ABC Ltd. was incorporated in May 2010. It came out with its initial public offer (IPO) in January 2017 and the shares were issued at a premium of ₹ 225 per equity shares. The face value of share is ₹ 10 per equity share.
CS Professional · Capital Commodity and Money Market · PYQS · December 2018
ABC Ltd. was incorporated in May 2010. It came out with its initial public offer (IPO) in January 2017 and the shares were issued at a premium of ₹ 225 per equity shares. The face value of share is ₹ 10 per equity share. The company now wants to expand its business and for this purpose it requires further capital of ₹ 10 crores, which it intends to raise the funds through the preferential issue for which the relevant approval from the shareholders have been obtained by the company in the General Meeting held on 30-8-2017. The average of the weekly high and low of the closing prices of the equity shares are as under: Number of Weeks Average of High and Low (₹) 20 weeks preceding the relevant date 230.22 2 weeks preceding the relevant date 288.00 From the above information, please answer the following questions: After issue of shares to the QIBs the weekly high and low averages of share price of ABC Ltd. on completion of 26 weeks from the date of listing was ₹ 238.40. Calculate, whether any further amount has to be received from the QIBs, to whom such preferential allotments were made?
Answer & Explanation:
It is given that after issue of shares to the QIBs the weekly high and low averages of share price of ABC Ltd. on completion of 26 weeks from the date of listing was ₹ 238.40. Hence according to the SEBI ICDR Guidelines, where the price of the equity shares is determined in terms of the (II) above, such price shall be recomputed by the issuer on completion of 26 weeks from the date of listing on a recognized stock exchange with reference to the average of weekly high and low of the closing prices of the related equity shares quoted on the recognized stock exchange during these 26 weeks and if such re-computed price is higher than the price paid on allotment, the difference shall be paid by the allottees to the issuer. However, in the given case price after 26 weeks is given as ₹ 238.40 and the company has already priced earlier as ₹ 288 which is lower than the price earlier charged, hence there is no need to charge any amount from the preferential issue allottees.
Topics: Capital Market
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