Introduction: - The public invites the public to buy shares by the company's proposal.
- The company also gets out of the securities through public distribution.
- Besides this, shares of rights are shared by bonus shares.
- According to company firm, the company can issue its shares, which can be called Offer for Sale.
- Invites the public to apply to buy shares and other securities.
- It is given specific rituals.
- The procedure for sharing application can be shown as follows.
- Procedure of Share Application
(1) To open an account in the bank: - The filling bank is appointed to carry out transactions related to the issue of share capital by the company. • The company can open the current account in any scheduled bank. • Special accounts are opened only for the company to provide share capital transactions to the paying bank. • This account is called an escrow bank account.• This account is opened by introducing a copy of the resolution for opening the account in the meeting of the Board of Governors and by presenting other documents.
• In opening this account, the company insists that the amount of share wages will be deposited in this account and after the completion of the share exchange, the total amount including share capital and premium amount will be shared in the accounts of the company.
• This account will be closed after the completion of the share approval procedure.
• SEBI's final guidelines (1-1-2016) can be made by the application through ASBA (Application Supported by Blocked Amount).
• According to the ASBA function, the amount of city application which is blocked in the applicant's bank account until the approval of the share is approved, i.e., the amount of the share application is not transferred to the bank account of the company.
• The amount of shares that the applicant receives in the same amount after the expiry of the share approval process is changed from the applicant's account to the bank account of the company.
• Therefore, the question of refunding the nominal amount of money does not arise.
(2) Receiving of share Application: - After publication of a public advertisement advertisement, the company informs the newspaper about the dates in which the fare will be open during the tenure of the company.
• Usually this period is three to five days.
• During this time, all types of investors seeking to apply for shares, such as petals, stock brokers, stock exchanges, and ASBA received the application form from the bank's approved branch and submit their full details to the broker or sub-broker with the signature.
• Because banks have to block the share application amount in the applicant's account.
• The next procedure is based on the signature of the applicant's bank account and the signature of the demat account as per the sample of the bank account.
• After receiving the share applications, each applicant blocks the amount of the application in the account and informs the registrar of the company. And the shares of the share application are handed over to the bank manager's lead managers.
(3) Classification of share application: - After receipt of share requests, the roll is prepared and applications with incomplete details are rejected.
• Thereafter, the details of shared disputes of the shares are prepared.
• Distributor applications are classified based on different types of applicants.
• According to SEBI guidelines, the types of applicants are as follows.
1. Investors in retail
2. Non-institutional investors.
3. Investors with institutional high net worth
4. Applicants from the company's employees are classified as applications in four types of applicants.
• According to the SEBI guidelines, retail investors are required to reserve at least 10% share of the total loaded shares.
• Usually the company refers to how many certificates are reserved for share allocation for each type of applicant in all its advertisements.
(4) Preparation of share allotment and allotment sheet: - Applications from each applicant have been received and compared to how many shares are sanctioned in that category.
• Proportional allocation is made if the received applications are more than the number of shares allotted for that class.
• Fulfilling lead managers, company secretaries, and allotment of shares by the authorized share-market applicants for the registration of shares are finalized.
• The names of the applicants who have allocated shares, demat account number, number of allocated shares, ID of the Depository Participant. Etc. The form along with the information is prepared which is called Share Transfer Form.
• The number of shares allocated to them by the stock market as well as by the depository participants, is communicated to SMS and e-mail.
• Share sharing is also done by the company's registrar and SEBI by the company.
Conclusion:-
• Thus, various stages of the share application are carried out as stated above.
• Only after the passage of the share application process, the shares are allotted to the applicants according to the application they have made and further proceedings are carried out.