Electronic book mechanism for issuance of securities on private placement basis - Clarifications
Summary
This circular clarifies and expands the Electronic Book Provider (EBP) mechanism for private placement of securities in India. It introduces new facilities including closed bidding, multiple yield allotment, and pay-in via issuer escrow accounts. The document also details the procedural amendments to existing regulations and defines responsibilities for issuers and registrars.
Text
In addition to the current system of open bidding, closed bidding shall also be permitted on EBP platform subject to the issuer disclosing the mode of bidding in the PPM/IM. Under closed bidding, there shall be no real time dissemination of bids on the EBP platform.
An issuer can choose either uniform yield or multiple yield allotment, provided the same is disclosed in the PPM/IM.
Investors are now permitted to place multiple bids in an issue.
Allotment to the bidders shall be done on the basis of "Yield-time priority". Thus, allotment shall be done first on "yield priority" basis, however, where two or more bids are at the same yield, then the allotment shall be done on "time - priority" basis. Further, if two or more bids have the same yield and time, then allotment shall be done on " pro-rata" basis.
In addition to the current process of pay-in of funds through clearing corporation of Stock Exchanges, the pay-in of funds towards an issue on EBP shall also be permitted through escrow bank account of an issuer. An issuer, in its PPM/IM, shall disclose the manner of funds pay-in so chosen and details thereof.
In addition to the Stock Exchanges, Depositories can also act as EBP.
The contents of this circular will come in effect from October 01, 2018.
This Circular is issued in exercise of the powers conferred under Section 11(1) read with regulation 31(2) of ILDS Regulations of the Securities and Exchange Board of India Act, 1992.
Electronic Book Providers are directed to: 5.1. comply with the conditions laid down in this circular; 5.2. put in place necessary systems and infrastructure for implementation of this circular; 5.3. make consequential changes, if any, to their bidding portal and respective bye-laws; and 5.4. communicate and create awareness about these revised guidelines amongst issuers, arrangers and investors.
"Electronic Book Provider" or "EBP" means a recognized stock exchange or a recognised depository, which pursuant to obtaining approval from SEBI, provides an electronic platform for private placement of securities.
Additional clauses require disclosure of: Manner of bidding (open/closed), Manner of allotment (uniform/multiple yield), Manner of settlement (clearing corp/escrow), and Settlement cycle (T+1/T+2).
Pay in shall be done through the clearing corporation of Stock Exchanges... or through an escrow bank account of the issuer... Provided that where the issuer has selected the escrow bank account as the mechanism for pay-in, EBP, pursuant to successful closure of issue, shall share the allocation details with the Registrar to an Issue...
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Source: SecMarx — Electronic book mechanism for issuance of securities on private placement basis - Clarifications. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.