Initial Public Offer Through Stock Exchange Online System

An issuing company may issue securities to the public either through the existing banking channel or through the online system of the stock exchanges (E-IPO).

An Initial Public Offer (IPO) is the selling of securities to the public in the primary market. It is when an unlisted company makes either a fresh issue of securities or an offer for sale of its existing securities or both for the first time to public. This paves way for listing and trading of the issuer’s securities. The sale of securities can be either through book building or through normal public issue.

The e-IPO software smooth the progress of online bidding for Retail/HNI/QIB clients of the member in different IPO’s, this software works as a distinct interface to bid for different IPO’s in NSE and BSE at one go and also do activities such as viewing the details of upcoming IPO’s, transferring the funds etc..

Features of e-IPOs

e-IPO Provides facility to create and sustain the client and assign rights to them based on the member’s business modulate.

Multiple users with enhanced user access and rights and Detailed price wise demand analysis of IPOs based on the files as received by the exchange,

e-IPO Provides Facility to bulk upload of orders for institutional clients

e-IPO aids generation of bulk files online, through a single platform

e-IPO facilitates export of bid

Multiple reports are accessible to end clients with report formation and export to excel facility

e-IPO make possible post IPO closure activities such as allocation etc.

e-IPO Supports both Fixed Price and Book Building methods of IPO Bidding

Requirements

The company should enter into an agreement with the stock exchanges. The agreement should specify mutual right duties/ responsibilities and obligations and it should provide for dispute resolution mechanism between them.

The stock exchanges would appoint the SEBI registered stock brokers of the exchange. These brokers are to accept applications and place orders with the company.

The brokers should collect money from the clients for orders placed. If the clients fail to pay for the shares allocated, the brokers would have to pay the amount.

It should be ensured by the lead manager/company that the brokers are financially capable of honoring their commitments if the clients fail to pay.

The company should pay the brokers a commission for their services. The brokers should not levy a service fee on the clients. This should be ensured by the stock exchanges.

The company should appoint a Registrar to the issue. He should have electronic connectivity with the stock exchanges through which securities are offered under the system.

Listing the company may list its securities on an exchange other than the one through which it offer its securities to the public via online system.

Responsibility of Lead Manager

Co-ordination of all activities among the various intermediaries connected on the issue system.

Disclosure in the prospectus and the application form of names of the appointed brokers along with other intermediaries like lead manager, Registrar to issue.

Mode of Operation

The company should advertise in dailies with nationwide circulation.

The advertisement should contain in addition to other required information, the following

The date of operating/closing of issue

The method and process of application/allotment

The names/addresses/telephone numbers of the brokers/centers for accepting applications.

The applicants may contact the brokers of stock exchanges through which securities are offered through online system to place an order for subscribing to the securities.

They may send the application forms with the cheque/DD towards application money to the Registrar to the issue or place the order to subscribe through a broker under the online system.

The Registrar should open centers for collection of direct applications at the four metropolitan centers at Delhi, Bombay, Kolkata and Chennai (for issue of capital of ` 10 crores or above).

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.

The broker should thereafter enter the buy order in the system on behalf of the clients. He should enter details including name, addresses, telephone number and category of applicant, number of shares applied for, beneficiary ID etc. He should give an order number / order continuation ship to the applicant.