Companies in the SME sector entering the capital markets will be prescribed ‘lot sizes' for shares in an initial public offering. In a circular released on Tuesday, the capital market regulator mandated specific lot sizes for IPOs in different price bands.
For a price band of up to Rs 14, the lot size would be 10,000 shares. For a band of Rs 14-18, the lot size has been fixed at 8,000 shares. As the value of the price band progressively increases from Rs 14 to above Rs 1000, the number of shares in the lot size decreases from 10,000 shares to 100 shares.
The circular clarifies that if the price during the public offering stage falls between two different price bands, then the minimum allotment size would be decided on the higher price band. For example, if the proposed price band is Rs 12-16, then the lot size would be 8,000 shares as it would then fall into the Rs14-18 price band bracket.
The stock exchanges can review the lot size once in every six months or whenever warranted, by giving an advance notice of at least one month to the market. Further, the stock exchanges should ensure that the lot size will be the same for securities traded across the exchanges.
Keywords: SEBI, SME public issues, capital markets, Lot size
According to these guidelines, minimum application should be for
Rs1,40,000 (10000 *14).It means they want to drive away small retail
investors from IPO market.In the secondary market the trading lot is
only 1 share irrespective of FV. This anomaly needs protest from
investors.