Raman Ltd. issued 50 Lakh equity shares at a price of ₹ 200 per share. The company provided Green Shoe Option for stabilizing the post listing price of the shares. The issue was oversubscribed and it was decided that sta
CS Executive · Securities Laws and Capital Markets · PYQS · December 2020
Raman Ltd. issued 50 Lakh equity shares at a price of ₹ 200 per share. The company provided Green Shoe Option for stabilizing the post listing price of the shares. The issue was oversubscribed and it was decided that stabilizing agent would borrow maximum number of shares permitted by SEBI (ICDR) regulations. Due to rise in price during Green Shoe Option period, only 5 Lakh shares could be bought back at the price of ₹ 180. You are required to : (i) Calculate the number of shares that the stabilizing agent needs to borrow in this case at the time of allotment and explain the same with relevant provisions.
Answer & Explanation:
As per SEBI (ICDR) Regulations, 2018, the maximum number of shares that can be borrowed by the stabilizing agent shall not be in excess of 15% of the issue size. In the given case, stabilizing agent can borrow 7.5 Lakh shares (15% of 50 Lakh shares).
Topics: Public Issues
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