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Sunday, Jul 31, 2005

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Nuts & bolts of equity offer

What is the amount of faith that I can lay on the contents of the documents? And whom should I approach if there are any lacunae?

The document is prepared by an independent specialised agency called Merchant Banker, which is registered with SEBI.

They are required to do through due diligence while preparing an offer document. The draft offer document submitted to SEBI is put on its Web site for public comments. In case, you have any information about the issuer or its directors or any other aspect of the issue, which in your view is not factually reflected, you may send your complaint to Lead Manager to the issue or to SEBI.

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 be made compulsorily in the demat form.

Thus, if an investor chooses to apply for an issue that is being made in a compulsory demat mode, he has to have a demat account and has the responsibility to put the correct DP ID and Client ID details in the bid/application forms.

What is the procedure for getting a demat account?

The FAQs relating to demat have been covered in the Investor Education section of the SEBI Web site in a separate head.

They are available on the URL http: //investor. in/faq/ dematfaq. html.

What are the dos and don'ts for bidding / applying in the issue?

The investors are generally advised to study all the material facts pertaining to the issue including the risk factors before considering any investment.

They are strongly warned against any `tips' or relying news obtained through unofficial means.

How many days is the issue open?

Subscription list for public issues shall be kept open for at least 3 working days and not more than 10 working days. In the case of Book built issues, the minimum and maximum period for which bidding will be open is 3 - 7 working days extendable by 3 days in case of a revision in the price band.

The public issue made by an infrastructure company may be kept open for a maximum period of 21 working days.

As per clause 8.8.2., Rights issues shall be kept open for at least 30 days and not more than 60 days.

Can I change/revise my bid?

Yes. The investor 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 of revising the bids shall be completed within the date of closure of the issue.

What proof can bidder 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.

The investor can retain this as a sufficient proof that the bids have been taken into account.

Can I know the number of shares that would be allotted to me?

In the case of fixed price issues, the investor is intimated about the CAN/Refund order within 30 days of the closure of the issue.

In the case of book built issues, the basis of allotment is finalised by the Book-running lead Managers within 2 weeks from the date of closure of the issue.

The registrar then ensures that the demat credit or refund as applicable is completed within 15 days of the closure of the issue.

The listing on the stock exchanges is done within 7 days from the finalisation of the issue.

Which are the reliable sources for me to get information about response to issues?

In the case of book-built issues, the exchanges (BSE/NSE) display the data regarding the bids obtained (on a consolidated basis between both these exchanges).

The data regarding the bids is also available category-wise.

After the price has been determined on the basis of bidding, the statutory 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.

Is there any category of entities which are exempted from the eligibility norms?

Yes, SEBI guidelines have provided certain exemptions from the eligibility norms. The following are eligible for exemption from entry norms.

* Private Sector Banks

* Public sector banks

* An infrastructure company whose project has been appraised by a PFI or IDFC or IL&FS or a bank which was earlier a PFI and not less than 5 per cent of the project cost is financed by any of these institutions.

* Rights issue by a listed company

Where can I get a form for applying/ bidding for the shares?

The form for applying/bidding of shares is available with all syndicate members, collection centres, the brokers to the issue and the bankers to the issue.

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