The Hindu Business Line : Safety net for equity investors

Recently, I got allotment of shares of a company at Rs 1,100 per share. , Today the quotation for this share is only Rs 850. Can I hold the board of directors responsible, by asking it to buy my shares at least at Rs 1,100 each?

Anonymous

At the height of the share market boom, many may shrug off this question. But to my mind it deserves a serious reply. The SEBI guidelines do contemplate a voluntary safety net dispensation up to 1000 shares for a period of six months from the date of allotment. But no one seems prepared to put his head on the chopping block, which reflects his own inhibitions about his own company and, more particularly, about the appropriateness of the premium charged. There seems to be more takers for the greenshoe option regime under which a price stabilisation agent buys or sells shares in the secondary market hot on the heels of issue in the primary market.

But this protection is illusory because it is operative just for a month and addresses the entire market rather than individual investors like you. I feel SEBI should usher in a compulsory safety net as well as a compulsory rating dispensations in the interest of the primary market.

(ASK! Send in your queries to ask@thehindu.co.in.)

http://MentorQA.blogspot.com

S. Murlidharan

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