Page 91 - DCOM304_INDIAN_FINANCIAL_SYSTEM

Indian Financial System

Notes five days of closure of the stabilization period. These would be returned to the promoters by the
SA in lieu of those borrowed from them and the GSO Demat Account would be closed. The
company would be making a final listing application in respect of such shares to all the concerned
stock exchanges where the shares allotted in the public issue are listed. The provisions relating
to preferential issues are (discussed later) would not be applicable to such allotment. The shares
returned to the promoters either case would be subject to the remaining lock-in period.
The SA would remit the issue price (i.e. further shares allotted by the issuer company to the
Demat Account) to the company from the GSO bank account. The remaining balance, (net of
addition of expenses incurred by the SA, would be transferred to the investor protection fund of
concerned stock exchange and the GSO Bank Account would be closed.
The SA should submit a daily report to the stock exchange(s) during the stabilization period,
should also submit a final report signed by him/company to the SEBI in the specified form
together with (1) a depository statement for the GSO Demat Account for the stabilization period
indicating flow of shares into and from the account and (2) an undertaking by the SA and
countersigned by depository(ies) in respect of confirmation of location in shares returned to the
promoters in lieu of shares borrowed from them for stabilization purposes.
The SA should maintain for at least 3 years from the date of the end of the stabilizing period a
register in respect of each issue with GSO, in which he acts as a SA containing the following
details: (1) price, date and time of each transactions, (2) promoters and the number of shares
borrowed find each and (3) allotments made.

5.3.9 Share Auction For QIBs

The SEBI decided on November 9, 2009 to introduce an additional method of book building for
Qualified Institutional Bidders (QIBs). Under this method, bidders will be free to bid at any price
above the floor price and allotment would be at differential prices against the current practice of
bidding within a price band. Retail investors, however, would be allotted shares at the floor price.

Self-Assessment

Fill in the blanks:
1. The ……………………function of the primary market facilitates the sale of securities to
ultimate investors.
2. In ………………………through prospectus a public limited company invites the public at
large through prospectus to subscribe to the issue of securities.
3. …………………..of securities method can be used when a company intends to approach a
small number of large individual or institutional investors.

4. ………………….method involves outright sale of shares enbloc by the company to issue
houses or a group of brokers at an agreed price who in turn resell them to the public at
large.
5. The lead manager would be responsible for coordination of all the activities among
various …………………..connected on the issue system.

6. Under OTC method, the company intending to raise funds through OTCE appoints a
member of the OTCE as………………………..
7. In case of an IPO by an ……………company/public issue by a …………………..company,
the promoters issuing shareholders holding more than 5 per cent shares may lend shares
which are in debenture form only.

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