The market regulator in its ‘Guide to Understanding Offer Document’ advises investors to go through risks factors and look at promise-vs-performance columns before investing in a company. “It is generally advised that investors should go through all risk factors of the company before making an investment decision,” Sebi said.
In case investors find any misinformation or lack of information, they may send their complaint to the lead manager or to the Sebi. Basically, the guidance note was an effort at improving financial literacy of especially nascent investors.
Informing investors about basic knowledge before investing in public issues or rights issues, Sebi said: ‘The application forms for applying or bidding for shares are available with all syndicate members, collection centres, the brokers to the issue and the bankers to the issue.”
The documents also made it clear about PAN (permanent account number) saying that any investor who wants to invest in an issue should have a PAN which is required to be mentioned in the application form. For aggrieved investors with respect to non-receipt of shares, delay in refund among other things, investors can approach the compliance officer of the issue, whose name and contact number is mentioned on the cover page of offer document.
Sebi also clarified that all public issues of over Rs 10 crore are compulsorily in demat mode. It said an issue can be kept open for 3-10 working days, extendable by three days in case of a revision in the price band, while rights issue can be kept open for 15-30 days. “You can get refunds in an issue through various modes such as registered or ordinary post, direct credit, RTGS (real time gross settlement), ECS (electronic clearing service) and NEFT (national electronic fund transfer),” Sebi said.
Book building
In book-built public issues (through which a company discovers actual price of share in the market) listing of shares gets done within three weeks after the closure of the issue. “Book-building is a process of price discovery. After the bidding process is complete, the cut-off price is arrived at based on the demand of securities. Only the retail investors have the option of bidding at the cut-off price,” Sebi said. Last month, Sebi had approved regulations for Investor Protection & Education Fund (IPEF) which may be even used for initiating legal proceedings against listed companies. In addition to funding legal battles in the interest of investors, the fund can also be utilised for activities like educating investors and disseminating information through media, the regulator said in a release after the board meeting last evening.
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