Reduction of Timeline for Listing of Shares in Public Issue from Existing T+6 Days To T+3 Days
August 09, 2023 marks a historic day in the Indian securities market, bringing about a significant change that will impact investors, issuers, and all market participants. The eagerly awaited reduction of the timeline for listing shares in a public issue has finally become a reality. Through Circular SEBI/HO/CFD/TPD1/CIR/P/2023/140 dated August 09, 2023, the Securities and Exchange Board of India (SEBI) has reduced the listing and trading timelines from the existing T+6 working days which came into effect from January 01, 2016, to T+3 working days (‘T’ denotes the day of closure of the issue). This change promises a range of benefits for both issuers and investors.
The alteration in listing and trading timelines presents a game-changing advantage for both issuers and investors. Companies raising capital through the issuance of shares will experience expedited access to the funds raised. This acceleration enhances the overall ease of doing business, streamlining the process of fundraising and allowing companies to deploy capital more swiftly. On the investors’ side, this reduction in timelines translates into quicker access to liquidity for their investments, thus improving the investment experience.
Currently, the IPO application period spans at least three working days and not more than ten working days. Typically, the bidding period remains open for three working days in India. For instance, if an investor submits an IPO application using the Application Supported by Blocked Amount (ASBA) method on the first day of the issue period, their funds remain blocked from that day till T+4 meaning the working day after finalization of the Basis of Allotment i.e., BOA+1. This implies that the funds of that investor will stay idle for seven working days, or approximately nine days. However, with the newly implemented reduction in the timeline, investor funds will be unblocked on T+2 days, and that too by 4 PM.
Let’s delve into the details of the circular to understand the changes:
| Timeline | Existing | Revised |
| T | Issue Closure
Submission of applications: Retail – on or before 5 PM Non-Retail – on or before 4 PM No categorization of applications. |
Issue Closure
Submission of applications: Retail –
Non-Retail –
*UPI mandates can still be accepted till 5 PM. Only the cut-off time has been reduced to 4 PM to ensure that the applications received particularly on the day of Issue closure are successfully processed and bidding on the Stock Exchange(s) platform is completed prior to bid closure at 5 PM on T day. |
| Final Certificates from SCSBs and Sponsor Banks for confirmation of funds blocked, to the RTI –
UPI ASBA – Before 09:30 pm on T day All SCSBs for Direct ASBA – Before 07:30 pm on T Day Syndicate ASBA – Before 07:30 pm on T day |
||
| T+1 | Final Certificates from SCSBs and Sponsor Banks for confirmation of funds blocked, to the RTI – not later than 6 PM | Initiation of corporate action to carry out lock-in for pre-issue capital held in depository system, by RTI |
| Completion of scrutiny of applications with respect to third-party investors | ||
| Finalization of rejections and completion of basis of allotment – Before 6 PM
Approval of basis of allotment by Designated Stock Exchange – Before 9 PM |
||
| T+2 | Scrutiny of applications with respect to third party investors | Completion of lock-in for pre-issue capital |
| Issuance of fund transfer instructions for debit and unblock to SCSB / Sponsor Bank by RTI –
Initiation not later than 09:30 AM; Completion before 2 PM for fund transfer; Completion before 4 PM for unblocking. |
||
| Corporate action execution for credit of shares –
Initiation before 2 PM Completion before 6 PM |
||
| Filing of listing application with Stock Exchanges and issuance of trading notice – Before 7:30 PM | ||
| Post-Issue advertisement – before 9 PM on the websites of Issuer, Merchant Banker and RTI | ||
| T+3 | Finalisation of Basis of Allotment by RTA and submission to stock exchange(s) for its/their approval | Post-Issue advertisement – In newspapers but not later than T+4 day |
| Issuance of fund transfer instructions for debit and unblock to SCSB / Sponsor Bank by RTI | Commencement of trading | |
| Initiation of corporate action to carry out lock-in for pre-issue capital held by RTI | ||
| T+4 | Completion of lock-in for pre-issue capital | Last date allowed for publishing of post issue advertisement in newspapers |
| Credit of funds in public issue account of the issuer | ||
| Completion of unblock for non-allottees | ||
| Initiation of Corporate action for credit of shares to successful allottees | ||
| T+5 | Confirmation of credit of shares to the demat accounts of allottees from NSDL / CDSL | |
| Application and receiving of listing and trading approval from stock exchange(s) | ||
| T+6 | Post-Issue advertisement | |
| Commencement of trading |
The updated timelines bring about advantages for both issuers and investors alike. Notably, issuers will now receive their funds within T+2 working days, marking a substantial enhancement compared to the previous T+4 working days. Similarly, investors will enjoy expedited unblocking of funds in case of non-allotment, with funds becoming available on T+2 working days instead of the previous T+4 working days timeframe. Furthermore, the compensation to investors for delay in unblocking of ASBA application monies (if any) shall be computed from T+3 day.
These revised timelines are optional for public issues opening on or after September 01, 2023, allowing issuers and intermediaries to transition at their own pace. Starting December 01, 2023, they become mandatory for public issues opening from that date onward, establishing a standardized framework.
This landmark reduction in the timeline for listing shares in a public issue reflects SEBI’s commitment to enhancing the efficiency and effectiveness of the Indian securities market. It streamlines the process, benefits both issuers and investors, and contributes to the overall growth of the market. As we move forward, these revised timelines are poised to contribute significantly to the ease of doing business in the Indian securities landscape.
However, it’s important to note that this reduction in listing and trading timelines might present some challenges for the intermediaries involved, especially the lead managers and registrars to the issue. Intermediaries play crucial roles in co-ordinating various aspects of the IPO process, including managing investor applications, allotment, and ensuring compliance with regulatory requirements. The compressed timeline could demand a more efficient and streamlined workflow, requiring these intermediaries to swiftly adapt their processes and systems to meet the new demands. While these challenges exist, they also provide an opportunity for market participants to innovate and improve their operational capabilities, ultimately contributing to a more agile and responsive IPO ecosystem.
Author Bio
Great analysis and explanation👏🏻