Massive Ltd. came out with its IPO in November, 2015 and offered shares of ₹10 each at ₹450 charging a premium of ₹440. Shyam applied for 1,000 shares which had been allotted. On the list day, the closing share price was
CS Executive · Capital Markets & Securities Laws · PYQS · June 2016
Massive Ltd. came out with its IPO in November, 2015 and offered shares of ₹10 each at ₹450 charging a premium of ₹440. Shyam applied for 1,000 shares which had been allotted. On the list day, the closing share price was ₹418 and he was very upset about it. He looked at the prospectus of the company and found that company's IPO was not graded. So, he filed a complaint with SEBI stating that the company did not obtain IPO grading which is mandatory and hence, the IPO should be cancelled and the company should be asked to refund the money to investors. Assume that you are working with the SEBI, will you suggest that the said issue should be cancelled as there has been violation of SEBI rules and regulations. Give your answer with reasons.
Answer & Explanation:
Massive Ltd. came out with its IPO in November, 2015. SEBI vide its Circular No. LAD-NRO/GN/2013-14/44/226 dated February 4, 2014, by amending the SEBI (ICDR) Regulations, 2009, made IPO grading optional for public issue of securities. So in this case the company has come out with the public issue in 2015. There was have not been violations of SEBI rules and regulations and hence, the issue cannot be cancelled on this basis.
Topics: Capital Markets