Streamlining the process of public issue of equity shares and convertibles by SEBI

Jul 03, 2019 | by Avantis RegTech Legal Research Team


The Securities and Exchange Board of India (SEBI) on June 28, 2019, has issued a Circular to streamline the process of public issue of equity shares and convertibles. The SEBI had introduced the use of Unified Payments Interface (UPI) as a payment mechanism with Application Supported by Block Amount (ASBA) for applications in public issues by retail individual investors through intermediaries (Syndicate members, Registered Stock Brokers, Registrar and Transfer agent and Depository Participants) with effect from January 01, 2019 vide Circular No. SEBI/HO/CFD/DIL2/CIR/P/2018/138 dated November 01, 2018. The timeline for implementation of Phase I of the aforesaid Circular was extended by 3 months that is till June 30, 2019, vide Circular No. SEBI/HO/CFD/DIL2/CIR/P/2019/50 dated April 3, 2019, in order to ensure that the transition to UPI in ASBA is smooth for all the stakeholders.

 Implementation of Phase II of Unified Payments Interface with Application Supported by Block Amount: The Phase II of the Circular dated November 01, 2018, shall become effective from July 1, 2019. Thereafter, for applications by retail individual investors through intermediaries, the existing process of, investor submitting bidcum-application form with any intermediary along with bank account details, and movement of such application forms from intermediaries to Self-Certified Syndicate Banks (SCSBs) for blocking of funds, will be discontinued. The implementation of Phase III shall continue unchanged as per the aforesaid Circular from the date of completion of Phase II.

 SEBI has specified the path to check the status of applications through UPI in IPOs can be made only through the SCSBs or mobile applications (apps) whose name appears on the SEBI website (www.sebi.gov.in).

 Retention of forms by Intermediaries: The intermediaries shall retain physical application forms submitted by retail individual investors with UPI as a payment mechanism, for a period of six months and thereafter forward the same to the issuer / Registrar to Issue. However, in case of Electronic forms, “printouts” of such applications need not be retained or sent to the issuer. Intermediaries shall, at all times, maintain the electronic records relating to such forms for a minimum period of three years.

 The aforesaid Circulars dated November 1, 2018, and April 03, 2019 shall stand modified to the extent stated under this Circular.

[SEBI Circular No. SEBI/HO/CFD/DIL2/CIR/P/2019/76]


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