Retail investors in IPOs to get compensation: Sebi
Sebi said there should be a uniform policy for calculation of the minimum compensation payable to investors
Market regulator Sebi on Thursday said retail investors applying for shares in IPOs would need to be compensated if bankers fail to make the allotment despite their eligibility. Besides, the public issue banker would need to pay an interest amount of 15 per cent to the investors for failing to resolve the grievance within 15 days, while they may also face Sebi’s action for such failures.
The Securities and Exchange Board of India (Sebi) on Thursday said retail investors applying for shares in initial public offerings would need to be compensated if bankers fail to make the allotment despite their eligibility.
The public issue banker would also need to pay an interest of 15 per cent to the investors for failing to resolve the grievance within 15 days, while they may also face Sebi’s action for such failures.
Putting in place a framework to compensate retail investors who fail to get securities in an IPO, Sebi said there should be a uniform policy for calculation of the minimum compensation payable to investors.
While calculating the minimum compensation, several factors need to be taken into account such as the opportunity loss suffered by an investor due to non-allotment of shares; number of times the issue was oversubscribed in the relevant category; probability of allotment; and listing gains, if any, on the day of listing. “It is also proposed that in case of issues that are subscribed between 90100 per cent — that is non-oversubscribed issues — the applicants would be compensated for all the shares, which they would have been allotted,” Sebi said.
However, no compensation would be payable to the applicant in case the listing price is below the issue price, it said in a circular, which would come into force with immediate effect.
The Business Standard, New Delhi, 16th February, 2018
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