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Come January 1, 2016, the time taken for listing of public issues after it has closed for subscription will be reduced from the existing 12 days to six days.
Announcing this in a circular on Tuesday, securities and commodities regulator SEBI, said that it would be applicable to issues opening on or after January 1, 2016.
Investors would now have the facility of submitting application form to subscribe to a public issue to banks, brokers, depository participants besides registrar and transfer agents. Earlier, forms could be submitted only through banks and brokers.
Making payments would also become easy for investors as SEBI has made the use of ASBA (application supported by blocked amount) compulsory for all categories of investors.
For investors, use of ASBA entails just writing their bank account numbers and authorising the banks to make payment in case of allotment by signing the application forms.
For investors, the benefit arises from the fact that their account is debited only to the extent of the amount for which they have been allotted shares. As a result issuing companies need not process refunds.
Arun Kejriwal, Founder KRIS Research said “While the idea of reducing time to list from 12 to 6 days is great, there are two issues which need to be addressed. Firstly, in the recently concluded IPO of Navkar Corporation, HNI bids which were 90 per cent of the HNI bucket was reduced to about 30 per cent on allotment. With ASBA alone applicable for HNIs how could this happen?”
“Secondly, with retail investors being asked to apply compulsorily through ASBA, there is a chance of exclusion of more than half the investing public simply because ASBA facilities are either not available or not feasible. For instance, the lone employee of bank branch trained to use ASBA might not be available or there could be extraneous reasons such as a power cut.”
Registrars and Depository Participants have been directed to provide contact details of where they would accept application forms by November 30, 2015.
Stock exchanges have been directed to provide alerts to investors by email and SMS to investors on application status.
SEBI further said intermediaries have to guide investors on how to apply to public issues besides stipulating that commission payable to intermediaries has to be disclosed in the offer document.
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