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Home / SEBI & Capital Markets / Preferential Issue & QIP
Last updated: 2 October 2026
Listed companies raising capital from identified investors or from qualified institutional buyers follow Chapters V and VI of the SEBI ICDR Regulations, 2018. Expertvuw supports documentation, approvals and exchange filings, working alongside the company’s merchant banker where one is required.
A preferential issue is an allotment of shares, convertibles or warrants to identified persons, governed by Chapter V of the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 and sections 42 and 62 of the Companies Act, 2013. It needs a special resolution, a floor price worked out under Regulation 164, in-principle approval from the stock exchanges and allotment within the time allowed after shareholder approval.
A qualified institutions placement (QIP) under Chapter VI is a private placement to qualified institutional buyers only. It is managed by a SEBI-registered merchant banker through a placement document, with a floor price linked to the two weeks of trading before the relevant date and restrictions on who may be allotted.
Expertvuw prepares the board and shareholder papers, explanatory statements, floor price computation support, exchange in-principle and listing applications, and post-allotment ROC and depository filings. Valuation reports are obtained from independent registered valuers, and certificates that the regulations require from a practising company secretary or auditor are obtained through independent licensed professionals.
Based on the regulations and circulars referred to on this page. Last updated: 28 September 2026.
Higher of 90 and 10 trading-day volume weighted average prices before the relevant date, for frequently traded shares (ICDR Reg 164)
Thirty days before the general meeting or postal ballot date considering the issue (Reg 161)
Allotment within 15 days of the shareholders' resolution or last regulatory approval, whichever is later (Reg 170)
Promoter group allotments locked in for up to 18 months and other allottees for six months from trading approval (Reg 167)
Average of weekly high and low closing prices in the two weeks before the relevant date; discount up to 5% (Reg 176)
At least 10% to mutual funds, no allotment to promoters, minimum two or five allottees by issue size (Chapter VI)
Most rejections and delays arise from eligibility and pricing points that can be checked before the notice goes out.
Proposed allottees who sold shares in the 90 trading days before the relevant date are generally ineligible for a preferential allotment.
Allotments above 5% of post-issue fully diluted capital, or causing a change in control, need a registered valuer's report (Reg 166A).
Allotments that cross 25% voting rights or change control can trigger an open offer under the SEBI SAST Regulations.
Related services.
Disclosures and open offer triggers linked to large allotments.
Raising capital from existing shareholders under ICDR.
Valuation inputs for pricing and regulatory reports.
LODR disclosures around fund-raising and use of proceeds.
Issue size, instrument, allottees and takeover or FEMA implications are reviewed before board approval.
The board approves the issue, relevant date and the notice with ICDR-prescribed disclosures.
Applications are filed with the stock exchanges with the required certificates and documents.
The special resolution is passed at a general meeting or through postal ballot.
Funds are received from allottees and shares or warrants are allotted within the permitted window.
Corporate action, listing and trading approvals are completed and lock-ins recorded with depositories.
Obligations continue after allotment until lock-ins expire and funds are fully used.
Return of allotment and private placement filings are made with the ROC under the Companies Act, 2013.
Deviations or variations in use of proceeds are reported to the exchanges under SEBI LODR Regulation 32.
Lock-in expiry dates for each allottee and pre-preferential holdings are tracked with the depositories.
Where warrants are issued, conversion and balance payment are tracked within the permitted tenure.
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A preferential issue can be made to identified persons, including promoters, under ICDR Chapter V. A QIP under Chapter VI is open only to qualified institutional buyers, is managed by a merchant banker and cannot be allotted to promoters or persons related to them.
A listed company obtains in-principle approval from the stock exchanges before issuing securities, as required by SEBI LODR Regulation 28. For preferential issues, the application is made alongside the shareholder approval process.
Not always. Regulation 166A requires a registered valuer’s report where the allotment exceeds 5% of post-issue fully diluted capital to an allottee or persons acting in concert, results in a change in control, or is for non-cash consideration.
Allotment under a QIP must be completed within 365 days of the shareholders’ special resolution.
No. A QIP is managed by a SEBI-registered merchant banker appointed by the company. Expertvuw supports the secretarial, documentation and filing work around it.
ACS – Director, Expertvuw Management Pvt Ltd
Advisory and company secretarial work is handled by Expertvuw’s team. Audits, certifications and representation that the law reserves for Chartered Accountants, advocates or other licensed professionals are provided by independent professionals engaged for your case.