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To expand their business empire companies need a large investment, to get high investment companies will enter stock market for the first time and bring the shares for the people to buy, this process is called initial public offer (IPO), book bidding is the process of restructuring the need for issued securities and price of these securities are determined by the auction for intended securities where donor wants to invest, in this way companies make the market, an the above is the process of making shares available to investors by the company.
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The securities which are issued by open book bidding requires the information of bidder and the bidders information is available to other bidders too, since the information is open this process is called open book bidding, in Closed book bidding the bidders details are confidential and it is only in online therefore no bidder will be known to another,according to SEBI, this process is for electronic utility purposes only.
There can be a price bond in securities floor price or in the bid amount in the offer document, the cap difference between floor price and price bond should not exceed 20%, that is cap should not be 120% more than floor, there can be a change in price bond and if it changes then there should be given an extra time for bidding but it should not exceed 30 days or a minimum of 3 days should be given.
The minimum amount that a bidder should posses to take a bid is called floor price.
4.Cut Off Price
To issue a book bidding the issuer should note it in price bond or red harding prospectus, reality discovered price should be greater than any price in price bond or should be greater than floor price, this price is called cut off price, according sebi icdr 2009 only the investors of small range can take cut off price.
5.Final Issued Price
Every companies issues time span and fluctuations in the all prices in the price bond will be uploaded in to computer then the final price will be given which is Final Issued Price.
6.No. Of days to keep open IPO/FPG Donors List
This list should be open for 3 days or 3 working days or the days without public holidays or if the list is taken for revision by book building process then the days can be extended for to open list is 3 days but the total bidding period should not exceed 10 days.
SEBI has introduced a new process in book building, if a person issuing to FPO fixes floor price then the floor price can be kept in red horror prospectus, if they have done red horror prospectus then they should intimate the floor price before one day of opening bids in newspapers.
The schedule 11 of SEBI ICRC regulation 2009 includes individual, non-institutional investors and employees and the the issues can be allocated as th percentage of issued price can be allocated to the bidder, in the issues or in price the bidder can increase or decrease his amount, the bidder can participate in one or many bids.
9.Fast Track Bids
SEBI introduced fast track bids in 2009, SEBI relaxed some of the fast track issues (FTIs), such as the average market capitalization of issues and issuer’s public shares, from Rs 5,000 crore to Rs 10000 crore. Some of the Fast Track Issues (FTIs), such as the average market capitalization of the issue of issuer’s issuer of the shares of the issuer, stabilize a total of 15% less than the amount issued by the public holding companies to the annual business sale for independent business ownership, from Rs 5,000 crore to Rs 10000 crore SEBI relaxed.
From 2 to 3 years many investors are subscribing to IPO and want to gain profits, investing in companies through IPO is good thought, after shares getting Allocation trying to sell the shares is not an appreciable thing, it is good way of getting into equities but should take advices from financial analyzers.