What is an IPO?
A. When an unlisted company makes either a fresh issue of securities or offers
its existing securities for sale or both for the first time to the public, it is
called an IPO. This paves the way for listing and trading of the issuer's securities
in the Stock Exchanges.
What is the difference between "Fixed price issue" and "Book Built issue"?
A. On the basis of Pricing, an issue can be further declassified into Fixed
Price issue or Book Built issue. Fixed Price Issue: When the issuer at the outset
decides the issue price and mentions it in the Offer Document, it is commonly known
as "Fixed price issue". Book built Issue: When the price of an issue is discovered
on the basis of demand received from the prospective investors at various price
levels, it is called "Book Built issue".
What is a price band?
A. 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.
What is a bid lot?
A. A Bid-lot is the pre-determined number of shares which have to be applied
for by an investor. It is different for each issue. There is a minimum lot size
which is pre-decided by the company and mentioned in the application form. Eg: Minimum
bid lot in IPO of XYZ co. - 10 Bid-lot Multiples of 10 Price Band - 100-120. It
means that a retail investor cannot apply for less than 10 shares in that particular
issue. The application for more than 10 shares has to be in multiples of 10 like
20,30,40,etc
What is price discovery?
A. Based on demand at various prices, the Issuer Company, in consultation
with BRLMs decides the final price of the offer. The price thus finalized is called
the discovered price.
Who is a Syndicate Member/Broker?
A. A Syndicate Member/Broker is a member of the Stock Exchange to whom the
investor has to submit the IPO Bid/Application form. The Syndicate Member / Broker
receives the bid and uploads the same on to the electronic book of the stock exchange.
Bids which are not uploaded into the electronic book are not considered for the
purpose of allotment. The Syndicate Member/Broker , then submits the bid with cheque
to the bankers. In case of online application, the Syndicate Member/Broker generates
the electronic application form and submits the same to the registrar with proof
of having paid the bid amount.
What proof can I request from a trading member or a syndicate member for entering
bids?
A. 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.
What are the different types of investor categories?
A. Investors are broadly classified under following categories:
- Retail individual Investor (RIIs)
- Non Institutional Investors (NIIs)
- Qualified Institutional Buyers (QIBs)
"Retail individual investor" means an investor who applies or bids for securities
for a value of not more than Rs. 2,00,000.
Which type of IPO bids are accepted at KKSL?
A. Only Retail IPO bids can be accepted at KKSL. As per SEBI circular a Non-retail
bid has to placed through ASBA (Application Supported by Blocked Amount) mode with
the registered SCSBs.
Whom do I approach if I have grievances with respect to the non receipt of
shares, delay in refund etc.?
A. You can approach the Registrar to the compliance officer of the issue,
whose name and contact number is mentioned on the cover page of the Company's prospectus.
What is the time deadline by which the allotment process would be completed?
A. As per current norms, the newly issued share has to be listed on or before
the 12th working day after the issue is closed. Working backwards, this would generally
mean that the allotment process and uploading of the shares, sending of refunds
etc. have to be completed within 10 working days from the date of closure of the
issue.
What is the time deadline by which the refund order would be dispatched?
A. As per current norms, the newly issued share has to be listed on or before
the 12th working day after the issue is closed. Working backwards, this would generally
mean that the allotment process and uploading of the shares, sending of refunds
etc. have to be completed within 10 working days from the date of closure of the
issue.
When can you trade in the new shares?
A. You can trade in new shares after they are listed and after ensuring that
the allotted shares have been credited into your Demat Account. As per current rules,
you cannot effect any off market transfers from your account till the shares are
listed.
What is the difference between a Initial Public issue (IPO) and a follow-on
public offer(FPO)?
A. IPO comprises of an offer for subscription made by such company whose
shares are not listed on any stock exchange for trading, whereas an FPO is offer
made by already listed company to issue additional securities. For an already listed
company, the investor may decide to buy from the market or subscribe to the offer
made by the Company.
What is cut-off price?
A. A retail investor can bid at any price within the price band or can bid
at cut-off. "Cut-off price" means the investor is ready to pay whatever price is
decided by the company at the end of the book building process. While making the
application at Cut off, the investor is required to pay the amount at the highest
price band. The excess amount, in case the price discovered is lower, is refunded.
Cut-off option can be exercised only by Retail Investors and Employees of the issuing
company applying in the Employee Category.
Why is your Demat Account No.(DP-ID & Client-ID) Important?
A. The DP-ID + Client ID, is the definitive identification of the applicant.
Demat account f fed into electronic bid file, is used to credit shares as well as
remit refund. The Registrar is required to process an application based on bid file
and in absence of any other possible validation, a wrong but valid demat account
can lead to a wrong refund / credit of shares. Thus it is very important that the
Demat Account Number is stated correctly in the application form.
Why is PAN important?
A. As per SEBI guidelines, all applicants are required to provide their PAN
while applying for an Issue. Application without PAN or with invalid PAN is rejected.
Investors are requested to ensure that their DP account is updated with proper PAN
details.
Who is a registrar to the Issue?
A. A Registrar to an Issue is a SEBI-registered entity, qualified to act
as such, and who electronically processes all the applications and carries out the
allotment process, as per the rules/prospectus. The Registrar is responsible for
complying with the time deadlines of updating the electronic credit of shares to
the successful applicants, dispatching/uploading of refunds and attending to all
investor related queries after the issue is completed. Usually, the Registrar continues
to work with the company, even after the IPO, as its Registrar and Transfer Agent.
What is the Role of a Registrar in an IPO?
A. The Registrar's role in an IPO can be divided into three phases:
- Pre-IPO, when the Registrar completes all preparatory work for the IPO, including
instructing the escrow / ASBA bankers about the procedures they have to follow and
the timelines to which they have to adhere.
- Post IPO closure but pre Listing -, during which the Registrar receives the Final
BID file from the exchanges, validates the same, coordinates with the bankers to
ensure that final collection certificates are received, all cheque returned cases
are accounted, and withdrawals if any are taken note of . The Registrar identifies
all other technical defects. The Registrar after considering all the rejects, withdrawals
etc., and after reconciling the bank receipts, with the Final Bid file, prepares
the basis of allotment in conjunction with the BRLMs and Issuer , and submits this
basis for approval to the Stock Exchange. Upon approval by the Stock Exchange, the
Registrar proceeds with the allotment of shares, ensures that the electronic files
for credit of shares and refunds are properly prepared and ensures the completion
of all these processes including over printing / despatch of allotment advices/
refunds within the prescribed time limits.
- Post allotment / listing phase during which the Registrar attends to all the complaints
and strives for speedy resolution of the same.
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.
What are the pre-requisites to apply in IPOs through KKSL?
A. You need to have a trading account with KKSL. There should be sufficient
funds in your KKSL account which is linked to the trading account.
Where can I check allotment of shares?
A. You can check the allotment of shares in your Demat account linked to
your KKSL online trading account on date of IPO order.
Where can I check the Refunds for non-allotted shares / Cancelled order /
lower revised orders?
A. Refunds are directly credited by IPO registrar to your Bank account linked
to your Demat account on the date of allotment, provided the MICR number in your
bank account is updated in your demat account, failing which you shall receive the
refunds vide physical warrant sent through POST/ Courier by IPO registrar.
