The Government have been
receiving a large number of complaints regarding non‑receipt/delay of
refund of share application money/allotment letters. In order to facilitate the
investors on the suggestion made by Securities & Exchange Board of India
(SEBI), a new instrument called stockinvest has been introduced as per scheme
prepared by State Bank of India and approved by Reserve Bank of India. As per
the Scheme, the stockinvest instrument provides for the investors to indicate
the name of the issuer, number and amount of shares/debentures applied for, a
space for the authorised signatory of the company to indicate the entitlement
to shares and debentures applied for and a statement from the bank expressing
that it is guaranteed for payment at par on all branches. A investor who has an
account for a deposit with the bank issuing the stockinvest will apply for
blank stockinvests. The issuing bank will give the stockinvests duly signed and
also marking the date to the investor. Simultaneously, the bank will mark a
lien on the investor's account to the extent of the stockinvests issued. The
investor, while applying for public issues will enclose the stockinvest forms
duly filled in along with the application forms and send them to the collecting
bank as he normally does in the case of cash, cheques and drafts under existing
system. Stockinvest is not an alternative but an additional facility available
to the investor in case he so opts. Under the scheme the company while deciding
the basis of allotment would consider along with other applications, the
applications received from the investor who has opted for payment by new
instrument. Once the basis of allotment to all the applicants is decided the
company would encash the stockinvest instrument in respect of those applicants
who are successful allottees and partially of those who are partially
successful. The unsuccessful applicant's stockinvest instruments would be
returned to the investor without encashing them. The successful/partially
successful applicant's instruments would, after encashing be deposited in the
separate bank account where the cash and other moneys received from other
investors are deposited. The stockinvest scheme is in conformity with the
provisions of Sections 69 and 73 of the Companies Act. In this connection it
may be stated that under sub‑section (1) of Section 69 of the Act, the
share application money can be paid either in cash or by a cheque or by any other instrument.
2. The aforesaid procedure has been
prescribed as a measure to avoid any complaint about non payment/delay in
refund of share application money in terms of Section 73 of the Companies Act
from the investing public.
3. You are requested to advise your
constituent member‑companies to adopt the aforesaid new scheme in consultation with State Bank of
India and Securities & Exchange Board of India. [Circular No. 2/92, dated 9‑1‑1992
Issued by the Ministry of Law, Justice & Company Affairs, Department of
Company Affairs, vide File No. 10/2/92‑CL. V, dated 9‑1‑1992].
Thousands of complaints have
been received with respect to non‑receipt of the refund moneys. In order
to facilitate the investors, the Government has decided to introduce a new
instrument called "STOCKINVEST". The details of the scheme have been
prepared by SBI and approved by RBI. The Indian Bankers' Association is taking
steps to circulate it for information and action by other banks.
The
STOCKINVEST instrument provides for the investors to indicate the name of the
issuer, number and
amount of shares and debentures applied for, a space for the authorised
signatory of the company to indicate the entitlement to shares and debentures
applied for and a statement from any scheduled bank expressing that it is
guaranteed for payment at par on all branches. The investor who has an account
or a deposit with the bank issuing the STOCKINVEST will apply for blank
STOCKINVESTs. The issuing bank will give the STOCKINVESTs duly signed and also
marking the date to the investor. Simultaneously, the bank will mark a lien on
the investors' account to the extent of the STOCKINVESTs issued. The investor,
while applying for public issues will enclose the STOCKINVEST forms filling in
his part along with the application forms and send them to the collecting bank
as he normally does in case of cash, cheques and drafts under existing system.
Companies Act sections 69
and 73 deal with receipt of moneys and allotment in pursuance to an issue. At
present, the applicants are required to send application moneys along with
their application forms. The application moneys can be paid by cash or cheque
or other instrument (section 69). The application forms from all the
application centres are collected by the company or the Registrars to an issue.
Thereafter in consultation with the Regional Stock Exchange, the company
decides the basis of allotment and the successful and the unsuccessful
allottees are identified.
Once the basis of allotment
is decided, the company utilises the moneys received from the investors either
for refund or for adjustment against the allotment of shares/debentures
[section 73(3A)]. The unsuccessful applicants or the partially unsuccessful
applicants are refunded their moneys while the successful or partially successful
applicants are sent formal letters of allotment by the companies.
STOCKINVEST instrument is an
additional facility available to an investor in case he so opts. The instrument
is essentially a combination of a letter of authority and a guaranteed cheque
and is as good " a cash. 'Me scheme provides for various denomination of
STOCKINVEST in order to enable partial encashment. Under the STOCKINVEST scheme
the company while deciding the basis of allotment would consider along with
other applications, the applications received from the investor who has opted
for payment by the instrument called STOCKINVEST.
Once the basis of allotment
of, all the applicants is decided the company would encash the STOCKINVEST
instrument fully of those applicants who are successful allottees and partially
of those who are partially successful. The unsuccessful applicants' STOCKINVEST
instruments would be returned to the investor without encashing them. The
successful/partially successful applicants' instruments would, after encashing
be deposited in the separate bank account where the cash and other moneys
received from other investors are deposited. This would be done before formal
allotment is made so as to meet the requirements of section 69.
Therefore, the STOCKINVEST scheme
is in conformity with the provisions of sections 69 and 73 for the following
reasons:
1. Companies Act permits an investor to
pay by cash, cheque or other instrument [section 69(1)]. STOCKINVEST is an
instrument approved as such by the Reserve Bank of India.
2. Once the basis of allotment is decided,
the STOCKINVEST instrument of successful (full or partial) allottees is
encashed. The company therefore has before allotment an instrument which is
paid (section 69).
3. The STOCKINVEST instrument of unsuccessful applicants is
returned without encashing it.
4. The moneys received in pursuance to
encashment would be kept in the separate bank account where the company would
also deposit the cash and other moneys received by way of cheque, bank drafts
etc. Thus, these moneys would form part of all moneys received in pursuance to
prospectus before allotment as required by section 69(4) and section 73(3).
5. The moneys received in pursuance to the
encashment of the STOCKINVEST scheme is not to be utilized for any purpose
except for adjustment against allotment [section 73(4)].
6. All the moneys received in the separate
account mentioned above would be utilized for adjustment against the allotment
of shares/debentures or for refund to the unsuccessful applicants (other than
stockinvest investors) [section 73(4)].
7. No allotment is made to any investor
(including an investor opting for STOCKINVEST) unless the minimum subscription
is received [section 69(4)].
8. The above procedure would be required
to be completed within the time stipulated in section 69 (120 days) and section
73 (10 weeks).
Hence, this instrument meets
with all the requirements of section 69 and section 73. This would also
minimise to large extent, the problem of investors' funds being locked up with
companies for a long period, pending refund. Lacs of investors would be
benefited by the scheme.
Eligibility.- All
individuals can seek issue of stockinvest forms of appropriate denorriinations
against deposits
held by them or on payment of the requisite sum. [Lien will be marked against
these deposits for the amounts of Stockinvests issued only and no lien will be
marked against unutilised drawing power in the investor's overdraft or loan
account for the purpose).
Instrument.‑ Stockinvest is a letter of authority‑cum‑cheque
as per the specimen enclosed, which the payee (a company issuing shares,
debentures or bonds) can encash for the authorised or a reduced sum, based on
actual allotments made to the investor.
Denominations.‑ Stockinvest will be issued in denominations of Rs.
250, Rs. 500, Rs. 2,500, Rs. 5,000 and Rs. 10,000.
Price.‑ The various denominations of stockinvest will
be priced based on a liability study being undertaken by our Management Science
Department.
Period.‑ The stockinvest is valid for a period of six months.
Interest.‑ The
stockinvest is issued after a lien is marked for the appropriate amount on the deposit account of the
investor and the deposit will continue to bear interest at the agreed sum till
the instrument is actually to be debited.
Non‑allotment to investors.- In case of non‑allotment,
the stockinvest forms are cancelled and filed with the bankers to the issue and as per
advice received from them, lien will be lifted from the account of the investor
concerned.
Payment.‑ Stockinvest is payable at par at all branches of the bank and
can be presented in
Banks Clearing
House. It bears the appropriate MICR cheque features.
Special benefits.‑ The stockinvest will ensure that only those,
instruments that represent allotments are actually collected. Thus, the load or) the clearing
system will be less. Refunds need not be issued in case of non or partial
allotments,' reducing the work load at the registrars. The
capital/debenture/bond issuing companies need not have the bother of holding
sums of money which cannot be used by them adequately, till the allotments are
made.
Further simplification of Stockinvest Scheme
The Reserve Bank
of India has simplified the Stockinvest scheme to make it more "investor
friendly".
Now, the
Stockinvest will be valid for four months against the earlier validity period
of six month). Also, now the registrar to the issue will directly return the
cancelled Stockinvest to the investor in case of non‑allotment. This
would avoid hardships to investor's on account of delays.
Banker's lien on
the investor's deposit account would be automatically lifted when a valid
instrument is presented by the controlling branch of the bank after allotment;
the cancelled Stockinvest is surrendered by the investor; or an indemnity bond
is executed in favour of the bank after the expiry period of four months, in
cases where investor has not received the advice of allotment.
Cancelled
instruments would now be directly sent back by the registrars of the issue to
the investors. Registrars should be duly authorised by the companies for this
purpose. Earlier, in case of non‑allotment, the registrar was to give a
list of cancelled Stockinvest forms to the issuing banker who in turn was to
inform the concerned issuing branch which was to advise the investor about
lifting of the lien.
To facilitate
such direct mailing of the instruments, the Stockinvest form would now provide
a ,,pace at the back, where the investor would be required to fill in the
address while filling up the share application form. In respect of Stockinvest
forms which have already been printed and supplied to branches for use,
however, a slip of paper of the same size as the instrument might be attached
by banks while issuing Stockinvest so that investors could give their address.
Banks would
henceforth be allowed to issue Stockinvest only if they make payment
arrangements at all the "mandatory centres" as decided by SEIJI from
time to time‑at present 57. Stockinvests would also now be printed
without specifying the denominations. The amount would be filled up by the
issuing branch at the time of issuing the instrument. This is to ensure that as
far as possible, only one Stockinvest is submitted with each application for
shares.
Introduction of Stoc kinvest in Primary Capital Market for NRIs/OCBs
With a view to
enabling non‑residents of Indian nationality/origin (NRIs) and overseas
corporate bodies predominantly owned by such persons (OCBs) to avail of the
Stockinvest facility to apply for shares/debentures with repatriation benefits
to be issued to them by Indian companies under public issues with Reserve
Bank's prior permission; it has since been decided that authorised dealers may
issue Stockinvest to NRIs/OCBs subject to following conditions:
(i) The Stockinvest to be issued to NRIs should be of Light
Green colour;
(ii) It should be superscribed with the
notation that the Stockinvest has been issued against lien on NRE/FCNR accounts
of the investor and the same will be paid when presented out of repatriable
funds held in NRE/FCNR account.
(iii) All other guidelines issued by
Development of banking operations and development shall be followed.
[Issued by the Reserve Bank
of India, Exchange Control Department, Central Office, vide AD (GP Series)
Circular No. 27 dated 23‑10‑1992 in continuation of earlier
Circular DBOD BC 76/ 24.47.001‑91/92, dated 1‑2‑1992].
Stock Invest available to individual investors and Mutual Funds only
RBI Instructions dated 5‑9‑1994.- The
Reserve Bank of India has issued revised instructions modifying the stockinvest
scheme. The stockinvests would now be restricted to individual investors and
mutual funds only. Stock‑brokers, corporate bodies, banks and financial
institutions, would not be allowed this facility.
Stotkinvest to be issued against deposit and balances.‑ As
per the revised instructions, the stockinvest's would be issued only against term
deposits and credit balances available in savings bank or current accounts.
Stockinvest not to be issued in blank.‑ The
stockinvest instrument would not be issued in blank. The banks would henceforth fill in the
name of the capital issuing company before the stockinvests are delivered to
the applicants.
Banks would
issued stockinvets only if they have made arrangements at all the mandatory
centres as decided by the Securities and Exchange Board of India (SEBI) from
time to time. All other terms and conditions for issue of stockinvests by banks
remain unchanged.
The revised
instructions were issued following the findings of test checks/scrutinies of
the operations of the stockinvest scheme conducted by the Reserve Bank which
revealed certain iffegularities. It was observed that banks were allowing bulk
purchases of stockinvests by corporate bodies, financial institutions, and
share brokers. Stockinvests were also being issued without adequate deposit
cover and/or against third party deposits. They were also issued against
available drawing power in cash credit and overdraft limits of the applicants
and uncleared clearing cheques/expected credit. Pre‑dated stockinvests
were also being issued by banks. It was also found that the stockinvests were
being used by third parties (i.e. other than the purchaser). [RBI Press Release
dated 6‑9-1994.]
Circular No. DBOD FSC BC
100/24/47/001/94, dated 2‑9‑1994
As you are
aware, the stockinvest scheme was introduced to avoid hardship and loss of
interest on account of the delays in allotment of shares and debentures. The
Reserve Bank of India had recently conducted test checks/scrutinies of the
operations of stockinvest scheme. The important irregularities noticed are set
out below
(i) Banks are allowing bulk purchases of
stockinvests by corporate bodies, financial institutions, and share brokers;
(ii) Stockinvests are issued without adequate
deposit cover and/or against third party deposits;
(iii) They are issued against available drawing
power in cash credit and overdraft limits of the applicants;
(iv) They are issued against uncleared clearing cheques/expected
credit;
(v) Banks issuing pre‑dated stockinvests;
(vi) Stockinvests are being used by third parties (i.e., other than
the purchaser).
2. In view of the irregularities observed
in the operations of the scheme, it has been decided to modify the scheme as
under:
(i) The stockinvests should be restricted
to individual investors and mutual funds only. Stockbrokers, corporate bodies,
banks and financial institutions, should not be allowed this facility.
(it) The stockinvests should be issued only
against term deposits, credit balances available in savings bank or current
accounts.
(iii) The stockinvest instrument should not be
issued in blank. The banks should, henceforth, fill in the name of the capital
issuing company before the stockinvests are delivered to the applicants.
(iv) Bahks should issue stockinvests only if
they have made arrangements at all the mandatory centres as decided by SEBI
from time to time (presently 30‑including 21 centres where stock exhanges
are situated).
3. All other terms and conditions for issue of stockinvests by
banks remain unchanged.
4. Please advise all your offices
authorised to issue stockinvests to strictly comply with the instructions
issued by the Reserve Bank of India. The banks should take steps to strengthen
the internal control systems to avoid irregularities in the issue of
stockinvests. We may add that violation of the instructions issued by us would
be viewed very seriously.
Press Release, dated 18-4‑1996
issued by the Reserve Bank of India
In consultation with SEBI,
the Reserve Bank has prescribed a ceiling of Rs. 10 lakh per individual per
capital issue for stock invests issued by banks. The ceiling which comes into
force with immediate effect is, however, not applicable to mutual funds.
Further, banks have also
been advised that
(i) share applications unaccompanied by
original stockinvests/cheques, furnishing declaration to the appropriate
authorities should not be treated as valid;
(ii) the banker's lien on the investor's
deposit account in respect of an unused stockinvest instrument should not be
lifted before the expiry period of four months.
Banks have been advised to
immediately bring these instructions to the notice of all their stockinvest
issuing branches and ensure strict compliance. Any violation/circumvention of
these instructions by banks would invite action by the Reserve Bank including
penal action as provided under the Banking Regulation Act, 1949.
It had come to the notice of
the Reserve Bank that in some instances promoters of capital issuing companies
had submitted share applications along with photocopies of stockinvests in
order to fulfil the requirement of a minimum subscription of 90 per cent of the
issue. The stockinvests were then cancelled within one week of their issue
although the cancelled instruments had been included for reckoning 90 per cent
of the subscription.
The Department of Company
Affairs, Government of India and the Reserve Bank of India have recognised the
Stockinvest as one of the instruments by which the application moneys for
subscription to shares, debentures etc. may be paid. In the light of the
experience gained, the Reserve Bank has on a review issued instructions to all
scheduled commercial banks to make the stockinvest scheme more investor
friendly. With a view to facilitate the use of stockinvest by the investors,
this release seeks to apprise the investors and others about the said
instructions and the manner in which the stockinvest has to be handled by them
from the time of its issue till it is discharged.
Issuing Banks
1.
(a) Each stockinvest should be properly
dated and issued under the signature of authorised signatory.
(b) Each stockinvest should contain the
particulars as to the name and code no. of the branch.
(c) Stockinvest should invariably be marked
as non‑negotiable transferable, crossed and payable to the banker to the
issue A/c issuer.
2. Stockinvest may be designed to provide
for insertion of the name and full address of the purchaser on its reverse,
preferably by providing a box. To the forms already printed and available for
issue, a suitable allonge may be added for the purpose to enable the Registrars
to the Issue to return the cancelled stockinvest to unsuccessful applicants in
window covers.
3. The issuing bank shall have branches or
make necessary correspondent arrangements with another bank to,facilitate
payment against the stockinvest at par at all mandatory collection centres.
4. After existing printed forms are
exhausted, fresh stockinvest forms may be so designed as to enter any
denomination in the space provided for the purpose and thus enable the
applicant to submit as far as possible only one stockinvest along with each
application.
5. Under the revised arrangements, the
Registrars to the issue are required to return the stockinvest duly cancelled
to the unsuccessful applicants. Accordingly, on production of the cancelled
stockinvest by the applicant the issuing branch shall lift the lien
immediately.
In case of
partial allotment and where more than one stockinvest is used, unutilised
stockinvest will be cancelled. Where, however, the cancelled stockinvests are
not presented on expiry of four months from the date of issue or no
"paid" advice or any other intimation has been received by the
issuing branch from its controlling office, the lien may be lifted on a request
received from the applicant against an indemnity bond furnished by him.
6. Where full or partial allotment is
made, the Registrars to the Issue shall present the stockinvest to the
company's bank for encashment in the normal course through clearing. On receipt
of the paid discharged instruments the issuing branch would debit the account
of the purchaser to the extent of the amount paid and lift the lien for balance
of the amount.
Investors
1. Any person ("the investoe,) may
approach the issuing bank with whom he maintains an account, for issue of
stockinvest of required denomination/s for payment of application and/or
allotment money wherever applicable while making an application for issue of
shares, debentures, etc.
2. The investor shall give irrevocable
authority to the issuer bank to mark a lien to the extent of the face value of
stockinvest on his deposit account with the issuer bank.
3. Investors, in their own interest,
should preferably use stockinvest within ten days from the date of issue to
ensure that it remains valid till the time of collection.
4. The investor shall provide necessary
details, such as payee's name, amount, number of shares applied for,
application form number, etc, in the left hand portion of the stockinvest and
his name and address in a box on the reverse of the stockinvest before depositing
it with Banker to the Issue.
In case a box is
not provided on the reverse of the stockinvest for writing the name and address
of the investor, an allonge may be obtained for the purpose and attached with
the stockinvest. The allonge should be used to write the investor's name(s) and
full address to enable the Registrars to return the cancelled stockinvest
directly to the investors.
5. As far as possible the investors should
use only one stockinvest along with each application for subscription to an issue.
If stockinvest of an odd amount is required and the same is not available in
the printed form with the issuing bank, the investor should request the issuing
bank to issue printed stockinvest for the nearest value and the balance may be
issued in the prescribed stockinvest form by filling the amount manually.
6. The investors should not hand over
stockinvest taken against their own account to any third party. The stockinvest
is intended to be utilised only by the account‑holder applicants.
7. In case of partial/full allotment, stockinvest will be sent
to the issuing branch through the 0 controlling
branch of the stockinvest issuing bank after collection.
8.
(1) Investors may please note that in case
of partial or non‑allotment, lien shall be lifted in the following manner
-
(a) In case of non‑allotment, on
presentation by the applicant to the issuing bank branch of the stockinvest
duly cancelled by the Registrar.
(b) In case of partial allotment (for the
unutilised amount), on receipt of advice from the controlling branch of the
issuing bank as to the amount collected or surrender of unutilised cancelled
stockinvests received by the investors directly from the Registrar.
(2) In case the cancelled/partially utilised
stockinvest is not received by an investor from the Registrar, lien will be
lifted by the issuing branch on expiry of four months from the date of issue
against an indemnity bond from the investor.
9. Multiple applications under a single
stockinvest will be rejected as each application is required to be accompanied
by a separate instrument.
10. Inquiries relating to stockinvest may be
addressed only to the Registrars and not to the issuing bank.
Controlling Branches of the Collecting Banks/Companies' Banks
1. Application forms together with the
relative stockinvest instruments shall, on receipt, be segregated and arranged
issuing bank‑wise and forwarded to the Registrar along with appropriate
schedule for processing simultaneously with other applications for which
payment has been received by other modes of payment.
2. In case of full or partial allotment, a
list of allottees together with stockinvests duly completed and signed by the
Registrar will be forwarded to the company's bankers who will arrange for
collection of their proceeds for credit to the company's application account.
Registrars to Issue
1. Registrars shall receive applications
for subscription to shares, debentures, etc. accompanied by stockinvest along
with separate schedules from the controlling branches of bankers to an issue.
2. Registrar shall give in‑house
number on the reverse of the stockinvest as indicated in the application and
thereafter detach the stockinvest and keep it in safe custody. The in‑house
number should bear distinctive character.
3. Registrars shall process applications
with stockinvest simultaneously with other applications for working out the
basis of allotment and despatch of appropriate advice. For the purpose of
allotment, applications received with stockinvest should invariably be given the
same treatment as applications received with other modes of payment.
4. Registrars shall generate report for
non‑allottees and all successful/partially successful allottees. Only
stockinvests of such successful applicants shall be segregated, while other
stockinvests shall be cancelled.
5. In case of non‑allottees/partially
successful allottees with more than one stockinvest, the cancelled stockinvests
shall be returned to the applicants along with the relative advice. Stockinvest
should bear stamps such as. "CANCELLED" and "NOT ALLOTTED"
across the face of the instrument.
6. In case of full or partial allotment,
the right hand portion of the stockinvest shall be filed in for the amount
payable on the shares/debentures, etc. allotted and the stockinvests shall be
discharged on behalf of the issuer co, any for collection of proceeds.
7. Registrars shall deposit stockinvest,
duly filled in and sorted out "Issuer bank branch‑wise" (except
at Bombay, Delhi, Calcutta, and Madras as in the case of cheques/drafts), with
the company's banker whose name shall be‑intimated to him in advance by
the company and who will take further steps to realise the amount of the
stockinvest from the issuing bank through banking channel and credit the
company's account,
8. Registrars shall reject multiple applications received with
a single stockinvest.
9. Registrars shall regularly maintain a proper record of
applications received with stockinvests.
|
Payee's account only Not negotiable |
STOCKINVEST |
(Not Over Rs. 250, Rs. 500, Rs. 2,500, Rs. 5,000,
Rs. 10,000) |
|
To State Bank of India, |
|
DATE OF ISSUE ________________ (Valid for payment for six months from the above
date). Payment guaranteed at part on the term overleaf (Published hereunder) |
|
PAY Messrs _________________________________ Rs.
_________ (Rupees __________________ only) and debit the amount to my
Current/SB Account No. ___________ Certified that this payment is towards
application money for (no.) shares/debentures/bonds for Rs. _________ each
applied to the payee company vide my application form No. ________
(enclosed). I further authorise the Bank to pay a reduced amount if so
indicated by the payee on the right hand side thereof. Singnature of the account
holder (Full name
_______________) Date ________ |
FOR
STATE BANK OF INDIA Branch Manager _______________ (Branch) (SS No.
_____________) To be filled in by payee Entitlement
for allotment of shares/ debentures/bonds number _______ against cation No.
_____ Received the application money of Rs. ______
(Rupees ________________ only) claimed against the above allotment. For and on behalf of Messrs _________________ Place _____________ Date _____________ Authorised Signatory (Payee’s signature) |
(S. No. of Cheque) (Bank Code) (Account Code)
Terms of Issue and Payment of Stockinvest
1. It is issued to the applicant, to be
used for applying for new issues of shares/debentures/bonds only.
2. The applicant will authorise payment of
the maximum sum payable towards application money for the shares/debenturestbonds
applied on the left hand side of Stockinvest. The payee will fill in the actual
amount receivable on the right hand side indicating the number of
shares/debentures/bonds for which payment is appropriated. The amount shown on
the right will be equal to or less than the amount indicated on the left and
should be within the overall ceiling for Stockinvest, indicated on the top
right hand side.
3. Stockinvest is paid to the payee
filling in the required particulars on the right side under due authorisation
and discharge by their authorised signatory and presenting it for payment.
4. Stockinvest is neither transferable nor
negotiable. Ile issuing bank undertakes to pay the lower of the two sums
indicated on the face of the instrument (representing the application money
payable on his entitlement of shares/debentures/bonds according to the basis of
allotment and his application) in terms of the authorisation given by the
account holder herein. Payment will be made only by credit to the payee's
account with their banker.
5. Stockinvest is current for six months
from the date of its issue indicated on its face and no amount can be claimed
on the Stockinvest by the issuing bank branch unless it is presented to it
within six months.
6. Stockinvest is payable at all branches of the issuing bank.
7. Stockinvest is valid for payment only
when signed by the issuing banker at the appointed place on its face.
8. The account holder's instructions to the bank, given herein,
are irrevocable.
9. It is understood that at the explicit
undertaking of the account holder an amount equivalent to the sum mentioned on
the left hand side of the Stockinvest is either debited to his account or lien
marked on his deposit account, from the date of its issue, till full liability
under the Stockinvest is extinguished.
10. The bank shall not be liable for any
delay, error, fraud, forgery or any other lapse in the issue or encashment of
the Stockinvest. It shall also be not liable for any losses/damages in case of
death, insanity or insolvency of the drawer before actual allotment/delivery of
the relative shares/debentures/bonds by the payee company.
HANDLING OF APPLICATIONS
ACCOMPANIED BY STOCKINVEST BY THE REGISTRARS TO THE ISSUE
SEBI has been
receiving a number of complaints from investors about the unequal treatment
given to the applications accompanied by stockinvest. Particularly, in case of
non‑allotment, there is inordinate delay in receipt of unutilised
stockinvest with the result that the investors are not in a position to recycle
their funds for the purpose of reinvestment. In order to mitigate such
difficulties faced by the investors and to remove some of the impediments in
the smooth functioning of stockinvest scheme, SEBI has, in consultation with
the Reserve Bank of India and the Indian Banks' Association, finalised a
detailed procedure for handling applications accompanied by stockinvest, by
various intermediaries.
This circular
outlines the procedure to be followed by the Registrars to the Issue while handling
applications accompanied by stockinvest:
1. Registrars shall receive applications
for subscription to shares, debentures etc. accompanied by stockinvest along
with separate schedules from the controlling branches of bankers to the issues.
2. Registrars shall give in‑house
number on the reverse of the stockinvest as indicated in the applications and
thereafter detach the stockinvest and keep them in safe custody. The inhouse
number should bear distinctive character.
3. Registrars shall process applications
with stockinvest simultaneously with other applications for working out the
basis of allotment and despatch of appropriate advice. For the purpose of
allotment, applications received with stockinvest should invariably be given
the same treatment as applications received with other modes of payment. Any
deviation from this will be viewed seriously.
4. Registrars shall generate report for
non‑allottees and all successful/partially successful allottees. Only
stockinvests of such successful applicants shall be segregated, while other
stockinvests shall be cancelled.
5. In case of non‑allottees/partially
successful allottees with more than one stockinvest, the cancelled stockinvests
shall be returned to the applicants along with the relative advice. The
stockinvest should bear stamps such as‑“CANCELLED" and "NOT
ALLOTTED" across the face of the instrument.
6. In the case of full or partial
allotment, the right hand portion of the stockinvest shall be filled in for the
amount payable on the shares/debentures etc. allotted and the stockinvests
shall be discharged on behalf of the issuer company for collection of proceeds.
7. The Registrars shall arrange to obtain
an authorisation from the issuer companies to sign on their behalf and for
realising the proceeds of stockinvest from the issuing banks or for affixing
"non‑allotment" advice on the instrument, or cancelling the
instrument of non‑allottees or partially successful allottees with more
than one stockinvest.
8. Registrars shall deposit stockinvest, duly
filled in and sorted out "issuer bank branch‑wise" (except at
Bombay, Delhi, Calcutta, and Madras as in the case of chequestdrafts), with the
company's banker whose name shall be intimated to him in advance by the company
and who will take further steps to realise the amount of the stockinvest from
the issuing bank through banking channel and credit the company's account.
9. Registrars shall advise the investors
of the outcome of allotment by issuing allotment advice/ despatching of
shares/debentures etc. without loss of time.
10. Registrars shall reject multiple applications received with a
single stockinvest.
11. Registrars shall regularly maintain a
proper record of applications received with stockinvests, giving inter alia the
name of the investor, station code, number and value of stockinvest attached,
utilised and returned to enable the Registrars to reply to investors' queries
promptly.
The Registrars
are advised to follow the procedure detailed above meticulously. Non‑compliance
of any aspect by them would invite penal action by SEBI.