The Securities and Exchange Board of India (Sebi) on Thursday said the e-initial public offering (e-IPO) facility would be implemented in two phases, with the first phase covering 400 locations by January 1, 2013. The facility would allow retail investors to submit bids for IPOs electronically.
In a circular issued on Thursday, Sebi said the second phase of the programme would be completed by March 1, 2013. It plans to introduce the e-IPO facility for retail investors at about 1,000 locations.
The move is part of Sebi’s efforts to provide retail investors with an additional mechanism to submit application forms for public issues, using exchanges’ stock broker networks. This mechanism can be used to submit applications supported by blocked amounts (Asba), as well as non-Asba applications by investors. Sebi said its new directive in this regard would be applicable to all offer documents filed with the Registrar of Companies on or after January 1, 2013.
Detailing the mechanism, Sebi asked stock exchanges to provide for downloading of application forms on their websites and broker terminals to ensure any investor or stock broker could download and print the forms directly. Stock exchanges would also have to ensure information relating to the price band is pre-filled in such forms. The bourses have been asked to list details, including the broker’s name, contact details of the contact person, the postal address, telephone number and e-mail address of the broker and the place where the application form would be collected, at least 15 days in advance.
Merchant bankers would have to ensure appropriate disclosures in this regard are made in the offer document and all intermediaries would have to take necessary steps to ensure compliance.
The decision to introduce the e-IPO mechanism was approved by the Sebi board in its meeting on August 16. Under the mechanism, an investor may submit an application indicating the mode of payment to any registered stock exchange broker with an office in the exchange’s broker centre.
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As is the case in secondary market transactions, in which an investor can check the status of trade on the stock exchange website, bourses, too, would have to facilitate investors in viewing the status of their issue applications on their websites. All accepted applications would be stamped by the broker at the time of receipt, and would be uploaded on the stock exchange platform. Brokers would be responsible for uploading the bid and submitting forms. They would also be liable for any failure in this regard, Sebi said. Stock exchanges may take action against brokers who fail to comply with Sebi’s circular. In case of repeated non-compliances, appropriate action would be taken, Sebi said. Listing would be withheld by stock exchanges till the time the issuer paid the brokers’ commission to the bourse, Sebi added.
According to an indicative timeline provided by Sebi, trading in the issuer’s shares would commence 12 days after the closure of the issue.