SEBI to bring in E-IPOs

The Securities Exchange and Board of India, the capital market regulator has decided to introduce electronic Initial Public Offerings [‘IPO’] from January 1, 2013.  Such a decision was taken so as to increase the reach of distribution of the IPOs.  Electronic IPO is a mechanism through which investments in the public offering can be done without any physical paperwork. E-IPO ensures a quick and efficient way to reach the widest possible investors.  This mechanism will also help the investors to check the status of their issue applications on the websites of the Stock Exchanges.

In a circular issued by the SEBI under Section 11 of the Securities and Exchange Board of India Act, 1992 it has been laid down that the E-IPO mechanism would be implemented in two phases. The first phase will cover 400 locations by January 1, 2013 and the second phase would be completed by March 1, 2013. The SEBI has requested the stock exchanges to provide for downloading of application forms on their websites/broker terminals to ensure any investor or stock broker could download and print forms directly. Under this mechanism interested investors have to submit application form to any registered broker and it can be used by both ASBA as well as non-ASBA investors. Annexure A to the circular also provides that just as in the case of secondary market, an investor can view the status of his issue application on the Stock exchange website itself. Merchant Bankers have also been called upon to ensure disclosure on this matter in the offer document.
 

Details of locations including name of the broker, contact details such as name of the contact person, postal address, telephone number and e-mail address of the broker, where the application forms shall be collected, will be disclosed by the stock exchanges on their websites at least 15 days in advance. Not only this, the stock exchanges also have to regularly update the details disclosed on their website. The downloadable forms also need to clearly mention the price-band and is pre-filled. The facility to submit the application form has now been made available in more than 1000 locations which are part of the broker network.  Commission is also to be decided through a discussion between the Issuer, Merchant Banker and the Stock Exchange. It is to be computed, based not on allotment, but on the basis of applications that are eligible to be considered for allotment. The Stock exchanges are also duty bound to disclose publicly the complaint and redresssal mechanism for E-IPO accompanied by related monetary/non-monetary penalty.

Further information can be accessed here.