm commitments to utilise such excess monetary assets in its business or project. Provided further that the limit of fifty per cent on monetary assets shall not be applicable in case the initial public offer is made entirely through an offer for sale. It has an average operating profit of at least ₹ 15 crore, calculated on a restated and consolidated basis, during the preceding three years (of twelve months each), with operating profit in each of these preceding three years. It has a net worth of at least ₹ 1 crore in each of the preceding three full years (of twelve months each), calculated on a restated and consolidated basis. If it has changed its name within the last one year, at least 50% of the revenue, calculated on a restated and consolidated basis, for the preceding one full year has been earned by it from the activity indicated by its new name. Alternative norms for unlisted public companies [Regulation 6(2) of SEBI (ICDR) Regulation 2018] An issuer not satisfying the condition stipulated in sub-regulation (1) shall be eligible to make an initial public offer only if the issue is made through the book-building process and the issuer undertakes to allot at least seventy five per cent of the net offer to qualified institutional buyers and to refund the full subscription money if it fails to do so. Eligibility requirements for an initial public offer on SME Platform As per Regulation 229 of SEBI (Issue of Capital & Disclosure Requirements), Regulations, 2018, the eligibility requirements for an initial public offer by Small and Medium Enterprises are as follow: An issuer shall be eligible to make an initial public offer only if its post-issue paid-up capital is less than or equal to ₹ 10 crore. An issuer, whose post issue face value capital is more than ₹ 10 crore and up to ₹ 25 crore, may also issue specified securities in accordance with provisions of this Chapter. An issuer may make an initial public offer, if it satisfies track record and/or other eligibility conditions of the SME Exchange(s) on which the specified securities are proposed to be listed. Provided that In case of an issuer which had been a partnership firm or a limited liability partnership, the track record of operating profit of the partnership firm or the limited liability partnership shall be considered only if the financial statements of the partnership business for the period during which the issuer was a partnership firm or a limited liability partnership, conform to and are revised in the format prescribed for companies under the Companies Act, 2013 and also comply with the following: adequate disclosures are made in the financial statements as required to be made by the issuer as per Schedule III of the Companies Act, 2013; the financial statements are duly certified by auditors, who have subjected themselves to the peer review process of the Institute of Chartered Accountants of India (ICAI) and hold a valid certificate issued by the Peer Review Board' of the ICAI. Provided further that in case of an issuer formed out of merger or a division of an existing company, the track record of the resulting issuer shall be considered only if the requirements regarding financial statements as specified above in the first proviso are complied with.