Know about primary market & process to apply for IPO/FPO/Right shares. In the previous section we know that what is share, what is share market, types of share & share market & brief introduction to primary market secondary market. In this section we will know details about primary market & way or procedure to invest in primary market namely IPO, FPO, etc.
Know about primary market & process to apply for IPO/FPO/Right shares.
Primary market is first steps for company to come in the share market. It is also called IPO (initial public offering) market. Hereby, company issue shares for general public to raise funds/capital. It is also called as first hand market, it is for only one time. The company directly float its shares directly to public through issue manager. General public also get chance to become owner of grown company. Company’s sole decision can’t sell shares to public.
Firstly, IPO/FPO issuance is to be approved from the annual general meeting (AGM) of company. Secondly, company will choose issue manager for IPO (Initial public offering) because company can’t sell its shares by own. Thirdly, company should apply for the approval from Security board for the issue. Than security board will thoroughly study the documents submitted by individual company & make final decision. If document submitted is good & found original security board will grant approval to issue IPO/FPO otherwise they reject the applications.
After the approval from Security board, company must publish notice regarding details of IPO/FPO to general public from national media.
The details include everything about company. They published details introduction of company, management team, directors, financial details, forecasted financial details, purpose of issuing IPO, issues details etc. Furthermore, issues details include: issue size, price per share, issue opening date, issue closing date, minimum & maximum application to apply, if any allocation of issues, issue manager, collection centre, etc.
Requirement for applying IPOs
- Open bank account (Banks must be connected with C-ASBA)
- Open DEMAT Account (you can open DEMAT account from Banks, Brokers, merchant banker, etc). It consists of 16 digits. It Cost Rs.150.
- Again visit the bank where you opened your account & Fill up C-ASBA registration form to get CRN number (C-ASBA Registration Number) from the bank. The bank will link your bank account with DEMAT account into CDS & clearing Ltd system & give you CRN number.
- Again visit the office where you opened DEMAT account take Mero share user & password. (For online application) It cost Rs.50 annually.
Note: Bank account is for saving or keeping your money. DEMAT account is for recording or keeping share of different company.
Process to apply for primary market (IPO)
After having Bank account, DEMAT Account & CRN Number you can apply for any IPO/FPOs in the market. After implantation of C-ASBA, one should not need to run here & there for applying IPO/FPOs as before. You can apply from your bank or online application through internet.
Manual application for IPO from Bank through C-ASBA
- Visit your banks’ nearest branches & take C-ASBA application form.
- Fill it properly & submit to bank. Your job is finished now.
The bank will verify application & check either you have sufficient balance in account for issue (IPO/FPO) or not. The bank will block amount for IPO as per application till the IPO allotment. After allotment if you are allotted than your bank will transfer the amount into the account of issue manager if not allotted blocked amount will be released.
Online application for IPO through C-ASBA for any issues
Once you get user password for “mero share” application. Then visit official website of CDS & Clearing Ltd.
Then, login to mero share.
Click on “MY ASBA”, you will get all the list of issuance like IPO, FPO, right shares.
Then, click on “Apply for Issue”, select any issue you want to apply.
Click on Apply bottom. Fill up the details & submit.
Also read: Part -1- what is share market?