SEBI clarifies Electronic book mechanism for issuance of securities on private placement basis

Aug 17, 2018 | by Avantis RegTech Legal Research Team


Securities and Exchange Board of India (SEBI) vide circular dated August 16,2018 has clarified  Electronic book mechanism for issuance of securities on private placement basis.

This is in continuation to SEBI circular No. SEBI/HO/DDHS/CIR/P/2018/05 dated January 05, 2018 (hereinafter "EBP Circular"), which mandated the use of Electronic Book Provider platform (EBP Platform), for private placement of securities.

Salient Features of Additional Facilities-

a) Closed bidding In addition to the current system of open bidding, closed bidding shall also be permitted on EBP platform subject to the issuer disclosing the mode of bidding in the PPM/IM. Under closed bidding, there shall be no real time dissemination of bids on the EBP platform.

b) Multiple yield allotment An issuer can choose either uniform yield or multiple yield allotment, provided the same is disclosed in the PPM/IM.

c) Multiple bids by an investor Investors are now permitted to place multiple bids in an issue.

d) Allotment on yield-time priority basis Allotment to the bidders shall be done on the basis of "Yield-time priority". Thus, allotment shall be done first on "yield priority" basis, however, where two or more bids are at the same yield, then the allotment shall be done on "time - priority" basis. Further, if two or more bids have the same yield and time, then allotment shall be done on " pro-rata" basis.

 e) Pay-in of funds through escrow bank account of issuer In addition to the current process of pay-in of funds through clearing corporation of Stock Exchanges, the pay-in of funds towards an issue on EBP shall also be permitted through escrow bank account of an issuer. An issuer, in its PPM/IM, shall disclose the manner of funds pay-in so chosen and details thereof. The process of pay-in of funds by investors and pay-out to issuer can be done on either T+1 or T+2 day, where T day is the issue day, and the same shall be disclosed by issuer in PPM/IM.

 f) Depositories to act as EBP In addition to the Stock Exchanges, Depositories can also act as EBP

The contents of this circular will come in effect from October 01, 2018.

[SEBI/HO/DDHS/CIR/P/2018/122]

 

URL- https://www.sebi.gov.in/legal/circulars/aug-2018/electronic-book-mechanism-for-issuance-of-securities-on-private-placement-basis-clarifications-_40007.html


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