SEBI says no to non-IPO first day price band

SEBI says no to non-IPO first day price band

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Mumbai: Market regulator Securities and Exchange Board of India (SEBI) has asked the bourses to do away with imposition of first day price bands in the case of non-IPO share listings.

In a circular sent to all the stock exchanges of the country, Securities and Exchange Board of India said that it has received representations expressing concerns of effect of price band on price discovery in cases of merger, de-merger, amalgamation, capital reduction and scheme of arrangement.

The stock exchanges currently have a policy for imposition of price band on first day of commencement or recommencement of trading in respect of cases of merger, de-merger, amalgamation, capital reduction, scheme of arrangement, revocation of suspension, direct listing on another stock exchange while being listed on one exchange.

After consultation with the bourses, SEBI said it has been decided that in cases of merger, de-merger, amalgamation, capital reduction, scheme of arrangement, and in cases of rehabilitation packages approved by the Board of Industrial and Financial Reconstruction and in cases of Corporate Debt Restructuring (CDR) packages, "there is no need to have a price band on the first day of commencement or recommencement of trading." The new policy for commencement and recommencement of trading of securities would come into force with immediate effect.

SEBI has also asked stock exchanges to provide it with the implementation status in the next Monthly Development Report.

"The price band may be retained in all other cases on the first day," SEBI said.

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