QIn case of sale of shares, when should the shares be given to the broker?
The delivery of shares has to be done prior to the pay in date for the relevant settlement or as otherwise provided in the Rules and Regulations of the Exchange and agreed with the broker/sub broker in writing.
QIs grading optional?
No, IPO grading is not optional. A company which has filed the draft offer document for its IPO with SEBI, on or after 1st May, 2007, is required to obtain a grade for the IPO from at least one CRA.
QIs it compulsory for me to fill up the registration form?
Yes. Filling up the form is necessary if you want to view more details about the IPOs as well as our investment perceptions and analysis.
QIs it compulsory for me to have a Demat Account?
As per the requirement, all the public issues of size in excess of Rs.10 crore, are to made compulsorily in the demat more. Thus, if an investor chooses to apply for an issue that is being made in a compulsory demat mode, he has to have a demat account and has the responsibility to put the correct DP ID and Client ID details in the bid/application forms.
QIs it possible to enter bids less than floor price?
No. The system automatically rejects the bids if price is less than floor price.
QIs the issue price for placement portion and net offer to public the same?
QIs there any preference while doing the allotment?
The allotment to the Qualified Institutional Buyers (QIBs) is on a discretionary basis. The discretion is left to the Merchant Bankers who first disclose the parameters of judgment in the Red Herring Prospectus. There are no objective conditions stipulated as per the DIP Guidelines. The Merchant Bankers are free to set their criteria and mention the same in the Red Herring Prospectus.
QIs there any provision where I can get faster delivery of shares in my account?
The investors/clients can get direct delivery of shares in their beneficial owner accounts. To avail this facility, you have to give details of your beneficial owner account and the DP-ID of your DP to your broker along with the Standing Instructions for ‘Delivery-In’ to your Depository Participant for accepting shares in your beneficial owner account. Given these details, the Clearing Corporation/Clearing House shall send pay out instructions to the depositories so that you receive pay out of securities directly into your beneficial owner account.
QIs this IPO a good investment?
When you go through the executive summary of an IPO, our research team provides its opinion on the issue based on an analysis of the company’s financials, promoters’ background and other qualitative issues. This can help in guiding your investment decision.
QWhat are Bonus Shares?
Bonus shares are shares issued by the companies to their shareholders free of cost by capitalization of accumulated reserves from the profits earned in the earlier years.
QWhat are CRR and SLR with respect to banks?
CRR or cash reserve ratio is the minimum proportion / percentage of a bank’s deposits to be held in the form of cash. Banks actually don’t hold these as cash with themselves, but deposit the same with RBI / currency chests, which is considered equivalent to holding cash with themselves.
When a bank’s deposits increase by Rs. 100 crore, and considering the present cash reserve ratio of 6%, bank will have to hold additional Rs. 6 crore with RBI and will be able to use only Rs. 94 crore for investments and lending. Therefore, higher the CRR, lower the amount that banks can lend. Thus RBI can control the liquidity by changing the CRR i.e. increase CRR to reduce the lendable amount and vice-versa.
SLR or statutory liquidity ratio is the minimum percentage of deposits that a bank has to maintain in form of gold, cash or other approved securities. It is the ratio of liquid assets (cash and approved securities) to the demand and term liabilities / deposits.
RBI is empowered to increase this ratio up to 40%. An increase in SLR restricts the bank’s leverage position to pump more money into the economy, thereby regulating credit growth.
QWhat are Cumulative Convertible Preference Shares?
Cumulative Convertible Preference Share are a type of preference shares where the dividend payable on the same accumulates, if not paid. After a specified date, these shares will be converted into equity capital of the company.
QWhat are Cumulative Preference Shares?
Cumulative Preference Shares are a type of preference shares on which dividend accumulates if remains unpaid. All arrears of preference dividend have to be paid out before paying dividend on equity shares.
QWhat are Disclosures and Investor protection guidelines?
The primary issuances are governed by SEBI in terms of SEBI (Disclosures and Investor protection) guidelines. SEBI framed its DIP guidelines in 1992. Many amendments have been carried out in the same in line with the market dynamics and requirements. In 2000, SEBI issued “Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines, 2000” which is compilation of all circulars organized in chapter forms. These guidelines and amendments thereon are issued by SEBI India under section 11 of the Securities and Exchange Board of India Act, 1992. SEBI (Disclosure and investor protection) guidelines 2000 are in short called DIP guidelines. It provides a comprehensive framework for issuances buy the companies.
QWhat are DVR shares?
What are DVR shares? 29 May 2012 at 11:00 am DVR or differential voting rights shares are like ordinary equity shares but with differential voting rights. Shares can have higher or lower voting rights as compared to the ordinary equity shares. However, Indian regulations do not permit companies to issue equity shares with higher voting rights. Hence, Indian DVR shares provide for lower voting rights as compared to ordinary equity shares.
Companies issue DVRs for several reasons such as prevention of a hostile takeover, bringing in a passive strategic investor or dilution of voting rights. DVR investors are generally compensated with a higher dividend rate. This makes the DVRs attractive for retail investors who do not want control in the company, but are looking at the long-term growth prospects.
DVR shares are listed on the stock exchanges and are traded in the same manner as ordinary equity shares, but they mostly trade at a discount, sometimes as high as 30%, due to fewer voting rights.
Tata Motors, Gujarat NRE Coke, Pantaloon Retail, Jain Irrigation are some of the Indian companies that have issued DVR shares.
E.g.: Tata Motors’ DVR shares carry voting rights which are one-tenth of the ordinary equity shares. The DVR shareholders are entitled to an additional 5% dividend, over and above the ordinary equity shareholders. Tata Motors DVR are trading at 800 or 36% discount to the ordinary shares, which are at trading at Rs 1,245 (as of 23rd November 2010).
QWhat are equity shares?
An equity share, commonly referred to as ordinary share also represents the form of fractional or part ownership in which a shareholder, as a fractional owner, undertakes the maximum entrepreneurial risk associated with a business venture. The holders of such shares are members of the company and have voting rights.
QWhat are Legal and other information?
Outstanding litigations and material developments, litigations involving the company and its subsidiaries, promoters and group companies are disclosed. Also material developments since the last balance sheet date, government approvals/licensing arrangements, investment approvals (FIPB/RBI etc.), all government and other approvals, technical approvals, indebtedness, etc. are disclosed.
QWhat are Participating Preference Shares?
Participating Preference Shares are shares where the right of certain preference shareholders to participate in profits after a specified fixed dividend contracted for is paid is given. Participation right is linked with the quantum of dividend paid on the equity shares over and above a particular specified level.
QWhat are preferece shares?
Preference shares are shares in which the owners of the shares are entitled to a fixed dividend or dividend calculated at a fixed rate to be paid regularly before dividend can be paid in respect of equity share. They also enjoy priority over the equity shareholders in payment of surplus. But in the event of liquidation, their claims rank below the claims of the company’s creditors, bondholders / debenture holders. In short they get preference over equity shareholders in case of payment of dividends on in case of winding up of the company.
QWhat are Risk Factors?
Here, the issuer’s management gives its view on the Internal and external risks faced by the company. Here, the company also makes a note on the forward-looking statements. This information is disclosed in the initial pages of the document and it is also clearly disclosed in the abridged prospectus. It is generally advised that the investors should go through all the risk factors of the company before making an investment decision.
QWhat are the charges that can be levied on the investor by a stock broker?
The trading member can charge:
1. Brokerage charged by member broker.
2. Penalties arising on specific default on behalf of client (investor)
3. Service tax as stipulated.
4. Securities Transaction Tax (STT) as applicable.
The brokerage, service tax and STT are indicated separately in the contract note.
QWhat are the dos and don’ts for bidding / applying in the issue?
The investors are generally advised to study all the material facts pertaining to the issue including the risk factors before considering any investment. They are strongly warned against any ‘tips’ or relying on news obtained through unofficial means.
QWhat are the prescribed pay-in and pay-out days for funds and securities for Normal Settlement?
The pay-in and pay-out days for funds and securities are prescribed as per the Settlement Cycle. A typical Settlement Cycle of Normal Settlement is given below:
Trading Rolling Settlement Trading T
Clearing Custodial Confirmation T+1 working days
Delivery Generation T+1 working days
Settlement Securities and Funds pay in T+2 working days
Securities and Funds pay out T+2 working days
Post Settlement Valuation Debit T+2 working days
Auction T+3 working days
Bad Delivery Reporting T+4 working days
Auction settlement T+5 working days
Close out T+5 working days
Rectified bad delivery pay-in and pay-outT+6 working days
Re-bad delivery reporting and pickup T+8 working days
Close out of re-bad delivery T+9 working days
Note: The above is a typical settlement cycle for normal (regular) market segment. The days prescribed for the above activities may change in case of factors like holidays, bank closing etc. You may refer to scheduled dates of pay-in/pay-out notified by the Exchange for each settlement from time-to-time.
QWhat are the relevant regulations and where do I find them?
The SEBI Manual is SEBI authorized publication that is a comprehensive databank of all relevant Acts, Rules, Regulations and Guidelines that are related to the functioning of the Board. The details pertaining to the Acts, Rules, Regulations, Guidelines and Circulars are placed on the SEBI website under the “Legal Framework” section. The periodic updates are uploaded onto the SEBI website regularly.
QWhat details are required to be mentioned on the Contract note issued by the Stock Broker?
A broker has to issue a contract note to clients for all transactions in the form specified by the stock exchange. The contract note inter-alia should have following:
•Name, address and SEBI Registration number of the Member broker.
•Name of partner /proprietor /Authorised Signatory.
•Dealing Office Address/Tel No/Fax no, Code number of the member given by the Exchange.
•Unique Identification Number
•Contract number, date of issue of contract note, settlement number and time period for settlement.
•Constituent (Client) name/Code Number.
•Order number and order time corresponding to the trades.
•Trade number and Trade time.
•Quantity and Kind of Security brought/sold by the client.
•Brokerage and Purchase /Sale rate are given separately.
•Service tax rates and any other charges levied by the broker.
•Securities Transaction Tax (STT) as applicable.
•Appropriate stamps have to be affixed on the original contract note or it is mentioned that the consolidated stamp duty is paid.
•Signature of the Stock broker/Authorized Signatory.
Contract note provides for the recourse to the system of arbitrators for settlement of disputes arising out of transactions. Only the broker can issue contract notes.