N O T I C E
Dated:
30th August, 2018
Trading Members are hereby informed that the Exchange
has received a Circular from SEBI Vide Ref. No. SEBI/HO/DDHS/CIR/P/2018/122,
Dated August 16, 2018 regarding Electronic book mechanism for issuance of
securities on private placement basis-Clarifications. The contents of
the said circular are reproduced hereunder for information of trading members.
Quote:
-
CIRCULAR
SEBI/HO/DDHS/CIR/P/2018/122 August 16, 2018
To
All Recognized Stock Exchanges (except Commodity Exchanges)
All
Recognized Depositories
Issuers of debt securities/NCRPS
Merchant Bankers and Brokers registered with
SEBI
Registrars to an Issue
Primary
Dealers registered with RBI
Dear Sir / Madam,
Sub: Electronic book mechanism for
issuance of securities on private placement basis- Clarifications
1. This is in
continuation to SEBI circular No. SEBI/HO/DDHS/CIR/P/2018/05 dated January
05, 2018 (hereinafter "EBP Circular"), which mandated the use of
Electronic Book Provider platform (EBP Platform), for private placement of
securities.
2. With a view to
further rationalise and ease the process of issuance
of securities onEBP platform and in consultation with
the market participants, it has been decided to provide for the following
additional facilities:
a) Closed bidding
In addition to the current system of open bidding,
closed bidding shall also bepermitted on EBP platform
subject to the issuer disclosing the mode of bidding inthe
PPM/IM. Under closed bidding, there shall be no real time dissemination of bids
on the EBP platform.
b) Multiple yield allotment
An issuer can choose either uniform yield or multiple
yield allotment, provided the same is disclosed in the PPM/IM.
c) Multiple bids by an investor
Investors are now permitted to place multiple bids in
an issue.
Page
1 of 2
d) Allotment on yield-time priority basis
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.
e) Pay-in of funds through escrow bank account
of issuer
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. The process of pay-in of funds by investors and pay-out to
issuer can be done on either T+1 or T+2 day, where T day is the issue day, and
the same shall be disclosed by issuer in PPM/IM.
f) Depositories to act as EBP
In addition to the Stock Exchanges, Depositories can
also act as EBP.
3. In line with the
changes described above the amendments to the EBP Circular dated January 05,
2018 are placed at Annexure-A to this circular.
4. The contents of this
circular will come in effect from October 01, 2018.
5. 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.
6. This Circular is available on SEBI website at www.sebi.gov.in
under the categories “Legal Framework” and under the drop down “Corp Debt
Market”.
Yours faithfully,
Richa G. Agarwal
Deputy
General Manager
Department of
Debt and Hybrid Securities
Tel No.022-2644 9596
Email id - richag@sebi.gov.in
Unquote: -
Trading Members are requested to take note of the
aforesaid guidelines of SEBI and act accordingly.
Dhiraj
Chakraboty
Deputy
General Manager
Encl :
Annexure
Page 2 of 2
Annexure
- A
A.
Para 5 of the EBP circular is modified to read as under:
5. 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.
B. Clause 1.1.5 of Schedule - A of the EBP circular is
modified to read as under:
"Electronic Book
Provider" or "EBP" means a recognized stock exchange or a
recognized depository, which pursuant to obtaining approval from SEBI, provides
an electronic platform for private placement of securities.
C. Clause 3.3.1 of Schedule - A of the EBP circular is
modified to read as under:
Details of size of the
issue and green shoe option, if any, and a range within which green shoe may be
retained (if applicable).
D. Following additional clauses are added after clause
3.3.3 of Schedule - A of the EBP circular:
3.3.4 Manner of bidding in
the issue i.e. open bidding or closed bidding. 3.3.5 Manner of allotment in the
issue i.e. uniform yield allotment or multiple yield allotment. 3.3.6 Manner of
settlement in the issue i.e. through clearing corporation or through escrow
bank account of issuer. 3.3.7 Settlement cycle i.e. T+1 or T+2 day.
E. Clause 5.9 of Schedule - A of the EBP circular is
modified to read as under:
Pay in shall be done
through the clearing corporation of Stock Exchanges, as per their operating
guidelines, or through an escrow bank account of the issuer, as per Annexure B.
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, associated with the
issue.
F. Clause 6.3.4 of
Schedule - A of the EBP circular shall be deleted.
G. Clause 6.3.6 of Schedule - A of the EBP circular is
modified to read as under:
All the bids made in a particular issue, shall be
disclosed on the EBP platform, in the following format:
Table
2
Yield (%) |
Demand at that particular yield ( in
Rs. Crore) |
Cumulative Demand (in Rs. Crore) |
|
|
|
For issues with open
bidding, the aforesaid information shall be disseminated on a real time basis,
however, for issues with closed bidding, the information shall be disseminated
after closure of bidding.
H. Clause 6.3.7 of Schedule - A of the EBP circular is
modified to read as under:
6.3.7 Allotment to the
bidders shall be done on yield-time priority basis in the following manner:-
a)
allotment would be done first on "yield
priority" basis;
b)
where two or more bids are at the same yield, then the
allotment shall be done on "time-priority" basis;
c)
where two or more bids have the same yield and time,
then allotment shall be done on "pro-rata" basis
I. In Clause 7.1 of the
of Schedule - A of the EBP circular "A recognized stock exchange identified to act as an EBP" shall
be replaced by "An electronic
book provider"
J. Clause 7.4.8 of Schedule - A of the EBP circular
shall be deleted.
Annexure-B
A. Process flow of settlement,
where funds pay-in is to be made to escrow bank account of issuer
a. Successful bidders,
in an issue, will make pay-in of funds towards the allocation made to them, in
the escrow bank account within the timelines, as provided by the issuer in the
PPM/IM. The funds pay-in by the successful bidders will be made only from the
bank account(s), which have been provided/updated in the EBP system. Further,
pay-in received from any other bank account will lead to cancellation of bid
and consequent debarment of the investor from accessing EBP platform for 30
days.
b. Escrow bank, pursuant
to receipt of funds will provide a confirmation to the RTA, associated with the
issue, about receipt of funds along with details including name of bank account
holder, bank account number and the quantum of funds received.
c. RTA, will then
reconcile the information received from escrow bank with the details as provided
by EBP and after reconciliation RTA shall intimate to the issuer about receipt
of funds. Subsequently, issuer will initiate the process of corporate action
through the RTA to Depository.
d. RTA, after passing on the instructions for
corporate action to the depositories, will issue instruction to the escrow bank
to release money to the issuers bank account.
B. Responsibilities of various entities involved in
the process
Issuer shall;
a. open an escrow bank
account/ have a escrow bank account jointly with a
RTA, where the role of the RTA in operating such bank account shall be limited
to the responsibilities as provided under this circular;
b. provide the details
of escrow bank account in which pay-in of funds has to be made and the
timelines by which such pay-in shall be done by the successful bidders;
c. effect corporate action for
credit of securities to the successful bidders, after receiving confirmation
from the RTA about receipt of funds.
RTA shall;
a. undertake
reconciliation between information received from the escrow Bank and EBP.
Further, after reconciliation, shall intimate the issuer about the receipt of funds
and shortfall, if any, and the reasons thereof;
b. issue instructions to
the escrow bank account for the release of funds, after passing on the
instructions for corporate action to the depositories;
c. intimate to the EBP, upon closure
of the issue, the status of the issue i.e. successful or withdrawn, details of
defaulting investors etc.
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