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Sri Lanka says IPOs must allocate 40-pct shares to retail investors
Sri Lanka's markets regulator said companies planning initial public offerings in future will have to allocate a minimum of 40 percent of shares initially to retail individual investors.
The Securities and Exchange Commission (SEC) said the move is aimed at helping broad base share ownership in the country.
The new rules will be effective from March 15, 2011.
"The SEC has observed that the recent IPOs were heavily oversubscribed due to investors using the bank guarantee option to submit IPO applications for a very large quantity of shares," the statement said.
"This has resulted in a majority of retail investors being allotted a small portion of the shares applied and has not created a level playing field in the primary market thereby hindering the process of broad basing share ownership in the country."
The SEC said a minimum of 40 percent of the offered shares for a particular share class in a public offer must be initially made available for allotment to retail individual investors.
A ‘retail individual investor’ is as an individual investor who applies for up to a maximum of 3,000 shares or for a value of not more than 100,000 rupees, whichever is higher.
Applicants submitting applications under other investor categories shall not make applications under the retail individual investor category, the statement said.
The SEC also said a minimum of 10 percent of the offered shares in an IPO must be initially made available for allotment to Sri Lankan growth or balanced unit trust funds comprising of not less than 500 unit holders resident in Sri Lanka making up of at least half of the fund.
If there is an under-subscription in the unit trust investor category and an over-subscription in other investor categories, the oversubscription in the retail individual investor category shall be given first priority in allotment of under-subscribed shares, the SEC said.
If there is an under-subscription in the retail individual investor category and an over-subscription in other investor categories, over-subscription in the unit trust investor category shall be given first priority in the allotment of under-subscribed shares.
The new rules come after talks with the Colombo Stock Exchange, Colombo Stock Brokers Association and IPO managers.
http://www.lbo.lk/fullstory.php?nid=408237369
Sri Lanka's markets regulator said companies planning initial public offerings in future will have to allocate a minimum of 40 percent of shares initially to retail individual investors.
The Securities and Exchange Commission (SEC) said the move is aimed at helping broad base share ownership in the country.
The new rules will be effective from March 15, 2011.
"The SEC has observed that the recent IPOs were heavily oversubscribed due to investors using the bank guarantee option to submit IPO applications for a very large quantity of shares," the statement said.
"This has resulted in a majority of retail investors being allotted a small portion of the shares applied and has not created a level playing field in the primary market thereby hindering the process of broad basing share ownership in the country."
The SEC said a minimum of 40 percent of the offered shares for a particular share class in a public offer must be initially made available for allotment to retail individual investors.
A ‘retail individual investor’ is as an individual investor who applies for up to a maximum of 3,000 shares or for a value of not more than 100,000 rupees, whichever is higher.
Applicants submitting applications under other investor categories shall not make applications under the retail individual investor category, the statement said.
The SEC also said a minimum of 10 percent of the offered shares in an IPO must be initially made available for allotment to Sri Lankan growth or balanced unit trust funds comprising of not less than 500 unit holders resident in Sri Lanka making up of at least half of the fund.
If there is an under-subscription in the unit trust investor category and an over-subscription in other investor categories, the oversubscription in the retail individual investor category shall be given first priority in allotment of under-subscribed shares, the SEC said.
If there is an under-subscription in the retail individual investor category and an over-subscription in other investor categories, over-subscription in the unit trust investor category shall be given first priority in the allotment of under-subscribed shares.
The new rules come after talks with the Colombo Stock Exchange, Colombo Stock Brokers Association and IPO managers.
http://www.lbo.lk/fullstory.php?nid=408237369
Last edited by Quibit on Thu Mar 10, 2011 4:34 pm; edited 1 time in total (Reason for editing : article incorporated)
