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Indian Trade Portal FAQ About IPO’S

What is an IPO?

According to Indian Trade Portal, Initial Public Offering, or IPO, is a way for a company to get listed on the Stock Exchange and raise money from investors for future projects. Or, an Initial Public Offer, or IPO, is when securities are sold to the public for the first time on the primary stock market.

According to Indian Trade Portal and From an investor’s point of view, an IPO gives them the chance to buy shares of a company directly from the company at a price they choose (in book-build IPOs). There is often a big difference between the price a company sets for its shares and the price investors are willing to pay for them. This gives investors who buy shares in an initial public offering (IPO) a good return.

From a company’s point of view, an IPO helps them figure out what their real value is, which is decided by millions of investors once their shares are listed on stock exchanges. IPOs also give companies money to help them grow in the future or pay off debts.

Who decides the date of the issue?

Once SEBI clears the “Draft Prospectus” of an IPO and the Stock Exchanges agree to it, it is up to the company going public to set the date and length of the IPO. Before setting the date, the company talks to the Lead Managers, the Registrar of the issue, and the Stock Exchanges. Following Indian Trade Portal will provide you more information

What does an IPO's registrar do?

The registrar of a public issue is a key part of the IPO process. They are a separate financial institution that is registered with SEBI and stock exchanges. They work for the company that is going public.

A registrar’s main job for an initial public offering (IPO) is to process applications, give applicants shares based on SEBI rules, handle refunds through ECS or checks, and move allocated shares to investors’ Demat accounts.

What do Lead Managers do during an IPO?

According to Indian Trade Portal , The company going public chooses an independent financial institution to be the lead manager. For big IPOs, companies choose more than one lead manager. They are called Book Running Lead Manager and Co Book Running Lead Managers.

Their main jobs are to start the IPO process, help the company with road shows, write a draught offer document and get SEBI and the stock exchanges to approve it, and help the company list its shares on the stock market.

What is Follow on public offering or FPO?

Follow-on public offering (FPO) is when a company that is already on the stock market sells shares to the public. An FPO is when a company that has already gone through an IPO and is on the stock market issues more shares of its stock.

What is primary & secondary market?

On the primary market, investors can buy shares directly from the company that put them on the market. This helps the company raise money.

Stocks are traded on the secondary market after they are first offered to investors in the primary market (through IPOs, etc.) and get listed on the stock exchange. The equity markets and the debt markets make up the secondary market. A secondary market is a place where listed stocks can be bought and sold. A primary market is how a company can get into a secondary market. 

Read more Trading Information on Indian Trade Portal 

Who can invest in IPOs?

All Indian citizens who can sign contracts under the Indian Contract Act of 1872 in their own names or as a couple. Ok, in simple terms, it means that any citizen of the country who is at least 18 years old and has a clear head can sign a contract, as long as he or she isn’t barred from doing so by another law. This means that most people are safe as long as there are no police or criminal investigations against them. Read More on Indian Trade Portal

For IPOs, you need a valid PAN (Permanent Account Number) and a bank account. Under a guardianship account opened for the benefit of a minor, parents of minor children can also apply for their kids. When applying to IPOs, it’s important to remember that all applicants need a demat account. Now, you can only open a demat account online, and some companies don’t charge you to open an account. If there aren’t many trades, investors can also use a Basic Services Demat Account (BSDA).

What is the difference between Floor Price and Cut-Off Price for a Book Building Issue?

The company responsible for creating the Book Building Public Issue chose a pricing range for it. Typically, the price band has an upper level and a lower level.

The floor price is the lowest price (lower level) at which an IPO can accept bids.

Investors may offer any price within the price range that has been established by the company for the Book Build IPO. Retail investors in the Book Build process also have the ability to select the “Cut-Off” price for bidding.

When an investor agrees to a “cut-off price,” they are agreeing to pay whatever the company ultimately decides to charge for the book. When submitting a bid at the cut-off price, the retail investor must pay the highest price. The remaining sum is returned to the retail investor if the firm thinks the final price will be less than the highest price requested for the IPO. This answer has been made by Indian Trade Portal

Is a PAN number required in order to apply for an IPO?

Yes, SEBI established a PAN number requirement for IPO candidates effective in July 2006. Forms that are submitted without a PAN number or with the incorrect PAN number are viewed as defective applications and are not taken into consideration for IPO allocation.

Double checking your PAN number information is strongly advised before submitting the IPO application form. Make sure the online stock broker has accurate information if you are filling out the IPO application through him.

How long is an IPO available to the public?

According to Clause 8.8.1, the subscription list for public concerns must remain open for no longer than 10 working days. The minimum and maximum duration for which bidding will be open in the case of book-built issues is 3 – 7 working days, extendable by 3 days in the event of a modification in the price range. An infrastructure business may keep the public issue open for a maximum of 21 working days if it satisfies the criteria in Clause 2.4.1 (iii) of Chapter II. Rights disputes must be open for at least 30 days and no longer than 60 days, in accordance with article 8.8.2.

After I submit the IPO application form, what information should I keep?

For all IPO investors, this is a crucial question. If you are submitting an IPO application, be sure to keep the following information on hand for any subsequent communications with the company or issue registrar.

  • 1. picture of the application form
  • 2. Photograph of a check
  • 3. Application number while submitting an IPO online –  Read More details on Indian Trade Portal

Does submitting an application for an IPO ensure that I will receive a particular number of shares?

No, submitting an application for shares in an IPO or placing a bid on shares does not ensure that you will receive the shares.

Allotment is based on the number of bids received in each category, the price at which the investor applied for the shares, and other factors because it is a bidding procedure.

After the IPO closes, the issue’s registrar compiles all the bid data and creates a “Basis of Allotment.” This document offers details on the bids received from a variety of investors at various prices as well as the pattern of allocation.

Can I submit more than one application with the same name for an IPO?

No, a single applicant cannot submit numerous applications for an IPO. There is a rule that all of your applications will be denied if you submit more than one application for an IPO using the same name, demat account, or PAN number.

If you want to order more than one application, you need apply under each member of your family’s name. However, once more, all eligible family members need have a PAN number and a demat account.

How many days is the issue open?

According to Indian Trade Portal, The Book Building IPO is open for 3 to 7 days, and it could be open for another 3 days if the price changes or if the issue doesn’t sell out in the first 3 to 7 days. The company that put out the issue and its issue lead manager decide how many days it will be open.

Right questions stay open for at least 30 days but no more than 60 days.

Can I change my IPO application or cancel it?

Yes, an investor can change the amount and price they bid on a Book Building IPO at any time if the issue is still open for subscriptions. Investors have to fill out a change form and give it to a member of the syndicate.

Where do I get an IPO application form?

According to Indian Trade Portal , Investors can get IPO Application Forms from the office of their nearest stock broker or from the office of a syndicate member of an IPO.

Usually, banks or other financial institutions are part of a syndicate (i.e. SBI). In an IPO Prospectus, a list of the people who are part of the syndicate is given.
Application forms for the IPO are free to get. The application can be sent to any office of a stock broker or syndicate member.

How to apply for an IPO online?

You need to do the following things through ASBA:

  • 1. Sign in to your online banking.
  • 2. Click on the link that says “IPO Application” on the left side of the page.
  • 3. Choose one of the IPOs you’d like to apply for and list up to three bids.
  • 4. Enter your depository details.
  • 5. Put in your order, and then confirm it.
  • 6. Then, before submitting the bid, you would have to agree to the “Terms and Conditions.”

How to sell IPO?

On the day of the listing, you can sell the shares you bought through an IPO. Once the allotment process is done and the subscribers’ accounts have been credited with the shares, the company will announce the date of listing. Please look at our IPO page to find out when the company will be on the stock market. On the day the stock is listed, you can sell it just like any other stock on the market.

How is IPO listing price decided?

The syndicate of investment banks handling the IPO determines the IPO’s listing price through a procedure known as book building. Follow Indian Trade Portal for More information about Trades.

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