In a move poised to redefine the efficiency of India’s securities market, the Securities and Exchange Board of India (SEBI) has taken a monumental step by announcing the “Reduction of Timeline to T+3 Days” to list shares in public issues. In Circular SEBI/HO/CFD/TPD1/CIR/P/2023/140 dated August 09, 2023, SEBI announced the timeline reduction for listing shares from the existing T+6 days to T+3 days.
A Leap Towards Enhanced Efficiency: Reduction of Timeline to T+3 Days
After extensive discussions with market participants and factoring in the public’s feedback, SEBI has decided to reduce the listing timeline. The T+3 timeline implies that the listing of specified securities after the closure of a public issue will now occur within three working days, as opposed to the earlier requirement of 6 working days. The ‘T’ in T+3 represents the issue closing date.
Revised Timelines and Disclosure
As per the Circular, there’s a newly set schedule of timelines for listing specific securities and the other tasks related to the public issue process. These timelines are now available in the Annexure of the Circular. Notably, the T+3 timeline for listing will need to be disclosed in the Offer Documents of public issues.
Transparency and Disclosure: T+3 Days Timeline
To ensure transparency and clear communication, the circular mandates that the timelines for application submission, securities allotment, unblocking of application monies, and listing should be prominently included in pre-issue, issue opening, and issue closing advertisements issued by the issuer for public matters. This requirement aligns with the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 (ICDR Regulations).
Enhancing ASBA Processes
For Direct Bank ASBA and Syndicate ASBA applications, the Circular emphasizes the importance of confirming the PAN (Permanent Account Number) connected to the applicant’s bank account and application. The PAN mentioned in the application must match the PAN linked to the bank account. The Registrar to an Issue will undertake third-party verification by comparing the PAN available in the demat account with the PAN in the bank account. Mismatches will result in such applications being considered invalid for allotment.
Lock-In and Compensation
The circular outlines that the lock-in of pre-issue shares must comply with the ICDR Regulations, and the operationalization of lock-in shall follow the Standard Operating Procedure (SOP) of Depositories issued on August 08, 2023. Furthermore, compensation to investors for any delay in unblocking ASBA application monies will be calculated from T+3 day.
Applicability and Implementation
This Circular comes into play voluntarily for public issues opening on or after September 1, 2023. However, it becomes mandatory for public issues opening on or after December 1, 2023. Any previously prescribed timelines from SEBI’s circulars dated November 1, 2018, June 28, 2019, November 8, 2019, March 30, 2020, March 16, 2021, June 2, 2021, and April 20, 2022, are modified to align with this new Circular’s provisions.
Final Words
SEBI’s Circular aiming to shorten the listing timeline for shares in public issues to T+3 days is a notable advancement in streamlining processes and promoting efficiency in the Indian securities market. The complete Circular and related information are on the SEBI website under the ‘Legal → Circulars’ category.