The Securities and Exchange Board of India (“SEBI”), pursuant to its circular dated December 8, 2020 (“Circular”), has introduced additional payment methods for making subscriptions and/ or payment of calls with respect to partly paid specified securities through self-certified syndicate banks (“SCSBs”) and intermediaries such as trading members/ brokers and registrar and transfer agents (“RTAs”).

The application supported by blocked amount (“ASBA”), which was introduced as the sole payment mechanism in initial public offers and rights issues, is an application for subscribing to a public issue or rights issue, along with an authorisation to SCSBs to block the application money in a bank account.

In light of the fact that, payment through ASBA mechanism is investor friendly and enables faster completion of the payment process, pursuant to the Circular, SEBI has introduced the below-mentioned additional payment channels for making payment towards balance money for calls in respect of partly paid specified securities:

1. Online ASBA:

This payment channel involves applying for making a subscription/ payment of balance call money through an online portal of the SCSB. On receipt of the application for making a subscription/ payment of balance call money, the SCSB will forward the application to RTA, and block the appropriate fund in the account of the shareholder.

2. Physical ASBA:

This payment channel involves applying for making a subscription/ payment of balance call money physically at the branch of the SCSB. On receipt of the application for making a subscription/ payment of balance call money, the SCSB will forward the application to RTA, and block the appropriate fund in the account of the shareholder.

3. Additional online mode:

This payment channel involves applying for making a subscription/payment of balance call money by using the three in one facility of linked online trading, dematerialised account and bank account, provided by some brokers.

The Circular further mentions that the payment period for payment of balance money in calls will be kept open for 15 (fifteen) days. The Circular also states that the intermediaries including the issuers and RTAs will be required to provide the specified security holders, necessary guidance on making payment of calls through ASBA mechanism.

The Circular will be applicable for all call money notices where the payment period opens on or after January 1, 2021.

Please find a copy of the Circular here.

This update has been contributed by Aastha (Partner) and Arjun Gopalakrishnan (Associate).