Starting today, September 1, 2023, significant changes are in motion in India, affecting Initial Public Offerings (IPOs).
The introduction of the T+3 rule marks a pivotal moment for the country’s IPO market.
Market regulator SEBI (Securities and Exchange Board of India) has taken this innovative step to enhance investor interests in IPOs.
In this inaugural phase, the T+3 rule is being implemented on a voluntary basis, with plans to make it mandatory from December 1, 2023.
This groundbreaking move reduces the time required for companies to list their IPO shares on stock markets after the IPO’s closure.
Previously, this listing deadline was set at six days; now, it’s been trimmed down to just three days.
SEBI’s Approval in June
On June 28, 2023, SEBI granted its approval for the T+3 rule during an important meeting. The regulator stated that the implementation would occur in two phases.
In the first phase, it applies to IPOs commencing on or after September 1, 2023, on a voluntary basis.
In the second phase, it becomes compulsory for IPOs starting on or after December 1, 2023.
This decision followed extensive consultations with stakeholders, including investors, banks, brokers, and others.
Benefits of T+3 Formula
The T+3 rule signifies a notable change. After an IPO subscription process concludes, the listing deadline now stands at T+3, whereas the previous norm was T+6.
Beyond the faster listing process, this rule benefits investors who do not secure IPO share allotments; they will receive their refunds more promptly.
Consequently, capital raised through IPOs will swiftly reach companies.
Revised Company Procedures
Under the current IPO market rules, companies offering IPOs allocate shares three days after the bidding process closes, followed by submitting listing applications for stock exchange approval on the fifth day.
With the new changes, they will need to complete these tasks by 6:30 pm on the second day following the bid’s conclusion.
