Compensation to Retail Individual Investors in an
IPO
SEBI
vide circular dated 15th February, 2018 has directed that investors
will be compensated by Self Certified Syndicate Banks (SCSBs) if the investors
fail to get allotment of specified securities in an IPO.
Opportunity
loss is faced by the investors due to factors such as failure on the part of
SCSBs to make bids to concerned stock exchanges even after the amount has been
blocked in the investor’s bank account, to process ASBA applications even if
they have been submitted on time or any other failure by SCSB which led to
rejection of form. With this circular the issue with respect to opportunity
loss faced by the investors due to non-allotment of securities, has now been
resolved.
If
in an IPO, investor fails to get allotment of securities and in the process
suffer any opportunity loss, he shall be
compensated by SCSB for the loss suffered.
Companies
should not have any concern with this circular because the compensation is
payable by the SCSBs for the fault on their part.
SEBI
has decided to design a uniform policy for the calculation of minimum
compensation payable to investors in case of loss suffered. In the circular
SEBI has proposed a formula for calculating minimum compensation.
Highlights of the circular:
- Any applicant whose application has not been considered for allotment, due to failure on the part of the SCSB, shall have the option to seek redressal of the same within three months of the listing date with the concerned SCSB.
- · On receipt of such application/s, the SCSB would be required to resolve the same within 15 days otherwise they will have to pay an interest at 15% p.a. for any delay
- In case the SCSBs fail to redress such grievances within the stipulated time, additionally SEBI may initiate action as deemed fit.
- In case of issues which are not oversubscribed the applicants would be compensated for all the shares which they would have been allotted.
·
No
compensation would be payable to the applicant
if the listing price is below the issue price.
This
circular shall come into force with immediate
effect.
The
circular can be downloaded from the following link:
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