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Monday, August 20, 2012

The market regulator SEBI has said that the company issuing IPOs must announce the price band of the issue at least five working days before the issue opens

Currently, the price band could be announced two working days before the IPO opened. This often left very less time in the hands of investor to analyse and arrive at an informed decision. The move by SEBI is aimed at enabling the investor to take an informed call on whether the price is fair and improve the quality of investor decision making

The price band is the price range within which the company will offer the shares under the IPO. Under the regulations, the spread or the difference between the floor and the cap of the price band cannot be more than 20%. In other words, it means that the cap should not be more than 120% of the floor price


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