SEBI/CFD/DIL/2008/ 25 /09
September 25, 2008
To All registered Merchant Bankers
To All registered Bankers to an Issue
To All registered Registrars to issues
To All Stock Exchanges
Dear Sir/Madam ,
Sub.: Applications Supported by Blocked Amount (ASBA) facility in Rights Issues
1. SEBI has introduced the facility of making applications through “Applications Supported by Blocked Amount” process, in book built public issues vide its circular dated July 30, 2008. It has now been decided to enable process of ASBA in Rights Issues on a pilot basis.
2. ASBA facility in rights issues will be available to all shareholders of the issuer company as on the record date subject to qualifications mentioned in point 3(a) below. ASBA facility will thus not be available to non- shareholders. It will co-exist with the current process, wherein cheque/demand draft is used as a mode of payment.
3. Merchant Bankers, Registrars and Self Certified Syndicate Banks (SCSBs) are advised to provide the ASBA facility in rights issues with suitable modifications to ASBA process specified by SEBI for public issue through book building route, as deemed fit. ASBA process in rights issue shall have the following features :
(a) All shareholders of the company as on record date shall be eligible to apply through ASBA (hereinafter referred as “ASBA shareholder”) provided if he/ she/it :
• is holding shares in dematerialised form and has applied for entitlements and /or additional shares in the issue in dematerialised form;
• has not renounced his/ her entitlements in full or in part;
• is not a renouncee to the Issue;
• applies through a bank account maintained with SCSBs.
(b) ASBA process in rights issue shall enable a shareholder of the company as on record date to apply through ASBA mode by selecting the option of ASBA in Part A of the application form of rights issue, to the Self Certified Syndicate Bank (SCSB) with whom the bank account to be blocked, is maintained. The SCSB shall then block in the bank account, the application money specified in the application, on the basis of an authorisation to this effect given by the account holder in the application. The application data captured by SCSB shall be made available to the Registrar on regular basis through the modus- operandi/ procedures mutually agreed and tested by the Registrars and SCSBs till web enabled interface provided by Stock Exchanges, is facilitated to accept rights issue application data from SCSBs.
(c) While discharging its duties in the ASBA process in a Rights Issue, the Registrars shall take into consideration the specific provisions/requirements of a Rights issue and give suitable instructions to the SCSBs for transfer of money to the issuer account after satisfying the designated stock exchange about receipt of minimum subscription of 90% in terms of provisions of SEBI (DIP) guidelines, and for any other matter relevant to a rights issue. The SCSBs shall comply with such instructions from the Registrar. Thus, the application money shall remain blocked in the bank account till receipt of instruction from Registrar for release of funds. Registrars shall validate the applications and finalise the basis of allotment.
4. All other instructions given in the circular dated July 30, 2008 shall continue to apply, to the extent relevant.
5. On pilot basis, it has been decided to include ASBA in rights issues of Tata Motors ltd and Sadhana Nitro Chem ltd which are opening on September 29, 2008.
6. This circular is available on SEBI website at www.sebi.gov.in under the categories “Legal Framework” and “Issues and Listing”.