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April 24, 2010 SEBI reduces timelines for listing by 10 days It has been a constant effort of Securities and Exchange Board of India (“SEBI”) to streamline the public issue process and to make it more effective, faster and more transparent. Just last week, SEBI released an amendment to the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 (“ICDR Regulations”), which we covered through our hotline dated April 19, 2010. On April 22, 2010, SEBI has issued a circular1 (“Circular”) wherein SEBI has declared a reduction in the timeline between closure of an issue and subsequent listing of shares for public issues opening after May 3, 2010. The foremost rationale behind such an amendment seems to be the inordinate delay while recording data at multiple levels and consequent reconciliation of entries. Prior to the Circular, the stipulated time taken to complete the listing of the shares from the date of closing of the issue was 22 days. Pursuant to the Circular, the aforesaid 22 days timeline has now been reduced by 10 days, i.e. it is 12 days. This reduced timeline is applicable in the case of applications supported by blocked amount, i.e. applications made through the ASBA process. It may now be possible for companies to list the shares at a condensed infrastructural cost. Therefore, this amendment shall also bring cheers to the large investor community who were earlier being exposed to a greater market risk on account of the 22-day timeline. Under the new process, the syndicate members would be required to compile the entire data which is relevant for finalization of the basis of allotment so as to upload the bid data in the electronic bidding system of the stock exchanges within the aforesaid time period of 12 days. However, the Circular also provides that the syndicate members would have a window of an additional day to modify some of the data fields, so as to ensure that the bid data which has been uploaded is accurate. The validation of the bids and finalization of the basis of allotment would be done by the registrar to the issue on the basis of the final electronic bid file, which shall be provided to the registrar by the stock exchanges. The Circular imposes a duty onto the lead managers and their agents to ensure the accuracy of the data and resolving any investor grievances, especially given the reduced timeline. Further, to ensure a speedy clearance of applications for allotment, the permanent account number (or PAN, as issued by the Income Tax Department of India) of the applicant shall be verified at the time of allotment. It is also important that details like the depository participant (“DP”) identification (or DP ID), client identification and PAN are accurately captured in the application form and recorded in the electronic bidding system of the stock exchanges, as the same is to be tallied against the data available with the depositories. In case the DP ID, client identification and PAN do not match with the records of the depositories, the application for allotment may be rejected.
______________ 1 CIR/CFD/DIL/3/2010
- Vedant Shukla, Harshita Srivastava & Diptee Deshpande
You may direct your comments to Ramya Krishnan-AniL +91 900465 0363 |
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