Page 53 - DCOM507_STOCK_MARKET_OPERATIONS

Stock Market Operations

Notes The money received from the applicants against the over-allotment in the GSO should be kept
in the GSO bank account (as distinct from the issue account) to be used for the purpose of buying
shares from the market during the stabilization period. These shares should be credited to the
GSO Demat Account. They should be returned to the promoters immediately within two working
days after close of the stabilization period.
To stabilize the post-listing prices of the shares, the SA would determine the timing of both of
them, the quantity to be bought, the prices at which bought and so on. In case the SA does not
allot shares to the extent of their over-allotment from the market, the issuer company should
allot them to the extent of the shortfall in dematerialized form to the GSO Demat Account within
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 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 three 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.

Self Assessment

State whether the following statements are true or false:
3. The OTC do not permits small companies to raise funds through its exchange.
4. The broker would refund the margin money, collected earlier, within three days of receipt
of basis of allocation to the applicants who did not receive allocation.

3.3 Primary Market Intermediaries in India

A number of intermediaries are associated with activities of the primary market in India. They
are: Merchant Bankers, Underwriters, Bankers to an Issue, Brokers to an Issue, Registrars and
Share Transfer Agents and Debenture Trustees. A brief discussion of tasks and obligations of
each of these participants, as per the SEBI guidelines is brought out below:
3.3.1 Merchant Bankers

Merchant bankers in India, akin to ‘accepting and issue houses’ of the UK and ‘Investment banks’
of the US, offer a package of financial services relating to the issue. According to the SEBI

48 LOVELY PROFESSIONAL UNIVERSITY