What is Institutional Placement Programme (IPP)? – All Details


By VRP

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Institutional Positioning Program (IPP): This is one of such approaches readily available to Indian noted business for the function of complying with minimum public shareholding requirements by raising additional share capital. In the light of a guideline that mandates the listed business to raise their public shareholding to 25% by limiting the promoter’s shareholding to an optimum level of 75%, methods such as this have actually become inescapable to abide by the minimum public shareholding requirement.

Technically, Institutional Positioning Programme suggests a further public offer of eligible securities by a qualified seller, in which the offer, allotment and allocation of such securities is made just to certified institutional buyers in regards to (PROBLEM OF CAPITAL AND DISCLOSURE REQUIREMENTS) Chapter VIII A, where

  • Eligible securities shall mean equity shares of same class noted and sold the stock market
  • Qualified seller consist of listed issuer, promoter/promoter group of listed provider

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Conditions to be satisfied for Institutional Positioning Programme (IPP):

unique resolution:

As per arrangements of the Companies Act, an unique resolution approving the institutional placement program need to be gone by the investors prior to making Institutional Placement Programme.

  • The approval of the stock exchange where the business is currently listed must be gotten in concept to proceed with the Institutional Placement Program.
  • No partially paid-up securities will be used under IPP.

Due diligence certificate by merchant bankers:

An institutional positioning programme shall be managed by merchant banker signed up with SEBI who will exercise the due diligence and will submit a due diligence certificate to SEBI. The certificate will mention that hat the eligible securities are being released under institutional placement program which the company complies with requirements of SEBI’s Problem of Capital and Disclosure Requirements.

Institutional Placement Programme

Offer Document:

The issuer shall send the deal file with the Registrar of Business and all at once shall submit a copy with SEBI and the stock exchange. The institutional placement programme shall be made on the basis of the offer file which shall consist of all material details.

Pricing of the problem:

A minimum of a day prior to the opening of the IPP, the company will announce a floor price or price band.

Allotment:

Securities will be allotted as per the approach pointed out in the offer document which will be managed by the stock market. The minimum number of allottees shall be 10 offered that no single allottee will be allotted more than 25% of the offer size. The certified institutional purchasers belonging to the very same group of management or under the control of very same ownership will be thought about to be a single allottee.

Restrictions associated with Institutional Positioning Programme (IPP):

  • This programme can just be used to raise minimum public shareholding requirements to 25%
  • 12 weeks constraint:

The promoters who are providing their eligible securities must not have actually acquired and/ or offered the qualified securities of the business in the 12 weeks period prior to the deal and they should undertake not to buy and/ or sell eligible securities of the company in the 12 weeks duration after the deal.

  • At least 25% to Shared funds & Insurer:

Minimum 25% of the qualified securities will be allocated to shared funds and insurer. If the shared funds and insurer do not register for stated minimum portion or any part thereof, then such portion can be set aside to other certified institutional buyers.

  • No allocation shall be made, either directly or indirectly, to any certified institutional purchaser who is a promoter or anyone related to promoters of the provider.
  • The provider shall accept bids utilizing Applications Supported by Blocked Quantity (ASBA) facility only. In ASBA, an applicant’s account doesn’t get debited until shares are set aside to them.

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