Compensation to Retail Individual Investors (RIIs) in an IPO
Summary
This circular establishes a uniform policy for calculating minimum compensation payable to Retail Individual Investors in IPOs due to Self Certified Syndicate Bank failures. It defines a specific formula based on listing gains, number of shares, and allotment probability, with special provisions for non-oversubscribed issues. The document outlines grievance redressal timelines for banks and SEBI's authority to initiate action for non-compliance.
Text
Instances where applicants failed to get allotment and suffered opportunity loss due to SCSB failure to make bids, process applications, or other rejections.
Factors taken into account include opportunity loss, oversubscription number, probability of allotment, and listing gains.
Compensation = (Listing price - Issue Price) X No. of shares that would have been allotted if bid was successful X Probability of allotment.
In case of issues subscribed between 90-100%, applicants are compensated for all shares they would have been allotted.
No compensation is payable if the listing price is below the issue price.
RTAs shall share the basis of allotment file if sought by SCSBs to help arrive at compensation.
Applicants may seek redressal within three months; SCSBs must resolve within 15 days, paying 15% p.a. interest for delays beyond this period.
SEBI may initiate action as deemed fit if SCSBs fail to redress grievances within the stipulated time.
Circular comes into force with immediate effect; SCSBs advised to resolve pending issues using this policy.
Issued in exercise of powers under section 11 read with section 11A of the Securities and Exchange Board of India Act, 1992.
Source: SecMarx — Compensation to Retail Individual Investors (RIIs) in an IPO. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.