In order the expedite the listing process and make the primary market more transparent, the Securities and Exchange Board of India (Sebi) has proposed new norms for initial public offerings (IPOs). The new norms will help both issuers and retail investors by saving cost and time. The draft guidelines say that retail investors and those under the category of employee reservation in IPOs can invest through the online route without the need for cheque payment or physically filling the forms.
According to Sebi, the move will reduce the time between issue closure and listing from 12 days to six working days. Once the process is stabilised, timelines can be further curtailed to two-three days. The reduced listing time means investors' funds will get blocked for a much lesser duration.
Sudip Bandyopadhyay, managing director and chief executive officer, Destimoney Securities, says, "e-IPO will benefit markets and retail investors in the form of transparency and cost and time savings. It will also improve operational efficiency and increase retail participation in the primary market. The mechanism of e-IPO should be designed like that for buying shares from the secondary market."
Under the new norms, an investor will be able to submit his application to any Sebi-registered stock broker, depository participant (DP) or registrar and transfer agent (RTA) or self-certified syndicate bank (SCSB). Depositories can access the stock exchange platform and in turn provide the same to their DPs or RTAs. At present, only brokers and SCSBs are allowed to bid on behalf of investors on the exchange platform.
Investor will continue to have the option of submitting application supported by blocked amount (Asba) application to SCSBs or stock brokers. The fast-track route may be extended to companies having an average market capitalisation of public shareholding between Rs 250 crore and Rs 3,000 crore.