Securities and exchange board of India (SEBI) has announced standardized lot size for initial public offer. There was no rule or less clarity about the lot of IPO as the applicant need to make calculations of the lot and amount subscription. So SEBI move to announce the lot size of shares according to the price is very vital.
CIRCULAR NO. MRD/DSA/06/2012, DATED 21-2-2012
1. SEBI vide circular dated May 18, 2010 prescribed the framework for setting up of a stock exchange/trading platform by a recognized stock exchange having nationwide trading terminals for Small and Medium Enterprises (SMEs).
2. In this regard it has been decided to standardize the lot size for Initial Public Offer proposing to list on SME exchange/platform and for the secondary market trading on such exchange/platform, as given under:
|Price Band (in Rs.)||Lot Size (No. of shares)|
|Up to 14||10000|
|more than 14 up to 18||8000|
|more than 18 up to 25||6000|
|more than 25 up to 35||4000|
|more than 35 up to 50||3000|
|more than 50 up to 70||2000|
|more than 70 up to 90||1600|
|more than 90 up to 120||1200|
|more than 120 up to 150||1000|
|more than 150 up to 180||800|
|more than 180 up to 250||600|
|more than 250 up to 350||400|
|more than 350 up to 500||300|
|more than 500 up to 600||240|
|more than 600 up to 750||200|
|More than 750 up to 1000||160|
3. At the Initial Public Offer stage the Registrar to Issue in consultation with Merchant Banker/s, Issuer and the Stock Exchange shall ensure to finalize the basis of allotment in minimum lots and in multiples of minimum lot size, as per the above given table. The secondary market trading lot size shall be the same, as shall be the IPO Lot Size at the application/allotment stage, facilitating secondary market trading.
4. At the Initial Public Offering stage if the price band decided, falls within two different price bands than the minimum application lot size shall be decided based on the price band in which the higher price falls into. For example: if the proposed price band is at 24-28 than the Lot size shall be 4000 shares.
5. The lot size shall not be reduced by the exchange to below the initial lot size if the trading price is below the IPO issue price.
6. The Stock Exchanges can review the lot size once in every 6 months/wherever warranted, by giving an advance notice of at least one month to the market. However, as far as possible the stock exchange shall ensure that odd lots are not created.
7. Further, the stock exchanges shall ensure that the lot size shall be the same for a securities traded across the Exchanges.
8. In case of oversubscription, if the option to retain ten per cent of the net offer to public for the purpose of making allotment in minimum lots is exercised, then it shall be ensured by the Issuer/Stock Exchanges/Merchant Bankers that the post-issue paid-up capital of the issuer does not go beyond Rs. 25 crore.
9. All the Stock Exchanges are advised to :
i. make necessary amendments, if any, to the relevant bye-laws, rules and regulations for the implementation of the above decision;
ii. disseminate the same on their website for easy access to the issuers and other market participants;
iii. communicate to SEBI, the status of implementation of the provisions of this circular in the Monthly Development Report.
10. This Circular is issued in exercise of the powers conferred under Section 11 (1) of the Securities and Exchange Board of India Act, 1992, read with Section 10 of the Securities Contracts (Regulation) Act, 1956 to protect the interests of investors in securities and to promote the development of, and to regulate the securities market and shall come into effect immediately.
11. This Circular is available on SEBI website at www.sebi.gov.in.