Changes to basis of allotment for IPOs rule

The Securities and Exchange Commission (SEC) has directed the Colombo Stock Exchange to amend the Listing Rules to incorporate changes to the Basis of Allotment (in the case of an IPO) with immediate effect.

Rule 3.1.5. Basis of Allotment

a) Subject to Rule 3.1.5 (b) the number and/or percentage of shares to be allotted to the public, employees, financial institutions etc by category and the manner in which the allotment is to be carried out. Where there is or is to be more than one class of shares (Other class of shares) in issue, like particulars shall be given for each additional class in accordance with these rules and subject to Rule 3.1.5 (b).

(b) (1) A minimum of 40% of the offered shares of a particular share class in an IPO to be initially made available for allotment to retail individual investors (Retail Individual Investor Category).

Retail Individual Investor shall mean an individual investor who subscribes for a maximum of 3,000 shares or a valuable of not more than Rs. 100,000 in a particular share class, whichever is higher.

(ii) A minimum of 10% of the offered shares of a particular share class in an IPO to be initially made available for allotment to Growth or Balance Unit Trust operated by Managing Companies licensed by the SEC to operate such unit trusts, where such unit trust comprises of not less than 500 unit holders resident in Sri Lanka who together hold at least 50% of that fund (Unit Trust Investor Category).

(iii) In the event of an under subscription in the Unit Trust Investor Category the Retail Individual Investor Category shall be given first priority in allotment of the under-subscribed shares

(iv) In the event of an under-subscription in the Retail Individual Investor Category, the Unit Trust Investor Category shall be given first priority in the allotment of the under-subscribed shares.