SEBI Introduces a ‘Special Call Auction Mechanism’ for Price Discovery of Scrips of Listed Investment Companies
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- Last Updated on 22 June, 2024
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Circular No. SEBI/HO/MRD/MRD-PoD-3/P/CIR/2024/86; Dated: 20.06.2024
SEBI observed that the scrips of a few listed investment companies (ICs) and investment holding companies (IHCs) are traded infrequently and at prices significantly lower than the book value disclosed by these companies in their latest audited financial statements.
Moreover, these companies generally have no day-to-day operations and invest in different asset classes, including scrips of other listed companies. The variance in the market price and book value of such ICs and IHCs is adversely affecting liquidity, fair price discovery and the overall interest of investors in scrips of such companies.
Accordingly, SEBI has introduced a ‘special call auction with no price bands’ mechanism for effective price discovery of scrips of listed ICs or IHCs. Stock exchanges must conduct the first special call auction in October 2024 based on the latest audited financial statements of such companies.
SEBI has provided clear guidelines for identifying ICs or IHCs eligible for the special call auction. These companies must be identified based on uniform industry classifications provided by stock exchanges. Additionally, their scrips must have been listed and available for trading for at least one year and should not be suspended from trading. This transparent process ensures that only the most eligible companies are included in the auction.
Click Here To Read The Full Circular
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