SEBI reduces time to disclose IPO price to two days | india | Hindustan Times
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SEBI reduces time to disclose IPO price to two days

Market regulator SEBI reduced the time period for disclosing the price band of an initial public offer from two weeks to two days, a move that will help the companies take into account current market conditions before announcing the offer price.

india Updated: Feb 03, 2009 11:43 IST

Market regulator SEBI on Monday reduced the time period for disclosing the price band of an initial public offer (IPO) from two weeks to two days, a move that will help the companies take into account current market conditions before announcing the offer price.

"It has been decided to amend the Disclosures and Investor Protection (DIP) Guidelines to enable the issuer company making an IPO declare the floor price/ price band at least two working days before the date of opening of IPO," the market regulator said after its board meeting.

However, it is subjected to wide dissemination of price band through advertisements and shall also disclose the financial ratios calculated for both upper and lower end of the price band, it added.

At present, in terms of DIP guidelines, in case of an IPO, either the floor price or the price band is required to be disclosed in the Red Herring Prospectus (RHP), that is, about two weeks before the date of opening of the IPO.

SEBI also amended the listing agreement to see that listed entities shall declare dividend on per-share basis only.

"At present, there is no uniformity in declaring dividend. Some companies declare dividend on per share basis and some as a percentage of face value of the shares," Sebi said.

It added that the declaration of dividend as a percentage of face value has the potential to mislead the investors in case face values of the shares of two companies are different.

The market regulator has also reduced the period for completing a bonus issue to 15 days, where no shareholders' approval is required and to 60 days where shareholders' nod is need.

At present, listed companies are required to complete a bonus issue within a maximum period of six months from the date of approval of the issue by the board of the company.

SEBI has also amended the DIP guidelines to increase the upfront margin to be paid by allottees of warrants to 25 per cent. Currently, the allottees of warrants are required to pay a margin of 10 per cent as upfront payment at the time of allotment.