Reservation on Competitive Basis

An IPO has many categories of investors that are eligible to subscribe to the company shares based on the reservation of such categories. A company can also make reservations in the IPO on a competitive basis.

As per the regulations under SEBI, a company that is planning to come up with an IPO can set up reservations on a competitive basis out of the total issue size after excluding the promoters’ contribution.

For whom is Reservation On Competitive Basis applicable?

This offer can be made to the following entities:

a. Employees of the issuer company
b. Existing shareholders of promoting companies (in case of new company)
c. Shareholders of existing group companies (in case of existing companies)
d. Persons associated with the issuer in the nature of depositors, bondholders, etc. as notified under SEBI regulation.
e. Other entities including Indian Mutual Funds, Foreign Institutional Investors, Indian and Multilateral development Institutions, and Scheduled Banks