Lead managers should be accountable for IPOs

The panel said these intermediaries were specialists on the entire issuance and guided the issuer through the maze of processes and orchestrate the diverse activities towards successful completion. There is scarcely an aspect in which they are not involved, it said.

The issuer has legal liability for many aspects such as mis-statements, statutory liability under Section 73 of the Companies Act.

“To implement this, Sebi will have to amend its guidelines,” Sebi said. The panel has recommended that the BRLMs should be entrusted with the overall responsibility for the issuance and will have to ensure due performance of the duties by the appointed agencies. Making participation in primary issues more easier, the task force suggested that NRIs should be permitted to electronically access application forms and transmit them together with electronic remittances from overseas to a syndicate member or broker in India.

With digital signatures now legal, such subscriptions would be secure, it said.

It is desirable to lay a uniform process whereby all refunds are credited to the NRE or NRO account specified in the form.

The panel suggested use of electronic clearing system (ECS) for faster refunds, Internet for primary market issuance and use of digital signature to save paper.

A 10 per cent margin requirement has been proposed on every QIB (qualified institutional buyers) bid, to be remitted into the issuer’s escrow account.

At present QIBs back their applications with funds upon confirmed allotments. This is radically different from the status for retail investors, who bring 100 per cent of the funds along with the application, obtain shares worth a fraction of the application amount, and then await a refund.

This places the two sets of investors on an unequal footing.