SEBI, vide circular dated June 20, 2024, has put in place a framework for special call auction with no price bands' for effective price discovery of scrips of listed Investment Companies (“ICs”) and listed Investment Holding Companies (“IHCs”). Some of the key provisions are as follows:
- Criteria for Identification of Eligible ICs and
IHCs:
- the scrip of ICs or IHCs must be listed and available for trading for a period of at least 1 (one) year and the said scrips should not be suspended for trading;
- total assets of the company invested in scrips of other listed companies must be at least 50%;
- the 6 (six) month Volume Weighted Average Price (“VWAP”) of the scrip must be less than 50% of the book value per share of such company based on present value of their investments in shares of other listed companies. If the scrip has not traded in the previous 6 (six) months, the VWAP will be considered as zero;
- Procedure for Special call auction mechanism:
- stock exchanges will initiate special call auctions for eligible ICs or IHCs with no price bands, after giving a 14 (fourteen) day notice to the market;
- special call option mechanism:
- a call auction is successful if price discovery involves orders from at least 5 (five) PAN-based unique buyers and sellers;
- if the auction succeeds on any one exchange for a scrip listed on multiple exchanges, that exchange's price discovery forms the trading base at other stock exchanges;
- the special call auction mechanism will be provided only once in a year; and
- the first special call auction will be conducted in the month of October 2024 by stock exchanges based on the latest available audited financial statements of such companies.
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