Mumbai: The Securities and Exchange Board of India (SEBI) has put some restrictions on the upcoming initial public offering (IPO) of Reliance Power.

Market controller has also directed the company and its merchant bankers to make sure all disclosures according to the crucial laws and the board’s own remarks on the brochure that may follow.

SEBI was looking at a complaint lodged by Rajkot Saher Jilla Grahak Suraksha Mandal on the matter. Reliance Power Limited (RPL), a 50:50 joint venture between Reliance Energy and AAA Projects, is an Anil Ambani Group company. The company’s projected public offering could be the biggest ever in India.

The market controller on yesterday directed the company (RPL) to lock the entire promoters’ quota of 20% for 5 years from the date of allotment in its planned IPO.

SEBI also noticed that RPL has backed away its request of splitting shares having face value of Rs 10 to those with a face value of Rs 2n and commented that according to the rules; if the offer price is below Rs 500 the shares may not be split.

The general idea of the complaint was that by engineering a merger before the issue, the promoters have managed to abuse an exemption permitted by clause 4.6.4 of the guidelines for public issues. This would permit the company’s promoters to not put in any capital as a part of the issue.

RPL’s representatives refused to remark on the subject.

SEBI stated, “The sequence of dates of the issue of shares to promoters, approval of the scheme of amalgamation, filing the same with the Registrar of Companies, allotment pursuant to the scheme and subsequently splitting the shares so allotted for the face value of Rs 2 each and filling DRHP with SEBI offering 130 crore of its equity shares with a face value of Rs 2 at a premium to the public could no doubt be interpreted and conceived as a device to bring the case under the exemption of clause 4.6.4.”

SEBI noted “That the number of shares issued as a result of the amalgamation as a proportion of the total paid up capital of the issuer company is very high in the case of RPL (around 50 per cent)…”

But SEBI stated that a few of other matters brought up in the complaint were out of its control.