Coming soon: the ‘e‑IPO’ to bring down the listing time period

Mar­ket reg­u­la­tor Secu­ri­ties and Exchange Board of India (SEBI) aims to reduce the peri­od between the clos­ing of an ini­tial pub­lic offer­ing (IPO) and com­mence­ment of trad­ing on stock exchanges to five-six days, against 12 days at present.

The SEBI board, in its meet­ing on Novem­ber 19, approved a dis­cus­sion paper on using the sec­ondary mar­ket mech­a­nism for issuance of shares in ini­tial pub­lic offers through e‑IPOs. Our aim is to bring down T+12 to T+5 or T+6 for listing.

‘T’ refers to the date the issue clos­es and ‘plus’ indi­cates the num­ber of days it will take for shares sold through an IPO to be avail­able for trad­ing. Though e‑IPOs have been in the pipeline for some time, a for­mal deci­sion could not be tak­en due to var­i­ous reg­u­la­to­ry issues.

The SEBI board was informed on Novem­ber 24, 2011, that imple­ment­ing e‑IPOs would require amend­ments to the Com­pa­nies Act and dis­pens­ing with the require­ment for an investor to “agree in writ­ing”, since no appli­ca­tion form is involved as the share allot­ment will be made through demat accounts.

The Min­istry of Cor­po­rate Affairs has held the view that in the case of sub­scrip­tion of ‘to be list­ed’ shares in demat form, it may not be nec­es­sary for an investor to “agree in writing”.