Sub: Guidelines for market makers on Small and Medium Enterprise (SME) exchange/separate platform of existing exchange having nation wide terminal
SEBI has put in a framework for setting up of new exchange or separate platform of existing stock exchange having nationwide terminals for SME (hereinafter referred to as the ‘Exchange/ SME Exchange’). In order to operationalise the said framework, necessary changes have been made to applicable Regulations, circulars etc. As per the framework, market making has been made mandatory in respect of all scrips listed and traded on SME exchange. The following guidelines shall be applicable to the Market Makers on this exchange.
1. Applicability
These guidelines are applicable to all the registered Market makers for making market in all scrips listed and traded on SME exchange.
2. Registration of the Market Maker
Any member of the Exchange would be eligible to act as Market Maker provided the criteria laid down by the exchange are met. The member brokers desirous of acting as Market Maker in this exchange shall apply to the concerned stock exchange for registration as Market Makers unless already registered as a Market Maker.
3. The obligations and responsibilities of Market Makers
The Market Maker shall fulfil the following conditions to provide depth and
continuity on this exchange:
(a) The Market Maker shall be required to provide a 2-way quote for 75% of
the time in a day. The same shall be monitored by the stock exchange. Further, the Market Maker shall inform the exchange in advance for each and every black out period when the quotes are not being offered by the Market Maker.
(b) The minimum depth of the quote shall be Rs.1,00,000/- . However, the
investors with holdings of value less than Rs 1,00,000 shall be allowed to offer their holding to the Market Maker in that scrip provided that he sells his entire holding in that scrip in one lot along with a declaration to the effect to the selling broker.
(c) Execution of the order at the quoted price and quantity must be guaranteed by the Market Maker, for the quotes given by him.
(d) There would not be more than five Market Makers for a scrip. These would be selected on the basis of objective criteria to be evolved by the Exchange which would include capital adequacy, networth, infrastructure, minimum volume of business etc.
(e) The Market Maker may compete with other Market Makers for better
quotes to the investors;
(f) Once registered as a Market Maker, he has to start providing quotes from
the day of the listing / the day when designated as the Market Maker for the respective scrip and shall be subject to the guidelines laid down for market making by the exchange;
(g) Once registered as a Market Maker, he has to act in that capacity for a
period as mutually decided between the Merchant Banker and the market
maker.
(h) Further, the Market Maker shall be allowed to deregister by giving one
month notice to the exchange, subject to (g) above.
4. Dissemination of Information
The exchange should disseminate the list of Market Makers for the respective scrip to the public.
5. Number of Shares per Market Maker
The number of companies in whose shares a Market Maker would make market should be linked to his capital adequacy as decided by the exchange.
6. Risk Containment Measures and monitoring for Market Makers
All applicable margins should be levied and collected without any waiver/exemption.
Capital Adequacy
The exchanges would prescribe the capital adequacy requirement for its members to commensurate with the number of companies which Market Maker proposes to make market. Further, the stock exchange may lay down
additional criteria also for Market Makers as risk containment measures. The
same shall be monitored by the stock exchange.
Monitoring
All the requirements with regard to market making shall be monitored by the stock exchange and any violation of these requirements would be liable for punitive action to be taken by the Disciplinary Action Committee (DAC) of the Exchange, which may also include monitory penalty apart from the trade restriction as decided by the DAC under intimation to the Merchant Banker.
7. Price Band and Spreads
The exchanges shall prescribe the maximum spread between bid and ask price. The exchange, may at its discretion also prescribe the price bands for
the same. Further, in case of new issue the spread shall also be specified in
the offer document with the prior approval of the exchange.
Wednesday, April 28, 2010
Market makers in SME exchange for Rs.10 lakh & max bid ask spread may be prescribed later, SEBI guidelines
Whether BSE/NSE is a regulator or a profit making entity, answer sebi now
Corporatisation & Demutualisation of Stock Exchanges has brought to the fore a new conflict between the ‘profit maximization goal’ of an Exchange vis-à-vis its ‘regulatory role’. Exchanges have traditionally been the first line of regulators in the securities market. With growing commercialisation of the exchanges and the resultant competition between exchanges, it would be necessary for the market regulator to recognize the possibility that exchanges may compromise on its regulatory role in its urge to canvass larger volumes of business from intermediaries and investors.
Internationally, the practice prevalent among regulators has been to allow Exchanges to pursue their commercial operations, while exercising regulatory oversight.
The SEBI Board, in its meeting held on December 22, 2009, (the detailed agenda note is available at http://www.sebi.gov.in/boardmeetings/129/corpgovern.html) decided to set up a Committee to look into the above issues and give suitable recommendations. Accordingly, a Committee under the Chairmanship of Dr. Bimal Jalan has been constituted. The Committee has decided to adopt a consultative process. Accordingly, a questionnaire has been devised to seek
the views of market infrastructure institutions, market participants, users and public on the concerns related to Ownership and Governance of Market Infrastructure Institutions, as elaborated above. You are requested to forward your responses for the questionnaire to any of the following email ids latest by May 10, 2010:
1. bhartendrakg@sebi.gov.in
2. divyav@sebi.gov.in
3. vishakham@sebi.gov.in
SEBI guidelines for derivative contracts on Volatility Index, like NSE has
Sub: Introduction of derivative contracts on Volatility Index
Further to SEBI circular no. SEBI/DNPD/Cir-35/2007 dated January 15, 2008 with regard to introduction of Volatility Index, it has now been decided to permit Stock Exchanges to introduce derivative contracts on Volatility Index, subject to the condition that;
a. The underlying Volatility Index has a track record of at least 1 year.
b. The Exchange has in place the appropriate risk management framework
for such derivative contracts.
2. Before introduction of such contracts, the Stock Exchanges shall submit the
following:
i. Contract specifications
ii. Position and Exercise Limits
iii. Margins
iv. The economic purpose it is intended to serve
v. Likely contribution to market development
vi. The safeguards and the risk protection mechanism adopted by the exchange to ensure market integrity, protection of investors and smooth and orderly trading
vii. The infrastructure of the exchange and the surveillance system to effectively monitor trading in such contracts, and
viii. Details of settlement procedures & systems
ix. Details of back testing of the margin calculation for a period of one year considering a call and a put option on the underlying with a delta of 0.25 & -0.25 respectively and actual value of the underlying.
Thursday, April 22, 2010
Understand all about ASBA - in public issues, rights issues, by Mutual Funds, by QIB's - an alternate way of investing, SEBI
Understand what is Application Supported by Blocked Amounts (ASBA)?
Whether ASBA is applicable for Rights Issues?
Can QIB’s apply in a public issue under ASBA mechanism?
Till now only Indian Retail Individual Investors bidding at cut-off Price were entitle to use ASBA facility.
In this regard, Stock Exchanges, Merchant Bankers, Registrar to an Issue and Bankers to an issue acting as Self Certified Syndicate Banks are advised to ensure that appropriate arrangements are made to accept ASBA forms from Qualified Institutional Buyers (QIBs) also in addition to the existing categories of investors on or after 1st May 2010.
Source: SEBI CIR/CFD/DIL/2/2010 dated 6th April 2010
Total period of realisation is 8 years for Securitisation Company, loss assets, date of acquisition defined, surplus investment in NABARD/SIDBI & more disclosures in Balance sheet - SARFAESI provisions amended
The Securitisation Companies and Reconstruction Companies (Reserve Bank) Guidelines and Directions, 2003 – Amendments (under SARFAESI provisions)
RBI clarification on certain issues as regards acquisition of financial assets by trusts floated by Securitisation Companies or Reconstruction Companies, extension in time frame allowed for realization of financial assets, deployment of surplus funds, acquisition of land and buildings by Securitisation Company or Reconstruction Company; asset classification, additional disclosures in the balance sheet etc. as detailed hereunder:-
(Directions here means Securitisation Companies and Reconstruction Companies (Reserve Bank) Guidelines and Directions, 2003)
(a) Amendment of paragraph 3(1)(iii) of the Directions - Date of acquisition
Date of acquisition means the date on which the ownership of financial assets is acquired by Securitisation Company or Reconstruction Company either in its own books or directly in the books of the trust.
(b) Amendment of paragraph 7(1) of the Directions - Financial Assets Acquisition Policy
Framing of ‘Financial Assets Acquisition Policy’ by the Securitisation Company or Reconstruction Company shall cover acquisition of financial assets either in its own books or directly in the books of the trust.
(c) Amendment of paragraph 7(6)(ii) of the Directions - Plan of realisation
In terms of clause 7(6)(i) of the Directions, every Securitisation Company or Reconstruction Company is required to formulate a plan for realisation of financial assets acquired by providing for one or more measures listed therein. Further, in terms of clause 7(6)(ii) of the Directions, the plan of realisation shall clearly spell out the steps proposed to reconstruct the assets and realize the same within a specified timeframe of (within) 5 years from the date of acquisition.
On a review, it has been decided that on expiry of 5years from the date of acquisition of financial assets, the Board of Directors of the Securitisation Company or Reconstruction Company may increase the period for realisation of financial assets so that the total period for realisation shall not exceed 8years from the date of acquisition of financial assets concerned. The Board of Directors of the Securitisation Company or Reconstruction Company shall specify the steps that will be taken by the Securitisation Company or Reconstruction Company to realise the financial assets within the time frame as above.
Qualified Institutional Buyers (QIB) shall be entitled to invoke the provisions of Section 7(3) of the SARFAESI Act only at the end of such extended period (post 5 years) as explained above. If the period for realisation is not extended, the Qualified Institutional Buyers shall be entitled to invoke the provisions of Section 7(3) of the Act at the end of period of realisation (within) 5 years from the date of acquisition of the financial asset concerned.
(d) Amendment of paragraph 8(1) of the Directions- Issue of Security Receipts
Paragraph 8(1) of the Directions prescribes that a Securitisation Company or Reconstruction Company shall give effect to the provisions of Sections 7(1) and (2) of the Act through one or more trusts set up exclusively for the purpose. The Securitisation Company or Reconstruction Company is required to transfer the assets to the said trusts at the price at which those assets were acquired from the originator. It is clarified that Securitisation Company or Reconstruction Company can acquire the assets from banks/FIs either in its own books and then transfer the assets to trusts or directly acquire the assets in the books of the trusts. In case such financial assets are first acquired in its own books by the Securitisation Company or Reconstruction Company, such financial assets shall be transferred to trust at the price at which those assets were acquired by Securitisation Company or Reconstruction Company from the originator.
(e) Amendment of paragraph 10(ii) of the Directions - Deployment of surplus funds
A Securitisation Company or Reconstruction Company may deploy any surplus available with it only in Government Securities and deposits with scheduled commercial banks in terms of policy framed in this regard by its Board of Directors.
To provide additional avenues to the Securitisation Company or Reconstruction Company for deployment of surplus funds, Securitisation Company or Reconstruction Company, subject to policy framed by its Board of Directors, may also deploy surplus funds as deposits with Small Industries Development Bank of India (SIDBI), National Bank for Agriculture and Rural Development (NABARD) or such other entity as may be specified by the Reserve Bank of India from time to time.
(f) Amendment of paragraph 10(iii) of the Directions- Acquisition of land and buildings by Securitisation Company or Reconstruction Company.
Presently, no Securitisation Company or Reconstruction Company is allowed to invest out of its owned fund in land and building, provided that this restriction will not apply to funds borrowed as also to owned fund in excess of the minimum prescribed.
On a review, it has been decided that no Securitisation Company or Reconstruction Company shall, invest in land and building;-
provided that this restriction shall not apply to investment in land and/or building by Securitisation Company or Reconstruction Company for its own use upto 10% of its owned fund,
provided further that any land and/or building acquired by Securitisation Company or Reconstruction Company in the ordinary course of its business of reconstruction of assets while enforcing its security interest, shall be disposed of within a period of 5 years from the date of such acquisition or such extended period as may be permitted by the Bank in the interest of realization of the dues of the Securitisation Company or Reconstruction Company.
(g) Amendment of paragraph 12 of the Directions - Asset classification
It is clarified that provisions relating to asset classification are applicable only in respect of assets held in the books of Securitisation Company or Reconstruction Company. Further, the meaning of the term “Loss asset” has been expanded to include the financial assets including Security Receipts continued to be held by the Securitisation Company or Reconstruction Company which has not been realized within the total time frame specified in the plan for realization formulated by the Securitisation Company or Reconstruction Company under Paragraph 7 (6)(ii) or 7(6)(iii).
(h) Amendment of paragraph 15 of the Directions- Disclosures in the Balance Sheet
It has been decided that every Securitisation Company or Reconstruction Company shall make additional disclosures on following issues in the balance sheet:-
(i) Value of financial assets acquired during the financial year either in its own books or in the books of the trust;
(ii) Value of financial assets realized during the financial year;
(iii) Value of financial assets outstanding for realization as at the end of the financial year;
(iv) Value of Security Receipts redeemed partly and the Security Receipts redeemed fully during the financial year;
(v)Value of Security Receipts pending for redemption as at the end of the financial year;
(vi) Value of Security Receipts which could not be redeemed as a result of non-realization of the financial asset as per the policy formulated by the Securitization company or Reconstruction company under Paragraph 7(6)(ii) or 7(6)(iii).
(vii)Value of land and/or building acquired in ordinary course of business of reconstruction of assets (year wise)
Securitisation Company u/ SARFAESI Act shall hold atleast 5% of Security Receipts issued by it on ongoing basis till the redemption of scheme, RBI
RBI amendment in SARFAESI provisions
Securitisation Companies/ Reconstruction Companies(SC/RCs) registered with the Bank are required to invest in the Security Receipts (SRs) issued by the trust set up for the purpose of securitisation, an amount not less than 5% under each scheme.
In Paragraph 5 of the The Securitisation Companies and Reconstruction Companies (Reserve Bank) Guidelines and Directions, 2003, after subparagraph (v), the following subparagraph (vi) shall be inserted.
" (vi) the Securitisation Company or Reconstruction Company shall continue to hold a minimum of 5% of the Security Receipts of each class issued by the SC/RC under each scheme on an ongoing basis till the redemption of all the Security Receipts issued under such scheme.
Source: RBI/2009-2010/414 DNBS (PD) CC. No. 19 / SCRC / 26.03.001/ 2009-2010 dated 21st April 2010
RBI approval is mandatory for Public (IPO), Preferential issue, QIP by Private bank; Understand what is required for Public issue of securities (SEBI)
Approvals required for various Corporate Actions, Issues by Private Sector Banks
1. Initial Public Offers (lPOs) – Public Issues:
(i) All banks should obtain RBI approval for IPOs. After listing on the stock exchanges, banks are free to price their subsequent issues.
(ii) Issue price should be based on merchant banker's recommendation. There need be no reference to the CCI formula for deciding on the pricing of such issues.
2. Rights issues:
RBI approval would not be required for rights issues by both listed and unlisted banks. However, banks need to comply with the requirements that have been laid down in the circular DBOD.No.PSBD.BC.99/16.13.100/2004-05 dated June 25, 2005 on Rights Issue.
3. Bonus issues:
Private sector banks, both listed and unlisted, need not seek RBI's approval for bonus issues. The issues would, however, be subject to SEBI's requirements on issue of bonus shares, viz. bonus issues (a) should be made from free reserves built out of genuine profits or share premium, (b) should not dilute the value or rights of partly or fully convertible debentures, (c) should not be in lieu of dividend and (d) should not be made unless all partly paid-up shares are fully paid-up. Further, bonus issues may be issued without linkage to rights issues.
4. Preferential issue:
All preferential issues would require prior approval of RBI. Pricing of preferential issues by listed banks may be as per SEBI formula, while for unlisted banks the fair value may be determined by a chartered accountant or a merchant banker.
5. Qualified Institutional Placement (QIP):
Private Sector Banks need to approach RBI for prior 'in principle' approval in case of Qualified Institutional Placements. Banks need to approach RBI along with details of the issue once the bank’s Board approves the proposal of raising capital through this route. Further, allotment to the investors would be subject to compliance with SEBI guidelines on QIPs and RBI guidelines dated February 3, 2004 on acknowledgement of allotment / transfer of shares. Once the allotment process is complete, the banks would also be required to furnish complete details of the issue to RBI in the enclosed format for seeking post facto approval. This would be irrespective of whether any acquisition results in shareholding of 5% or more of the paid up capital of the bank.
6. In case of pricing of issues
- where RBI approval is not required, pricing of issues should be as per SEBI guidelines (ICDR Regulations);
- in cases where prior approval of RBI is required, pricing should take into account both SEBI and RBI guidelines.
Source: Issue and Pricing of Shares by Private Sector Banks vide RBI/2009-10/411 DBOD.No.PSBD.BC.92 /16.13.100/2009-2010 dated 20th April 2010
Wednesday, April 21, 2010
Download ICSI Admit Card for June 2010 Company Secretary exam - Hall Ticket based on CS Registration or Roll No.
Hope you would have got your Admit Card or Hall tickets for CS Foundation Programme, CS Executive Programme or CS Professional Programme exams by now.
The CS Admit Card issued by ICSI gives you the details of Roll Number, Examination centre and the details of the exams that you are allowed to write along with the Date of the Exams and the exemptions granted.
So, its the time to wish all the best!!! Just be confident of your preparations now, irrespective of how much you have studied. Just make sure, you spend 3 hours of your time for every exam with 100% concentration and every exam is independant of each other. The performance of one exam has connection to the performance in the other exam. So, simply give your best for each & every exam. Its Only This Much!!!
For those, who have not got the same, not to panic! there is a very easy way to download, which is valid for Exams too from ICSI site itself. Just you have to know your ICSI registration number. (Enter Either Registration number or Roll Number) 17 Digit Registration No (Third character is Zero and not "O") or 9 digit numbers followed by / month (2 digit) / year (4 digit) and you will get your Admit Card Extract.
Now, click here to get your Admit Card Click here to download ICSI Hall Ticket for June 2010 exams.
If you are not able to access the above link, click http://icsi.edu/Student/Queries/tabid/1587/Default.aspx and then click “Admit Card Extract Link”.
Enjoy passin…Vj
Monday, April 19, 2010
Allocation of limits to FIIs/sub-accounts for investment in Government & Corporate debt through bidding process
Allocation of limits to FIIs/sub-accounts for investment in Government and Corporate debt through first come first served process
1. As per SEBI Circular No. IMD/FII&C/42/2009 dated April 09, 2010 the remaining limit for investment in Government and Corporate debt were to be allocated to the FIIs/ sub-accounts on a ‘first come first served’ basis in terms of our Circular dated January 31, 2008.
2. The list of entities got allocation of investment in Government and Corporate debt category are placed in Annexure A and Annexure B respectively.
In terms of SEBI circular dated November 06, 2008, time period for utilization of these allocated limits shall be 11 working days i.e. by May 04, 2010.
Allocation of limits to FIIs/sub-accounts for investment in Government & Corporate debt through bidding process
1. As per SEBI circular No. IMD/FII&C/42/2010 dated April 09, 2010, unutilised investment limits for Government & Corporate debt was available for allocation to the FIIs/ sub-accounts in the open bidding platform. The bidding for these limits took place today on the NSE offered platform.
2. Pursuant to the bidding, 11 successful bidders (list enclosed as annexure A) got allocation of investment in government debt category. In corporate debt category 18 successful bidders (list enclosed as annexure B) got allocation of investment.
3. These limits shall be utilized by the allocated entities within 45 days of the allocation.
Source: www.sebi.gov.in
Monday, April 12, 2010
NSE bidding process for FII on April 16, 2010 on first come first serve basis, sebi notification
To
All Foreign Institutional Investors
through their designated Custodians of Securities
Sub: Allocation of debt investment limits to FIIs
Based on the assessment of the allocation and the utilization of the limits to FIIs for investments in Government and Corporate Debt, it has been decided to allocate the unutilized limits in the following manner:-
I Allocation through bidding process
Please refer to SEBI circular IMD/FII & C/ 37/2009 dated February 06, 2009, providing the modalities for the allocation methodology through the bidding process. The bidding process shall be on April 16, 2010 on the National Stock Exchange (NSE) for both the government as well as the corporate debt limits subject to the following conditions: -
1. Government Debt:
a. In partial amendment to clause 3 (h) of the aforesaid circular IMD/FII & C/37/2009, no single entity shall be allocated more than Rs.200 cr. of the government debt investment limit.
b. In partial amendment to clause 3 (c) and 3(d) of the aforesaid circular IMD/FII & C/ 37/2009, the minimum amount which can be bid for shall be Rs.50 cr. and the minimum tick size shall be Rs.50 cr.
2. Corporate Debt:
a. In partial amendment to clause 3 (h) of the aforesaid circular IMD/FII & C/37/2009, no single entity shall be allocated more than Rs.2000 cr. of the corporate debt investment limit.
b. In partial amendment to clause 3 (c) and 3(d) of the aforesaid circular IMD/FII & C/ 37/2009, the minimum amount which can be bid for shall be Rs.200 cr. and the minimum tick size shall be Rs.200 cr.
II. Allocation through first come first serve process (FCFS)
In terms of SEBI circular dated January 31, 2008, the government and corporate debt limits shall be allocated in the first come fist served basis subject to the following conditions:-
3. Government Debt:
a. An investment limit of Rs.200 cr. in Government debt shall be allocated among the FIIs/sub-accounts on a first come first served basis, subject to a ceiling of Rs.49 cr. per registered entity.
4. Corporate Debt:
a. The remaining amount in corporate debt after bidding process shall be allocated among the FIIs/sub-accounts on a first come first served basis, subject to a ceiling of Rs.199 cr. per registered entity.
The debt requests in this regard shall be forwarded to the dedicated email id
fii_debtrequests@sebi.gov.in. The window for first come first served process shall open at 08:30 AM IST, April 19, 2010. Time period for utilization of the allocated debt limit through first come first served basis shall be 11 working days from the date of the allocation.
The format for applying for debt limit for FCFS process is as per the source.
Wednesday, April 7, 2010
Listing with Stock Exchanges to be made within 12 days of closure of public issue wef 1st May 2010
Reduction in timelines between issue closure and listing
SEBI, in its continuing endeavour to make the existing public issue process more efficient, proposes to reduce the time between public issue closure and listing to 12 days from existing of up to 22 days. This will be applicable to public issues opening on or after May 1, 2010.
SEBI's guide to Understand Prospectus, its concepts, structure, etc... [read offer documents in public issues now]
Guide to understand an Offer Document
This sub‐section attempts to inform the structure of presentation of the content in an offer document. The basic objective is to help the reader to navigate through the content of an offer document.
(a) Cover Page
Under this head full contact details of the Issuer Company, lead managers and registrars, the nature, number, price and amount of instruments offered and issue size, and the particulars regarding listing. Other details such as Credit Rating, IPO Grading, risks in relation to the first issue, etc are also disclosed if applicable.
(b) Risk Factors
Under this head the management of the issuer company gives its view on the Internal and external risks envisaged by the company and the proposals, if any, to address such risks. The company also makes a note on the forward looking statements. This information is disclosed in the initial pages of the document and also in the abridged prospectus. It is generally advised that the investors should go through all the risk factors of the company before making an investment decision.
(c) Introduction
Under this head a summary of the industry in which the issuer company operates, the business of the Issuer Company, offering details in brief, summary of consolidated financial statements and other data relating to general information about the company, the merchant bankers and their responsibilities, the details of brokers/syndicate members to the Issue, credit rating (in case of debt issue), debenture trustees (in case of debt issue), monitoring agency, book building process in brief, IPO Grading in case of First Issue of Equity capital and details of underwriting Agreements are given. Important details of capital structure, objects of the offering, funds requirement, funding plan, schedule of implementation, funds deployed, sources of financing of funds already deployed, sources of financing for the balance fund requirement, interim use of funds, basic terms of issue, basis for issue price, tax benefits are also covered.
(d) About us
Under this head a review of the details of business of the company, business strategy, competitive strengths, insurance, industry‐regulation (if applicable), history and corporate structure, main objects, subsidiary details, management and board of directors, compensation, corporate governance, related party transactions, exchange rates, currency of presentation and dividend policy are given.
(e) Financial Statements
Under this head financial statement and restatement as per the requirement of the Guidelines and differences between any other accounting policies and the Indian Accounting Policies (if the Company has presented its Financial Statements also as per either US GAAP/IFRS) are presented.
(f) Legal and other information
Under this head outstanding litigations and material developments, litigations involving the company, the promoters of the company, its subsidiaries, and group companies are disclosed. Also material developments since the last balance sheet date, government approvals/licensing arrangements, investment approvals (FIPB/RBI etc.), technical approvals, and indebtedness, etc. are disclosed.
(g) Other regulatory and statutory disclosures
Under this head, authority for the Issue, prohibition by SEBI, eligibility of the company to enter the capital market, disclaimer statement by the issuer and the lead manager, disclaimer in respect of jurisdiction, distribution of information to investors, disclaimer clause of the stock exchanges, listing, impersonation, minimum subscription, letters of allotment or refund orders, consents, expert opinion, changes in the auditors in the last 3 years, expenses of the issue, fees payable to the intermediaries involved in the issue process, details of all the previous issues, all outstanding instruments, commission and brokerage on, previous issues, capitalization of reserves or profits, option to subscribe in the issue, purchase of property, revaluation of assets, classes of shares, stock market data for equity shares of the company, promise vis‐à‐vis performance in the past issues and mechanism for redressal of investor grievances is disclosed.
(h) Offering information
Under this head Terms of the Issue, ranking of equity shares, mode of payment of dividend, face value and issue price, rights of the equity shareholder, market lot, nomination facility to investor, issue procedure, book building procedure in details along with the process of making an application, signing of underwriting agreement and filing of prospectus with SEBI/ROC, announcement of statutory advertisement, issuance of confirmation of allocation note("can") and allotment in the issue, designated date, general instructions, instructions for completing the bid form, payment instructions, submission of bid form, other instructions, disposal of application and application moneys, , interest on refund of excess bid amount, basis of allotment or allocation, method of proportionate allotment, dispatch of refund orders, communications, undertaking by the company, utilization of issue proceeds, restrictions on foreign ownership of Indian securities, are disclosed.
(i) Other Information
This covers description of equity shares and terms of the Articles of Association, material contracts and documents for inspection, declaration, definitions and abbreviations, etc.
Investment in public Issues/ rights issues
(a) Where can I get application forms for applying/ bidding for the shares?
Application forms for applying/bidding for shares are available with all syndicate members, collection centers, the brokers to the issue and the bankers to the issue. In case you intend to apply through new process introduced by SEBI i.e. APPLICATIONS SUPPORTED BY BLOCKED AMOOUNT (ASBA), you may get the ASBA application forms form the Self Certified Syndicate Banks. For more details on “ASBA process” please refer to the “FAQs on ASBA”
(b) Whom should I approach if the information disclosed in the offer document appears to be factually incorrect?
The document is prepared by Merchant Banker(s), registered with SEBI. They are required to do the due diligence while preparing an offer document. The draft offer document submitted to SEBI is put on website for public comments. In case, you find any instance of misinformation/ lack of information, you may send your complaint to Lead Manager to the issue and/ or to SEBI, at this address: Securities & Exchange Board of India, C4 A, G Block, Bandra KurlaComplex, Bandra (E), Mumbai‐ 400051.
(c) Is it compulsory for me to have a Demat Account?
As per the requirement, all the public issues of size in excess of Rs.10 crore, are to made compulsorily in demat mode. Thus, if you intend to apply for an issue that is being made in a compulsory demat mode, you are required to have a demat account and also have the responsibility to put the correct DP ID and Client ID details in the bid/application forms. You can also refer to FAQs relating to demat available in the URL http://investor.sebi.gov.in/faq/dematfaq.html in the Investor Education section of the SEBI website.
(d) Is it compulsory to have PAN?
Yes, it is compulsory to have PAN. Any investor who wants to invest in an issue should have a PAN which is required to be mentioned in the application form. It is to be distinctly understood that the photocopy of the PAN is not required to be attached along with the application form at the time of making an application.
(e) For how many days an issue is required to be kept open?
The period for which an issue is required to be kept open is:
For Fixed price public issues: 3‐10 working days
For Book built public issues: 3‐7 working days extendable by 3 days in case of a revision in the price band
For Rights issues: 15‐30 days.
(f) When do I get the allotment/ refund of shares?
For Fixed price public issues: 30 days of the closure of the issue
For Book built public issues: 15 days of the closure of the issue
For Rights issues: 15 days of the closure of the issue
(g) How can I know about the demand for an issue at any point of time?
The status of bidding in a book built issue is available on the website of BSE/NSE on a consolidated basis. The data regarding bids is also available investor category wise. After the price has been determined on the basis of bidding, the public advertisement containing, inter alia, the price as well as a table showing the number of securities and the amount payable by an investor, based on the price determined, is issued. However, in case of a fixed price issue, information is available only after the closure of the issue through a public advertisement, issued within 10 days of dispatch of the certificates of allotment/ refund orders.
(h) How will I get my refund in an issue?
You can get refunds in an issue through various modes viz. registered/ordinary post, Direct Credit, RTGS (Real Time Gross Settlement), ECS (Electronic Clearing Service) and NEFT (National Electronic Funds Transfer). As stated above, if you are residing in one of the 68 centers as specified by Reserve Bank of India, then you will get refunds through ECS only except where you are otherwise disclosed eligible under Direct Credit and RTGS. If you are residing at any other center, then you will continue to get refunds through registered/ordinary post. You are therefore advised to read the instructions given in the prospectus/ abridged prospectus/ application form about centers. For more details, you may read subsection on “Electronic Clearing Scheme for Refunds”.
(i) When will the shares allotted to me get listed?
In book built public issue the listing of shares will be done within 3 weeks after the closure of the issue. In case of fixed price public issue, it will be done within 37 days after closure of the issue.
(j) How will I know which issues are coming to the market?
The information about the forthcoming issues may be obtained from the websites of Stock Exchanges. Further the issuer coming with an issue is required to give issue advertisements in an English national Daily with wide circulation, one Hindi national newspaper and a regional language newspaper with wide circulation at the place where the registered office of the issuer is situated.
(k) Where to I get the copies of the offer document?
The soft copies of the offer documents are put up on the website of Merchant banker and on the website of SEBI under Reports/Documents section [http://www.sebi.gov.in/Index.jsp?contentDisp= Section&sec_id=5 ]. Copies of the offer documents in hard form may be obtained from the merchant banker or office of SEBI, SEBI Bhawan, Plot No. C4‐A “G” Block, BKC, Bandra (E), Mumbai ‐ 400051 on a payment of Rs 100 through Demand Draft.
(l) How do I find the status of offer documents filed by issuers with SEBI?
SEBI updates the processing status of offer documents on its website every week under the section http://www.sebi.gov.in/Index.jsp?contentDisp=PrimaryMarket in SEBI website. The draft offer documents are put up on the website under Reports/Documents section. The final offer documents that are filed with SEBI/ROC are also put up for information under the same section.
(m) Whom do I approach if I have grievances in respect of non receipt of shares, delay in refund etc.?
You can approach the compliance officer of the issue, whose name and contact number is mentioned on the cover page of the Offer Document. You can also address your complaints to SEBI at the following address: Office of Investor Assistance & Education, Securities & Exchange Board of India, C4A, G Block,Bandra Kurla Complex, Bandra (E), Mumbai‐ 400051.
Understanding Book Building
(a) What is book Building?
Book building is a process of price discovery. The issuer discloses a price band or floor price before opening of the issue of the securities offered. On the basis of the demands received at various price levels within the price band specified by the issuer, Book Running Lead Manager (BRLM) in close consultation with the issuer arrives at a price at which the security offered by the issuer, can be issued.
(b) What is a price band?
The price band is a band of price within which investors can bid. The spread between the floor and the cap of the price band shall not be more than 20%. The price band can be revised. If revised, the bidding period shall be extended for a further period of three days, subject to the total bidding period not exceeding thirteen days.
(c) How does Book Building work?
Book building is a process of price discovery. A floor price or price band within which the bids can move is disclosed at least two working days before opening of the issue in case of an IPO and atleast one day before opening of the issue in case of an FPO. The applicants bid for the shares quoting the price and the quantity that they would like to bid at. After the bidding process is complete, the ‘cut‐off’ price is arrived at based on the demand of securities. The basis of Allotment is then finalized and allotment/refund is undertaken. The final prospectus with all the details including the final issue price and the issue size is filed with ROC, thus completing the issue process. Only the retail investors have the option of bidding at ‘cut‐off’.
(d) How does “cut‐off” option works for investors?
“Cut‐off” option is available for only retail individual investors i.e investors who are applying for securities worth up to Rs 1,00,000/‐ only. Such investors are required to tick the cut‐off option which indicates their willingness to subscribe to shares at any price discovered within the price band. Unlike price bids (where a specific price is indicated) which can be invalid, if price indicated by applicant is lower than the price discovered, the cut‐off bids always remain valid for the purpose of allotment
(e) Can I change/revise my bid?
Yes, you can change or revise the quantity or price in the bid using the form for changing/revising the bid that is available along with the application form. However, the entire process of changing or revising the bids shall be completed within the date of closure of the issue.
(f) Can I cancel my Bid?
Yes, you can cancel your bid anytime before the finalization of the basis of allotment by approaching/ writing/ making an application to the registrar to the issue.
(g) What proof can I request from a trading member or a syndicate member for entering bids?
The syndicate member returns the counterfoil with the signature, date and stamp of the syndicate member. You can retain this as a sufficient proof that the bids have been accepted by the trading / syndicate member for uploading on the terminal.
