Not all company's can issue shares to the public.

SEBI has provided a list of requirements that need to be met by a company if they wish to go public. A company that wishes to go public needs to meet all of the below mentioned criteria

Entry Norms I or EN I: 1. Net Tangible assets of atleast Rs. 3 crores for 3 full years 2. Distributable profits in atleast 3 years 3. Net worth of atleast 1 crore in 3 years 4. If there was a change in name, atleast 50% of the revenue in the preceeding year should be from the new activity 5. The issue size should not exceed 5 times the pre-issue networth of the company

To provide sufficient flexibility and also to ensure that genuine companies do not suffer on account of rigidity of the above mentioned rules, SEBI has provided 2 alternate routes to company's that do not satisfy the criteria for accessing the primary market. They are as follows:

Entry Norms II or EN II:

1. Issue shall be only through the book building route with atleast 50% allotted mandatorily to Qualified Institutional Buyers (QIBs) 2. The minimum post issue face value capital shall be Rs. 10 crores or there shall be a compulsory market-making for atleast 2 years

Or

Entry Norms III or EN III:

1. The "Project" is appraised and participated to the extent of 15% by FI's/Scheduled Commercial Banks of which atleast 10% comes from the appraiser(s). 2. The minimum post issue face value capital shall be Rs. 10 crores or there shall be a compulsory market-making for atleast 2 years 3. In addition to the above mentioned 2 points, the company shall also satisfy the criteria of having atleast 1000 prospective allotees in future.