POST- ISSUE

By- Abhishek Sinha

Post-Issue Obligation
The following are the post-issue obligations: Receiving of application forms Screening of applications Deciding allotment procedure Mailing of allotment letters Shares certificate or demat account entries and refund orders

Monitoring reports
The lead merchant banker ensures the submission of the post-issue monitoring reports based on the formats. In case of public issue by listed or unlisted companies, the due date for submitting post-issue monitoring reports are as follows:

3-day monitoring report for book-built portion

The 3-day monitoring report occurs in case of an issue through book building. The due date for this report is the third day from the date of allocation, or one day before the opening of the fixed price portion.

3-day monitoring report in other cases

Other cases include fixed price portion of the book-built issue. The due date for the report is the third day from the date of closure of the issue.

Final post-issue monitoring report for all issues

The due date for the report is the third day from the date of listing of the report, or 78 days from the date of closure of the issue subscription, whichever is earlier.

Allotment procedure
The Managing Director of the Regional Stock Exchange consults with the post-issue lead merchant banker and the registrars regarding public issue of securities. This method ensures that the basis of allotment is done fairly according to the following guidelines: The lead banker must ensure that the allotment is made on a proportionate basis as explained below: The applicants are divided into separate category based on the number of shares they have applied for. The total number of shares to be allotted to each category is done on a proportionate basis. This is based on the product of the total number of shares applied for in that category and the inverse of the oversubscription ratio.

 Example 1:

Total number of applicants in category of 100s = 2,000 Total number of shares applied for = 2, 00,000 Number of times oversubscribed = 5 Proportionate allotment to category = 2, 00,000 x 1/5 = 40,000.

 Example 2: Number of shares applied for by each applicant = 300 Number of times oversubscribed = 3 Proportionate allotment to each successful applicant = 300 x 1/3 =100 In the applications where the proportionate allotment is less than 100 shares per applicant, the allotment is carried out as follows: Each successful applicant is allotted a minimum of 100 securities. The successful applicants for that category are determined by drawl of lots in such a way that the total number of shares allotted in that category corresponds to the number of shares.

Reservation for small individual applicants

The proportionate allotment of securities in an issue, when oversubscribed, is subjected to the reservation for small individual applicants as explained below: A minimum 50% of the net offer of securities to the public is first made available for allotment to individual applicants, who have applied for allotment of equal to or less than 10 marketable lots of shares or debentures or the securities offered. The balance net offer of securities to the public is made available for allotment to the individual applicants, who have applied for allotment of more than 10 marketable lots of shares or debentures or the securities offered.

Redressal of investors grievances(complaint)

The post issue lead merchant banker must interact on a regular basis with the post-issue activities such as allotment and refund. The merchant banker must regularly monitor the redress of investors grievances arising from the activities.

Coordination with intermediaries

The post-issue lead merchant banker maintains close co-ordination with the registrars to an issue, and also arranges to assign the officers of intermediaries at regular intervals after the closure of the issue. This is done to monitor the flow of applications from collecting bank branches and processing of the applications till certain activities are completed. The activities include the finalization of the basis of allotment, sending off the security certificates, and completion of refund orders and listing of securities. If the lead merchant banker finds any act of omission or commission on behalf of any intermediaries, it is directly reported to the board.

Post issue advertisements

The advertisement gives the details regarding oversubscription, basis of allotment, number, value and percentage of applications received with the stock invest. Also, value and percentage of successful allottees who have applied through stock invest, completion date of dispatch of refund orders, dispatch date of certificates and date of filing of listing application, which is released within 10 days from the completion date of the various activities. The post-issue lead merchant banker ensures the advertisement circulates in at least three publications in English, Hindi and a regional language at the place, where registered office of the issuer company is situated. This is applicable for all issues.

Other responsibilities
Ensures payment of interest to the applicants for delayed dispatch of allotment letters, refund orders and so on as given in the offer document.

Ensures that the dispatch of refund orders, allotment letters, and share certificates are carried out through registered post or certificate of posting as applicable.
The post-issue lead merchant banker is responsible for post issue activities till: The subscribers have got the shares or debenture certificates or refund of application money. The listing agreement is entered into by the issuer company with the stock exchange. The listing or trading permission is received.

Realization of stock invests

The post-issue lead merchant banker must submit a certificate within two weeks from the date of allotment to the board. The certificate must certify that the stock invests are released on the basis of the allotment finalized.

Self Assessment Questions

1. The 3-day monitoring report occurs in case of an issue through _________________. 2. The lead merchant banker ensures ____________ of interest to the applicants for delayed dispatch of allotment letters, and refund orders as given in the offer document. 3. The merchant banker must give _________ in case of all issues.

DANKE!!!