Page 49 - DCOM507_STOCK_MARKET_OPERATIONS

Stock Market Operations

Notes names of the appointed brokers, along with other intermediaries (i.e. lead manager,
registrar to issue), should be disclosed in the prospectus and the application form.

Mode of Operation: The company should, after filing the offer document with the ROCs
and before opening of the issue, publish an advertisement each in an English and Hindi
daily with nationwide circulation and also in a regional daily with circulation at the place
where its registered office is situated. The advertisement should contain the salient features
of the offer document as specified in form 2-A of the companies (Central Government’s)
General Rules and Forms, 1956. In addition to other required information, it should contain
(1) the date of opening/closing of issue, (2) the method and process of application allotment
and (3) the names/addresses/telephone numbers of the brokers/centres for accepting
applications.

During the period the issue is open to public for subscription, the applicants may:
1. Approach the brokers of the stock exchange(s) through which the securities are offered
through the online system, to place an order for subscribing to the securities. Every
broker should accept orders from all clients who place orders through him;
2. Directly send the application forms, along with the cheque/demand draft for the sum
payable towards the application money, to the registrar to the issue or place the order to
subscribe through a broker under the online system. In the case of issue of capital of ` 10
crore or above, the registrar to the issue should open centres for collection of direct
applications at the four metropolitan centres situated at Delhi, Chennai, Kolkata and
Mumbai.
The broker should collect the client registration form from the applicants, duly filled and signed,
before placing the order in the system as per the “Know Your Client” rule as specified by the
SEBI and as may be modified from time to time. He should, thereafter, enter the buy order in the
system on behalf of the clients and enter details including the name, address, telephone number
and category of the applicant, the number of shares applied for, beneficiary ID, DP code and so
on, and gives an order number/order confirmation slip to the applicant.

The applicant may withdraw applications according to the Companies Act, 1956.
The broker may collect an amount to the extent of 100 per cent of the application money as
margin money from the client before he places an order on their behalf. He should open a
separate bank account (Escrow Account) with the clearing house bank for primary market issues
in which the amount collected from clients as margin money should be deposited. At the end of
each day, while the issue is open for subscription, he should download/forward the order data
to the registrar to the issue. On the date of closure of the issue, the final status of orders received
should be sent to the registrar to the issue/company.
On the closure of the issue, the designated stock exchange, along with the lead merchant banker
and registrars to the issue, should ensure that the basis of allocation is finalized in a fair and
proper manner according to the basis of allotment norms. These may be modified from time to
time. After the finalization of the basis of allocation, the registrar to the issue/company should
send the computer file containing the allocation details, that is, the allocation numbers, allocated
quantity and so on of the successful applicants to the exchange to be processed, generate the
broker-wise pay in obligation and send the file to member brokers. On receipt of the basis of
allocation data, the brokers should immediately intimate the fact of allocation to their clients/
applicants. They should ensure that each successful client/applicant submits the duly filled in
and signed application form to them along with the amount payable towards the application
money. The amount already paid by the applicant as margin money would be adjusted towards
the total allocation money payable. The broker should, thereafter, hand over the application
forms of the successful applicants, who have paid the application money, to the exchange to
submit the same to the registrar to the issue/company for their records.

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