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ASBA mandatory for non-retail investors from May: Sebi

ASBA mandatory for non-retail investors from May: Sebi

Mumbai: Market regulator Sebi on Monday made it mandatory for non-retail investors to apply for shares in public and rights offers through ASBA facility - where money is debited from investor’s account only after share allotment.

“The ASBA (Application Supported by Blocked Amounts) facility shall be mandatory for non-retail investors making applications in public/rights issues with effect from 1 May, 2011," chairman C B Bhave said after a Sebi board meeting in Mumbai.

The new norm would be applicable to all non-retail investors - qualified institutional buyers and non-institutional investors - bidding for shares in public offers of the companies as also rights offers, where shares are sold to existing shareholders only.

Sebi had introduced ASBA facility for public offers first in September 2008, when retail investors were allowed to invest through this facility. The move avoids the investors’ money getting blocked between the time of bidding for shares and final allotment.

Under ASBA mechanism, investors can bid for shares while the money remains in his/her bank account and gets debited only after allotment of the shares.

The facility eliminates any delays related to refunds for the unallotted shares. Initially, the facility was offered to retail investors only and was given to other investors in 2009. However, it is not yet mandatory for retail investors to use ASBA facility.

New norms for co takeovers, bourses to take time

Bhave further said that the decision on the new Takeover Code has been deferred. The Takeover Code relates to changes in a host of regulations governing the merger and acquisitions of listed companies.

Asked about the Jalan Committee report, which has recommended sweeping changes in the way stock exchanges and other market infrastructure institutions are owned and run, Bhave said the matter was not discussed at all.

While the Sebi is awaiting some more clarity from the government on the Takeover Code, the regulator is still collating the feedback received on Jalan panel recommendations, he said.

The Takeover Code has been awaiting a clearance for many months now and has been discussed in at least three meetings of the Sebi board, which has representations from the government also, so far without any final decision.

Whenever the government completed its consultations, Sebi will take decision on Takeover Code, Bhave added.

While Bhave did not specify any reasons for delay in decisions on these two major issues, sources close to the development said that the government is of the view that these matters could be best taken up by the next Sebi chief.

Bhave’s three-year term as Sebi chief ends on 17 February and he would be succeeded by U K Sinha, chief of fund house UTI AMC and chairman of mutual fund industry body Amfi.

Sebi had begun the process of finalising its guidelines on the way bourses are owned and do business, based on the feedback received on recommendations made by the Jalan committee on this matter, in January it self.

Sebi had put forth the recommendations made by the Bimal Jalan Committee for review of ownership and governance norms for market infrastructure institutions on 23 November, 2010 and had invited public comments on the same till 31 December

The committee suggested sweeping changes in the way stock exchanges are owned and function and its proposals include capping their profitability and not allowing them to get listed to safeguard their front-line regulatory role.

The proposals generated intense debate and opposition has been raised to various proposals including non-listing of bourses and cap on profitability, terming them as measures that would push the investors away.

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