| Lot of pressure was put on the share brokers and | | | | of shares / securities by the company. This is |
| investors with 20 per cent fall in market value as a | | | | emanating from the fundamental principle under Law |
| result sharp decline in the last three days. As a result | | | | of Contracts that an offer can be revoked before |
| of the squeeze investors were hard pressed for | | | | acceptance. The bids made by the bidders |
| cash. They got some relief with Finance Minister and | | | | (applicants) is an offer made and allotment of |
| RBI assuring them that all legitimate requirements will | | | | securities by the companies only brings into a binding |
| be met. Some of the investors also rushed to cash in | | | | contract between the bidder and the company and, |
| huge amounts invested in recently issued IPOs | | | | therefore, an application in a public issue can be |
| including Reliance Power. Under rules the investors are | | | | withdrawn by the applicant depending upon the |
| allowed to with their investment till the stock is listed. | | | | market scenario post subscription/closure of the IPO |
| This had been the case in some earlier issues also like | | | | but before allotment even if the application money |
| Deccan Air and Cairn Energy. | | | | has been realized by the company. However, as per |
| In an IPO, companies invite applications for shares | | | | Clause 11.3.4.1 of the SEBI DIP Guidelines, only |
| sought to be enlisted by them in a Stock Exchange. | | | | Qualified Institutional Bidders (QIBs) are not allowed |
| The subscription in an IPO can either through | | | | to withdraw their bid after the closure of the bid. |
| book-built process by inviting bids from the | | | | This is to prevent any possible manipulation of the |
| prospective investors or on a fixed price basis. Issue | | | | IPO subscription by the QIBs. |
| of securities in an IPO is, inter alia, governed by SEBI | | | | Instances have happened in our country where |
| (Disclosures and Investors Protection) Guidelines, | | | | investors have withdrawn their applications in an IPO. |
| 2002 - popularly known as SEBI DIP Guidelines. | | | | IPO made by Purvankara Projects, Deccan Airlines, |
| SEBI DIP Guideline at Para no 11A.7.7 also provides | | | | Cairn Energy, Housing Development Infrastructure |
| that an applicant can withdraw applications in a public | | | | Limited, IVR Prime, KPR Mills, have seen withdrawal |
| issue. Thus, in a book-built issue the applicants can | | | | of applications by retailers and HNI categories before |
| withdraw their applications anytime before allotment | | | | allotment. |