Allocation Allotment Procedure
In case of issue of 100 per cent of the net offer to the public through 100 per cent book-building process, of at least 25 per cent of the net offer to the public should be available for allocation to retail individual investors, (i) at least 25 per cent to non institutional investors (i.e, investors other than retail individual investors and QIBs and (ii) not more than 50 per cent to QIBs. However, 50 per cent of the issue site should be mandatory allotted to the QIBs in case of a public issue by an unlisted company through book-building.
In case of 75 per cent of the net offer to the public through book-building and 25 per cent at the price determined through book-building, at least 25 per cent of the net offer to the public and not more than 50 per cent should be available for allocation to non QIBs and QIBs respectively. The balance 25 per cent should be allocated to retail individual investors who have either hot participated or have not received any allocation in the book-built portion. The allotment to retail individual/non-institutional investors should be made on the basis of the proportionate allotment. In case of under subscription in any category, the unsubscribed portion may be allocated to hidden in other categories. However, the unsubscribed portion in the QIBs category would not of available for subscription to other categories in the case of book-building by unlisted companies that do not fulfill the criterion of pre-issue net worth track record of distributive profits net tangible assets and issue size for a public issue/offer for sale. The allocation to QIBs should determined by the book runner(s) based’ on prior commitment, investor quality, price aggression, how early the bid was made and so on.
After finalization of the basis of allocation, the Registrar to the issue/issuing company should send the computer file containing the allocation details (i.e, allocation numbers, allocated quantity of successful applicants and so on) along with broker-wise funds pay-in obligation to the broker to the issue and the stock exchange(s). The company lead manager/hook runner should announce and intimate the pay-in day to broker and exchanges. The broker would be responsible to deposit the amount in the escrow account to the extent of allocation to his client in the pay-in date.
On payment/receipt of the application money towards minimum subscription, the issuing company would allot the shares to the applicants 35 per the applicable guidelines. After the allotment, the Registrar to the issue would post the share certificates to the investors or instruct the depository to credit the escrow securities account of each broker. The broker, as an agent, would transfer from the escrow account the shares to the clients/applicants depository account after full payment of them and confirm the same to the book runner/registrar to the issue not later than the day of commencement of trading. Any dispute among the broker(s)/chants) would be referred to arbitration as per the bye-laws/regulations of the stock exchange. The allotment details should be put on the website of the registrar to the issue/issuer. Moreover, online messaging facility of stock exchange may be used to communicate the allotment details to brokers as an alternative of physical Confirmation of Allocation Note Trading would commence within 6 days from the closure of the issue failing which interest at 15 per cert would be paid to the investors. Conciliatory examples for issue size and allocation is specified in Appendix 18-A. Model time framework for book-building is classified. In case of 75 per cent of the net offer to public through book-building and 25 per cent at the price determined through book-building the offer of 25 per cent should open within 15 days from the date d closure of bidding. The offer should remain open for subscriptions from the public for at least three working days after completing all the requirements of advertisement and dispatch of issue material to all the stock exchanges. When the offer is open, investors who have received an intimation regarding entitlement of securities should submit application forms along with the application money/ties), The other individual investors who had not participated in the bidding process or have not received intimation of entitlement of securities may also make an application.