ASBA forms to be made available on websites of the stock exchanges

SEBI vide circular CIR/CFD/DIL/7/2010 dated July 13, 2010 has stated that ASBA bid-cum application forms would be made available for download and printing, on websites of the stock exchanges which provide electronic interface for ASBA facility (i.e. BSE and NSE). The ASBA forms so downloaded would have a unique application number and can be used for making ASBA applications in public issues. The ASBA forms should be made availble on stock exchange's websites at least one day before opening of the public issue. This rule is applicable to all public issues opening on or after July 19, 2010. This move from SEBI would ensure wider availability of ASBA forms in addition to the ASBA forms available at the designated branches. It would also improve the popularity of the ASBA facility among the retail investors.

Review of the progress in implementation of ASBA facility

A memorandum circulated in the SEBI board meeting dated May 19, 2010 contains the following facts in relation to the progress of implementation of ASBA facility.

•  ASBA was introduced on July 30, 2008 wherein only ‘Retail Individual Investors’ could make applications in book built public issues by blocking the bid amount in their bank account subject to condition that bidding be done only at ‘cut-off’ price with no revision facility ("Phase–I"). Subsequently, on August 20, 2009, ASBA was made mandatory for rights issue.
• During Phase I, ASBA facility was used in about 23 public issues and 19 rights issues and ASBA applications as a percentage of total applications from retail individual investors category ranged from less than 1% to 28%.
• Later ASBA facility was extended to other investor categories also like Non Institutional Investors (NIIs) which include High Networth Individuals (HNIs), Corporate entities etc. The extension of ASBA facility ("Phase-II") involved changes in system software, procedure etc., and became effective from January 1, 2010 for all the public issues (book built and fixed price) and right issues.
• As on April 15, 2010, 27 banks having 3535 designated branches have certified their readiness for Phase II.
• Since January 1, 2010, ASBA facility was used in 24 public issues and 10 rights issues wherein the ASBA applications as percentage of total applications were in the range of 6.5% to 28% out of which applications by NIIs was in the range of less than 1% to 16%. 

More (previous) posts on ASBA are available here, here, here, here and here.

SEBI extends ASBA facility to QIBs

SEBI vide circular CIR/CFD/DIL/2/2010 dated April 06, 2010 has extended the Applications Supported by Blocked Amount (ASBA) facility to Qualified Institutional Buyers (QIBs) in public issues opening on or after May 1, 2010. Earlier in December 2009, SEBI had extended ASBA facility to all investor categories like HNIs and corporate investors except QIBs (referred as ASBA Phase II). The rule at that time was QIBs were required to bring in only 10% of application money at the time of placing bids. Later in March 2010, SEBI revised this rule and stated that QIBs should bring in 100% of the application money as margin along with the application for securities in public issues from May 1, 2010. SEBI has now extended the facility of ASBA to QIBs so that while placing the bids, the QIBs need not pay the application money by cheque. Under ASBA facility the bank account of the QIBs would be blocked to the extent of the application money and the application money would get debited from account only if their application is selected for allotment after the basis of allotment is finalized.

A copy of the circular is available here.

SEBI amends rights issue norms: ASBA introduced and Minimal disclosure

SEBI vide its Circular SEBI/CFD/DIL/DIP/38/2009/08/20 dated August 20, 2009 has amended the SEBI (DIP) Guidelines, 2000 and effected the following changes. The new amendment that has been brought in follows SEBI’s decision of late last year to cut short the time period for allotment of shares in rights issue to 15 days from the previous 45 days.

Rationalized the disclosure requirements for rights issues: The reason being rights issues are further issuances of capital made by listed entities to existing shareholders who are in possession of basic information about the issuer company. According to the norms issuer companies are required to disclose only minimum information that will help in making the issuance process faster and also help in reducing cost.
Applications Supported by Blocked Amount (ASBA) in rights issues: SEBI extended the facility of ‘application supported by blocked amount’ (ASBA) to all rights issue which enables an investor to apply for an issue without making payment. Instead, the amount is blocked in investor’s personal account with the designated syndicate bank and only the required funds will be debited from the account upon allocation of shares. Currently SEBI had enabled the facility for applying through ASBA only in case of an initial public offer (IPO).
Utilisation of issue proceeds after finalization of the basis of allotment in the issue: Issuer company can now utilise the issue proceeds only after the basis of ‘allotment of rights share’ is finalised. Earlier, the issuer company was allowed to utilise the rights issue proceeds after satisfying the designated stock exchange that it’s rights offer had received minimum 90% subscription’.

A copy of the Circular is available here.
A copy of the amended DIP guidelines is available here.

SEBI Board meeting held on December 4, 2008

IPO and Rights Issues

(a) SEBI issues an "observation letter" for all offer
documents submitted by Cos proposing to hit Capital Market.
Earlier, the validity of the letter was 3 mths. In view
of the current market situtation SEBI has extended this validity to 1 YEAR.

(b) Entitlements in a Rights issue will now be made in
electronic mode (i.e. by way of a credit in the demat
accout) and these can be traded on exchanges. Further
the facility of ASBA (blocking of funds in the account of
the applicant till the allotment is finalised) has also
been extended to Rights issues

Mutual Funds - Following was decided

(a) No early exit will be allowed in any Close Ended
Scheme.
(b) Close ended schemes to be listed on Exchanges (to
provide exit route to investors)
(c) Maturity of the underlying assets not to go beyond
the date the scheme expires.
(d) Schemes approved earlier but not launched to be
amended accordingly


Other decisions

(a) SEBI to have a code to avoid conflict of interest
for the members of the Board
(b) Agenda and Minutes of SEBI Board meetings to be made
public (thru website)