Girdhar (Retail Individual Investor) had applied for Initial Public Offer of Six Sigma Ltd. through Applications Supported By Block Amount (ASBA) process. The Self Certified Syndicate Banks (SCSBs) failed to make bids in

CS Executive · Securities Laws and Capital Markets · PYQS · December 2018
Girdhar (Retail Individual Investor) had applied for Initial Public Offer of Six Sigma Ltd. through Applications Supported By Block Amount (ASBA) process. The Self Certified Syndicate Banks (SCSBs) failed to make bids in the Stock Exchange system even after the amount has been blocked. The issue was oversubscribed. Based on the SEBI guidelines/circulars, answer the following: Calculate the minimum fair compensation payable to Girdhar based on the following information: Listing Price: ₹350, Issue Price: ₹300, Minimum Bid lot-20 shares, probability of allotment of shares on the basis of allotment (ratio 7: 8).

Answer & Explanation:

Calculation of minimum fair compensation is as follows: Compensation = (Listing Price - Issue Price) × No. of Shares that would have been allotted if bid was successful × Probability of allotment of shares determined on the basis of allotment *Listing price shall be taken as the highest of the opening prices on the day of listing across the recognized Stock Exchanges. Compensation amount = (₹350 - ₹300) × 20 shares × (7/8) = ₹50 × 20 × (7/8) Compensation amount = ₹875

Topics: SEBI (Issue of Capital and Disclosure Requirements) Regulations

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