SEBI: Additional Payment Methods like ASBA for Payment of Balance Money in Calls for partly paid specified securities introduced

The Securities and Exchange Board of India (SEBI) on Tuesday this week has introduced additional payment mechanism, including Application Supported by Blocked Amount (ASBA), for making subscription and/or payment of calls in respect of partly paid specified securities issued by the listed entity.

According to a statement issued by SEBI in its circular it has said, “SEBI, in its endeavour to protect investors’ interest and reduce investor grievances relating to refund, introduced Application Supported by Blocked Amount (ASBA) as the sole payment mechanism in the IPO and Rights issues.”

SEBI also stated, “Considering that payment through ASBA mechanism is investor-friendly and enables faster completion of the process, it has been decided to introduce additional payment mechanism(i.e. ASBA, etc)for making subscription and/or payment of calls in respect of partly paid specified securities through SCSBs and intermediaries such as Trading Members/Brokers- having three in one type account and Registrar and Transfer agents (RTA).”

SEBI has provided both the online as well as physical ASBA additional payment methods and the facility of linked online trading, DEMAT and bank account (three-in-one type) account which is offered by some brokers.

In the Online Payment Method, the Investors can apply through an online portal of the self-certified syndicate banks (SCSBs) or physically apply to the branch of an SCSB.

The SCSBs would then send the application to RTA and block funds in shareholders accounts.

The Market Regulator (SEBI) has clarified that the payment period for payment of balance money in calls will be kept open for 15 days.

It, further, said intermediaries including the issuer company and its RTA would provide necessary guidance to the specified security holders in use of ASBA mechanism while making payment of calls.

The circular issued by SEBI shall be applicable for all Call Money Notice wherein the payment period opens on or after January 01, 2021.

With Warm Regards,

CL Bureau.