Regulation for Withdrawal of Applications by Retailers and Hni in an Ipo

<h1>Regulation for Withdrawal of Applications by Retailers and Hni in an Ipo</h1>Author: <a title="Alan Peter" href="http://www.articlesbase.com/authors/alan-peter/27618.htm">Alan Peter</a> Lot of pressure was put on the share brokers and investors with 20 per cent fall in market value as a result sharp decline in the last three days. As a result of the squeeze investors were hard pressed for cash. They got some relief with Finance Minister and RBI assuring them that all legitimate requirements will be met. Some of the investors also rushed to cash in huge amounts invested in recently issued IPOs including Reliance Power. Under rules the investors are allowed to with their investment till the stock is listed. This had been the case in some earlier issues also like Deccan Air and Cairn Energy.

In an IPO, companies invite applications for shares sought to be enlisted by them in a Stock Exchange. The subscription in an IPO can either through book-built process by inviting bids from the prospective investors or on a fixed price basis. Issue of securities in an IPO is, inter alia, governed by SEBI (Disclosures and Investors Protection) Guidelines, 2002 - popularly known as SEBI DIP Guidelines.

SEBI DIP Guideline at Para no 11A.7.7 also provides that an applicant can withdraw applications in a public issue. Thus, in a book-built issue the applicants can withdraw their applications anytime before allotment of shares / securities by the company. This is emanating from the fundamental principle under Law of Contracts that an offer can be revoked before acceptance. The bids made by the bidders (applicants) is an offer made and allotment of securities by the companies only brings into a binding contract between the bidder and the company and, therefore, an application in a public issue can be withdrawn by the applicant depending upon the market scenario post subscription/closure of the IPO but before allotment even if the application money has been realized by the company. However, as per Clause 11.3.4.1 of the SEBI DIP Guidelines, only Qualified Institutional Bidders (QIBs) are not allowed to withdraw their bid after the closure of the bid. This is to prevent any possible manipulation of the IPO subscription by the QIBs.

Instances have happened in our country where investors have withdrawn their applications in an IPO. IPO made by Purvankara Projects, Deccan Airlines, Cairn Energy, Housing Development Infrastructure Limited, IVR Prime, KPR Mills, have seen withdrawal of applications by retailers and HNI categories before allotment.

About the Author: Article Source: <a href="http://www.articlesbase.com/">ArticlesBase.com</a> - <a href="http://www.articlesbase.com/business-articles/regulation-for-withdrawal-of-applications-by-retailers-and-hni-in-an-ipo-312597.html" title="Regulation for Withdrawal of Applications by Retailers and Hni in an Ipo">Regulation for Withdrawal of Applications by Retailers and Hni in an Ipo</a>

Lot of pressure was put on the share brokers and investors with 20 per cent fall in market value as a result sharp decline in the last three days. As a result of the squeeze investors were hard pressed for cash. They got some relief with Finance Minister and RBI assuring them that all legitimate requirements will be met. Some of the investors also rushed to cash in huge amounts invested in recently issued IPOs including Reliance Power. Under rules the investors are allowed to with their investment till the stock is listed. This had been the case in some earlier issues also like Deccan Air and Cairn Energy.

In an IPO, companies invite applications for shares sought to be enlisted by them in a Stock Exchange. The subscription in an IPO can either through book-built process by inviting bids from the prospective investors or on a fixed price basis. Issue of securities in an IPO is, inter alia, governed by SEBI (Disclosures and Investors Protection) Guidelines, 2002 - popularly known as SEBI DIP Guidelines.
SEBI DIP Guideline at Para no 11A.7.7 also provides that an applicant can withdraw applications in a public issue. Thus, in a book-built issue the applicants can withdraw their applications anytime before allotment of shares / securities by the company. This is emanating from the fundamental principle under Law of Contracts that an offer can be revoked before acceptance. The bids made by the bidders (applicants) is an offer made and allotment of securities by the companies only brings into a binding contract between the bidder and the company and, therefore, an application in a public issue can be withdrawn by the applicant depending upon the market scenario post subscription/closure of the IPO but before allotment even if the application money has been realized by the company. However, as per Clause 11.3.4.1 of the SEBI DIP Guidelines, only Qualified Institutional Bidders (QIBs) are not allowed to withdraw their bid after the closure of the bid. This is to prevent any possible manipulation of the IPO subscription by the QIBs.

Instances have happened in our country where investors have withdrawn their applications in an IPO. IPO made by Purvankara Projects, Deccan Airlines, Cairn Energy, Housing Development Infrastructure Limited, IVR Prime, KPR Mills, have seen withdrawal of applications by retailers and HNI categories before allotment.

Rate this Article:

5 / 5 stars - 1 vote(s)

Re-Publish

Article Source: http://www.articlesbase.com/business-articles/regulation-for-withdrawal-of-applications-by-retailers-and-hni-in-an-ipo-312597.html

Article Tags: Ipo, Sebi, Reliance Power

Related Videos
Related Articles
Ask / Related Q&A

Play

Learn about More on IPOs

Play

Learn about An IPO

Play

Learn about Equity vs. Debt

Play

What is Equity

Play

How to Use Basic Key Framing and IPO Curves in Blender

Latest Business Articles
More from Alan Peter

How To Craft Sales Offers That Work Easily and Often

By: Sue Painter | 25/12/2009
Sue talks about the top three mistakes entrepreneurs and sale professionals make when crafting their offers. Realizing that people buy on emotion and tips on how to bring emotions into the offer will help your bottom line.

Gaining An Understanding Of Drop Forged Rivetless Chain And Its Applications

By: Paul Timmerman | 25/12/2009
Conveyor systems universally use drop forged rivetless chain. Throughout the world, there are millions of feet used in several types of industrial plants. The chain gives steady reliable round-the-clock service to these industries. Approximately 90% of all overhead trolleys use conveyor chain of the drop forged rivetless sort. For the...

How to Make $50 Dollars Per Day For Free

By: Vahid Lancaster | 25/12/2009
You may have heard of a very popular PTC website that pays you to click ads. This is a guide for how to make REAL money with this website, without actually paying them a dime from your own money. To get full access to the website that I'm talking about, please...

Bristol Restaurants Look Forward To Economic Recovery

By: Elizabeth Cooling | 25/12/2009
Restaurants in Bristol are forecasting continuing commercial success as the south-west recovers from the global recession, as an increasing number of local residents return to the city's eateries to shore-up the region's leisure and entertainment sectors. Bristol, UK (2 December 2009) - - Restaurants and diners across Bristol are anticipating growing...

HTC T5353, Windows mobile 6.1 smart phone with WIFI Gravity inducer function JAVA

By: agoodic | 25/12/2009
Operating System:Windows Mobile? 6.1 Professional Wi-Fi: IEEE 802.11 b/g Triband GSM900/1800/1900 Dual cameras,flash light for the back camera Built-in MSN,QQ,UC Web6

The Shoes that Ooze Sex Appeal Manolo Blahniks and Don't Miss Out

By: Damien Gillespie | 25/12/2009
Manolo Blahnik shoes entered the public eye on Sex in the town, when character Carrie Bradshaw claimed they were the shoes to die for. Manolo Blahniks were even dubbed as the 5th personality of the show, as sales soared as a result. Actress, Sarah Jessica Parker in real life, claims to have over 100 pairs of Manolo Blahniks, maybe the most active envoy for Manolo Blahnik heels High sales should come as little surprise, as Manolo Blahniks unique designs please women all around the...

Copy HTC Touch Diamond2 T5353 Quad Band Cell Phone

By: agoodic | 25/12/2009
HTC Touch Diamond2 T5353 arranges your conversations by people,not just by how you speak with them.When looking at your contacts,you now can see a history of your conversation in whatever form it took place.The Touch Diamond2 is your perfect companion in both the way it helps you keep in the loop and the way it accentuates your sense of style.

Benefits of using 3D CAD Design & 3D Modeling compared to 2D method

By: Richard Botham | 25/12/2009
With 2D views, projections might show a specific member in several different views while other members might be completely omitted to maintain drawing precision. This results in poor quantity estimation.