ROLES AND RESPONSIBILITIES IN A PUBLIC ISSUE

ROLES AND RESPONSIBILITIES IN A PUBLIC ISSUE (Part 1)

Key Concept 1: Introduction to Roles and Responsibilities

Definition: A public issue of shares involves various entities with distinct roles and responsibilities, including the lead manager, registrar and transfer agents, bankers, and brokers.
Details: The lead manager is primarily responsible for the issue process, while other entities have specific roles and responsibilities as outlined by SEBI.

Key Concept 2: Registrar and Transfer Agents

Role: Registrar and Transfer Agents (R&T agents) play a significant role in a public issue, appointed by the issuer in consultation with the lead manager.
Responsibilities:
- Pre-issue work: Enter into Escrow Agreement, Share Escrow Agreement, Syndicate Agreement, and Underwriting Agreement.
- Liaising with Depositories for ISIN and tripartite agreement.
- Dematerialization of existing shareholders' equity shares.
- Providing instructions to Self-Certified Syndicate Banks (SCSBs) and Designated Intermediaries.
- Intimation of processing fees and brokerage.
Post-issue work:
- Procuring and collecting final certificates from SCSBs.
- Checking accuracy of certificates and confirming receipt within specified time limits.
- Obtaining Demographic Details of Bidders from Depositories and validating data.
- Preparing rejection list, Bid file, and reconciling compiled data.
- Ensuring Basis of Allotment is in accordance with SEBI regulations.
- Assisting in seeking approval of Basis of Allotment with the Designated Stock Exchange.
- Preparing lists of valid applications, rejected Bids, and technical rejection list.
- Sending Confirmation Allocation Note (CAN) and Allotment Advice.
- Maintaining electronic records of Bids, allocation, and allotment.

Key Concept 3: Sponsor Bank

Definition: A Sponsor Bank is registered with SEBI as Banker to an Offer and has obtained UPI certification from NPCI.
Role: Acts as a conduit between Stock Exchanges and NPCI to push mandate collect requests and payment instructions of retail investors into the UPI mechanism.

Key Concept 4: Bankers to the Issue

Definition: Banker to an issue means a scheduled bank or other banking company specified by SEBI to carry out activities such as acceptance of application and application monies.
Responsibilities:
- Acceptance of application and application monies.
- Acceptance of allotment or call monies.
- Refund of application monies.
- Payment of dividend or interest warrants.
Application Supported by Blocked Amount (ASBA):
- Mandatory mode of payment in Initial Public Offerings and Rights Issues for all categories of investors.
- Requires investor's bank to be registered with SEBI as Self-Certified Syndicate Bank (SCSB).
- SCSB identifies designated branches for ASBA submission and provides acknowledgement for receipt of ASBA.

ROLES AND RESPONSIBILITIES IN A PUBLIC ISSUE (Part 2)

Additional Channels for Subscription and Payment

Online ASBA: Allows investors to submit applications and block funds through an online portal of a Self-Certified Syndicate Bank (SCSB).
Physical ASBA: Enables investors to submit applications physically at an SCSB branch.
Additional Online Mode: Allows investors to submit applications through a linked online trading-demat-bank account provided by some brokers.

ASBA Process

An ASBA investor submits an application physically or electronically to an SCSB.
The SCSB blocks the application money in the investor's account until the basis of allotment is finalized or the issue is withdrawn.
The SCSB uploads the application data to a web-enabled interface provided by the stock exchange.
After the basis of allotment is finalized, the registrar provides details to the controlling branch of each SCSB, including the number of shares allotted and the amount to be transferred.

Role and Responsibilities of the Registrar to the Issue regarding ASBA Process

Obtaining Electronic Bid Data: The registrar obtains electronic bid data, including ASBA bid data, from the stock exchange.
Matching DP ID, Client ID, and PAN: The registrar matches the DP ID, Client ID, and PAN specified in the electronic bid file with the depository's database.
Intimating Basis of Commission: The registrar intimates the basis of commission payable to SCSBs before the issue opens.
Providing Details to SCSBs: The registrar provides details to SCSBs, including the number of shares to be allotted, amount to be transferred, and date of transfer.
Maintaining Electronic Records: The registrar maintains accurate electronic records relating to ASBAs.

Unified Payment Interface (UPI) Mechanism

Introduction: UPI is an instant payment system that enables merging of banking features, seamless fund routing, and merchant payments.
Purpose: The purpose of introducing UPI with ASBA is to increase efficiency, eliminate manual intervention, and reduce the time duration from issue closure to listing.

Role and Responsibilities of the Registrar to the Issue regarding UPI Mechanism

Providing Acknowledgement: The registrar provides an acknowledgement to the investor upon receipt of the application.
Obtaining Electronic Bid Details: The registrar obtains electronic bid details from the stock exchange immediately after the bid/offer closing date.
Reconciling Compiled Data: The registrar reconciles the compiled data received from the stock exchange, SCSBs, and sponsor bank.
Rejecting Multiple Applications: The registrar rejects multiple applications determined based on common PAN.
Submitting Cancelled/Withdrawn Applications: The registrar submits details of cancelled/withdrawn applications to SCSBs on a daily basis.

UPI as a Payment Option in Public Issue Process

Filling in Bid Details: The investor fills in bid details in the application form or mobile device/web interface of the intermediary along with their UPI ID.
Uploading Bid Details: The intermediary uploads the bid details along with the UPI ID in the stock exchange bidding platform.
Blocking of Funds: The sponsor bank requests the investor to authorize blocking of funds equivalent to the application amount and subsequently debits funds in case of allotment.

Roles and Responsibilities in a Public Issue

Introduction to UPI Payments

UPI Payments: The Unified Payments Interface (UPI) has become a popular mode of money transfer, and SEBI proposes to offer a structured UPI option for investors making payments to market intermediaries.
Verified UPI ID: A verified UPI ID is linked to a validated bank account, ensuring secure transactions.
RTAs: Registrar and Transfer Agents (RTAs) are required to make the UPI facility available by October 1, 2025.

Responsibilities of the Registrar to the Issue

Create Investor Awareness: Create awareness about UPI payment handles and "SEBI Check" functionality through various modes.
Educational Content: Create awareness and educational content for investors by placing relevant FAQs on respective websites.

Brokers to the Issue/Syndicate Members/Designated Intermediaries

Role of Brokers: Brokers to the issue are appointed to facilitate the collection of application forms and bids.
Responsibilities: They are responsible for collecting the bid/application forms and ensuring that it is accompanied by a payment instrument.

Indicative Timeline of Activities for Listing of Shares through Public Issues

Application Submission: Electronic applications can be submitted up to 5 pm on the issue closing date (T day).
Bid Modification: Bid modification can be done from the issue opening date up to 5 pm on T day.
Validation of Bid Details: Validation of bid details with depositories can be done from the issue opening date up to 5 pm on T day.
Reconciliation of UPI Mandate Transactions: Reconciliation of UPI mandate transactions is done on a daily basis.

Sequence of Activities for Listing within T+3 Days

Issue Closure: Issue closure is at 4 pm on T day for QIB and NII categories, and 5 pm on T day for retail and other reserved categories.
Submission of Final Certificates: Submission of final certificates for UPI ASBA, Bank ASBA, and Syndicate ASBA is before 09:30 pm on T day.
Third-Party Check: Third-party check on UPI applications is done on a daily basis and completed before 9:30 AM on T+1 day.
Finalization of Rejections: Finalization of rejections and completion of the basis is done before 6 pm on T+1 day.
Approval of Basis: Approval of the basis by the Stock Exchange is done before 9 pm on T+1 day.
Issuance of Fund Transfer Instructions: Issuance of fund transfer instructions is initiated not later than 09:30 am on T+2 day.
Corporate Action Execution: Corporate action execution for credit of shares is initiated before 2 pm on T+2 day.
Filing of Listing Application: Filing of the listing application with Stock Exchanges and issuance of the trading notice is done before 7:30 pm on T+2 day.
Publish Allotment Advertisement: Publish allotment advertisement on the website of the Issuer, Merchant Banker, and RTI before 9 pm on T+2 day.
Trading Starts: Trading starts on T+3 day.

Sample Questions

The role and responsibility of each constituent (intermediary) in an issue process is defined by the lead manager.
- Answer: b. FALSE
In an initial public offer of shares, which of the following modes of payment is mandatory?
- Answer: c. Application supported by blocked amount
Register of Members and Allotment Registers are prepared by which of the following?
- Answer: b. Registrar and Transfer Agents
Bankers to an issue are appointed by the _______ for an anchor investor.
- Answer: a. Issuers
Registrar to the Issue shall maintain accurately, at all times, the electronic records relating to ASBAs.
- Answer: a. TRUE