Description
green shoe option
GREEN A Price SHOE Stabilization OPTION Mechanism
VNL
What is it ? – The SEBI Definition
• It’s an option of allocating shares in excess of the included in the Public Issue & operating a post-listing issue price stabilizing mechanism in accordance with the provision of Chapter VIII-A of the SEBI DIP Guidelines which is granted to a Company to be exercised through a “Stablizing Agent”
Modus Operandi
• 1.Authorization seeking the possibility of allotment of further shares to the “Stabilizing Agent” at the end of the Stabilization Period in the resolution of the General Meeting authorizing the IPO. • Appointment of a Stabilizing Agent from the IPO Management Team. This Agent is the party responsible for the “Price Stabilization Process”
Modus Operandi – Contd…
• SA enters into an agreement with the Promoters or Pre-Issue Shareholders, who will “lend” there shares under provisions of the Chapter pertaining Green Shoe Option in the SEBI DIP Guidelines. (The Maximum no. of shares that may be borrowed should not exceed 15% of the total IPO size.
• The Lead Merchant Banker, in consultation with the SA, determine the no. of shares to be “Over Alloted”
Modus Operandi – Contd…
• A Special A/c for GSO Proceeds with a Bank & Special A/c for GSO Shares of the Company with a Depositary is opened by the SA • The Money received from the applicants against over allotment in the GSO shall be deposited in the Special A/c for GSO Proceeds distinct from the Issue A/c • This money is to be used in the buying shares from the Market for Price Stabilization during the Stabilization Period
Modus Operandi – Contd…
• Shares so bought from the Market lying in the GSO Demat A/c are to be returned to the Lenders, immediately. • Prime Responsibility of the SA shall be to stabilize the Post-Listing price of the Shares. • On expiry of the Stabilization Period, in case the SA doesn’t buy the shares to the extent of the OverAllotment by the Company, the issuer shall allot shares to the extent of the shortfall to the GSO Demat A/c, within 5 days. These shares would be returned to the Promoters in lieu of the shares borrwed from them, with the GSO Demat A/c being closed after that.
Modus Operandi – Contd…
• A Final Listing Application for these shares is made to all exchanges. • Finally, The SA has to remit an amount equal to (Further Shares alloted by the Issuer Company to the GSO Demat A/c) X (Issue Price) to the Issuer Company from the GSO Bank A/c
Bibliography
• SEBI DIP Guidelines • SEBI Website
THANK YOU
doc_747970566.ppt
green shoe option
GREEN A Price SHOE Stabilization OPTION Mechanism
VNL
What is it ? – The SEBI Definition
• It’s an option of allocating shares in excess of the included in the Public Issue & operating a post-listing issue price stabilizing mechanism in accordance with the provision of Chapter VIII-A of the SEBI DIP Guidelines which is granted to a Company to be exercised through a “Stablizing Agent”
Modus Operandi
• 1.Authorization seeking the possibility of allotment of further shares to the “Stabilizing Agent” at the end of the Stabilization Period in the resolution of the General Meeting authorizing the IPO. • Appointment of a Stabilizing Agent from the IPO Management Team. This Agent is the party responsible for the “Price Stabilization Process”
Modus Operandi – Contd…
• SA enters into an agreement with the Promoters or Pre-Issue Shareholders, who will “lend” there shares under provisions of the Chapter pertaining Green Shoe Option in the SEBI DIP Guidelines. (The Maximum no. of shares that may be borrowed should not exceed 15% of the total IPO size.
• The Lead Merchant Banker, in consultation with the SA, determine the no. of shares to be “Over Alloted”
Modus Operandi – Contd…
• A Special A/c for GSO Proceeds with a Bank & Special A/c for GSO Shares of the Company with a Depositary is opened by the SA • The Money received from the applicants against over allotment in the GSO shall be deposited in the Special A/c for GSO Proceeds distinct from the Issue A/c • This money is to be used in the buying shares from the Market for Price Stabilization during the Stabilization Period
Modus Operandi – Contd…
• Shares so bought from the Market lying in the GSO Demat A/c are to be returned to the Lenders, immediately. • Prime Responsibility of the SA shall be to stabilize the Post-Listing price of the Shares. • On expiry of the Stabilization Period, in case the SA doesn’t buy the shares to the extent of the OverAllotment by the Company, the issuer shall allot shares to the extent of the shortfall to the GSO Demat A/c, within 5 days. These shares would be returned to the Promoters in lieu of the shares borrwed from them, with the GSO Demat A/c being closed after that.
Modus Operandi – Contd…
• A Final Listing Application for these shares is made to all exchanges. • Finally, The SA has to remit an amount equal to (Further Shares alloted by the Issuer Company to the GSO Demat A/c) X (Issue Price) to the Issuer Company from the GSO Bank A/c
Bibliography
• SEBI DIP Guidelines • SEBI Website
THANK YOU
doc_747970566.ppt