IPOs/FPOs/Rights
Issues
Secondary Market
Derivatives
Dealing with Brokers &
Sub-brokers
Mutual Funds
Buyback of Securities
Open Offers (under Takeover
Regulations)
Collective Investment Schemes
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IPOs/FPOs/Rights Issues
DOs |
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Read the Prospectus/ Abridged
Prospectus and pay special
attention to: |
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Risk factors
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Outstanding litigations and
defaults, if any |
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Financials of the issuer |
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Object of the issue |
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Company history |
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Background of the promoters |
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Instructions for making an
application. |
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In case of any doubts/problems,
contact the compliance officer
named in the offer document. |
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In case you do not receive,
within due period, the physical
certificates/ credit to demat
account or refund of application
money, lodge a complaint
with the compliance officer of
the issuer company and with the
post-issue lead manager listed
in the offer document. |
DON’Ts |
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Don’t fall prey to market rumours. |
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Don’t go by any
implicit/explicit promise made
by the issuer or
any one else. |
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Don’t invest
based on the prevailing bull run
of the market
index or of scrips of other
companies in the same industry
or scrip of
the issuer company/group
companies. |
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Don’t bank upon the price of the
shares of the issuer company
to necessarily go up. |
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^ TOP |
Secondary Market
DOs |
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Transact only through SEBI-recognised stock exchanges. |
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Deal only through SEBI-registered
intermediaries. |
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Complete all
required formalities for opening
an account with
the broker (Client registration,
Client agreement forms etc). |
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Ask for and sign the “Know Your
Client” Agreement. |
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Read and
properly understand the risks
associated with
investing in securities before
undertaking any transactions. |
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Assess the
risk-return profile of the
investment as well as the
liquidity and safety aspects
before making your investment
decision. |
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Ask all relevant questions and
clear your doubts with your
broker before transacting. |
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Invest based
on sound reasoning and
fundamentals of the company
after taking into account all
publicly available information. |
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Give clear and unambiguous
instructions to your
broker/sub-broker/ depository
participant. |
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Insist on a contract note for
each of your transactions and
verify all details in contract
note, immediately on receipt. If
in
doubt, crosscheck details of
your trade with details as
available on
the exchange website. |
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Scrutinize minutely both the
transaction and the holding
statements that you receive from
your Depository Participant. |
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Keep copies of all investment
documentation. |
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Handle Delivery Instruction
Slips (DIS) Book issued by DPs
carefully. Insist that the DIS
numbers are pre-printed and your
account
number (Client ID) is pre
stamped. |
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In case you are not transacting
frequently, make use of the
freezing facility provided for
your demat account. |
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Pay the required margins in the
prescribed time. |
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Deliver the shares/depository
slip in case of sale and pay the
money in case of purchase within
the prescribed time. |
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Participate and vote in general
meetings either personally or
through proxy. |
DON’Ts |
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Don’t undertake off-market
transactions in securities. |
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Don’t deal with unregistered
intermediaries. |
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Don’t fall prey to promises of
unrealistic returns. |
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Don’t invest on the basis of
hearsays and rumors. |
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Don’t forget to take account of
the potential risks that are
involved in the investment. |
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Don’t be
influenced into buying into
fundamentally unsound
companies (penny stocks) based
on sudden spurts in trading
volumes or
prices or favourable
articles/stories in the media. |
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Don’t follow the herd or play on
momentum. |
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Don’t be misled by hot tips. |
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Don’t try to time the market. |
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Don’t hesitate to approach the
proper authorities for redressal
of your doubts/grievances. |
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Don’t leave signed blank
Delivery Instruction Slips of
your
demat account lying around. |
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Don’t sign blank Delivery
Instruction Slips(DIS) and keep
them
with the Depository Participant
(DP) or with the broker to save
efforts
when required. |
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^ TOP |
Derivatives
DOs |
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Go through all rules,
regulations, bye-laws and
disclosures
made by the exchanges. |
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Trade only through the Trading
Members (TM) registered with
SEBI or through an authorised
person of the TM registered with
the
exchange. |
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While dealing with an authorised person, ensure that
the
contract note has been issued by
the TM of the authorized person
only. |
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While dealing with an authorized
person, pay the brokerage/
payments/ margins etc. to the TM
only. |
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Ensure that for every executed
trade you receive duly signed
contract note from your TM
highlighting the details of the
trade along
with your unique Client ID. |
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Obtain receipt for collateral
deposited with the TM towards
margin. |
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Go through the details of
Client-Trading Member Agreement. |
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Know your rights and duties
vis-à-vis those of the TM/
Clearing
Member. |
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Be aware of the risks associated
with your positions in the
market and margin calls on them. |
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Collect/pay mark-to-market
margins on your futures position
on
a daily basis from / to your TM. |
DON’Ts |
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Don’t start trading in
derivatives unless you have
understood
the Risk Disclosure Documents |
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Don’t trade on any product
without knowing the risk and
rewards associated with it |
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^ TOP |
Dealing with Brokers &
Sub-brokers
DOs |
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Deal only with SEBI-registered
brokers/sub-brokers. |
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Ensure that the
broker/sub-broker has a valid SEBI registration
certificate. |
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Ensure that the
broker/sub-broker is permitted
to transact in
the market. |
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State clearly to the
broker/sub-broker who will be
placing
orders on your behalf |
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Insist on client registration
form to be signed by the
broker/sub-broker before
commencing operations. |
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Enter into an agreement with
your broker/sub-broker setting
out
the terms and conditions
clearly. |
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Insist on contract note/
confirmation memo for trades
done each
day |
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Insist on bill for every
settlement. |
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Ensure that
broker’s name, trade time and
number, transaction
price and brokerage are shown
distinctly on the contract note. |
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Insist on periodical statement
of accounts. |
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Issue cheques/drafts in trade
name of the broker only. |
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Ensure receipt of payment/
deliveries within 48 hours of
payout |
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In case of
disputes, file written complaint
to the
broker/sub-broker, to the stock
exchange of which he is a member
and to
SEBI within a reasonable time. |
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In case of
sub-broker disputes, inform the
main broker about
the dispute within a maximum of
6 months. |
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Familiarise yourself with the
rules, regulations and circulars
issued by the stock exchanges/SEBI
before carrying out any
transactions. |
DON’Ts |
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Don’t deal
with unregistered
broker/sub-broker |
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Don’t pay
more than the approved brokerage
to the
intermediary. |
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Don’t
undertake deals on behalf of
others. |
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Don’t neglect
to set out in writing orders for
higher value
given earlier over the phone. |
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Don’t sign
blank delivery instruction slip(s) while
meeting
security pay-in obligation |
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Don’t accept
unsigned/duplicate contract
note/confirmation memo |
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Don’t accept
contract note/confirmation memo
signed by any
unauthorised person. |
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Don’t delay
payment/deliveries of securities
to the broker/
sub-broker. |
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Don’t get
carried away by luring
advertisements |
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Don’t be led
by market rumours
or get into shady transactions |
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^ TOP |
Mutual Funds
DOs |
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Read the
offer document carefully before
investing. |
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Note that
investments in mutual funds may
be risky, and do not
necessarily result in gains. |
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Mention your
bank account number in the
application form. |
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Invest in a
scheme depending upon your
investment objective and
risk appetite. |
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Note that Net
Asset Value ( NAV) of a scheme is subject to
changes depending upon market
conditions. |
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Insist on a
copy of the offer document/key
information
memorandum before investing, and
read it carefully. |
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Note that
past performance of a scheme or
a fund is not
indicative of the scheme’s or
the fund’s future performance.
Past
performance of a scheme may or
may not be sustained in future. |
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Keep regular
track of the NAV
of the schemes in which you have
invested |
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Ensure that
you receive an account statement
for the money that
you have invested. |
DON’Ts |
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Don’t invest in a scheme just
because somebody is offering you
a commission or other
incentives, gifts etc. |
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Don’t get carried away by the
name of the scheme/mutual fund. |
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Don’t fall prey to promises of
unrealistic returns. |
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Don’t forget to take note of
risks involved in the
investment. |
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Don’t hesitate to approach the
proper authorities for redressal
of your doubts/grievances. |
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Don’t deal
with any agent/broker dealer who
is not registered
with the Association of Mutual
Funds in India (AMFI). |
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^ TOP |
Buyback of Securities
DOs |
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Read the special resolution
regarding the proposed buyback
in
detail and then vote for it. |
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Compare the
price offered in the buyback
with the market price
during last few months as also
with the company’s Earning per
Share,
Book Value etc. and then
determine whether the price
offered is
reasonable. |
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Read the
instructions for making the
application for tendering
of shares carefully. |
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Ensure that your application
reaches the collection centre
within the prescribed time. |
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If you don’t get the letter of
offer within a reasonable
period, contact the concerned
Merchant Banker. |
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Mention all details as required
in the letter of offer legibly. |
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Furnish all the documents asked
for in the letter of offer. |
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Send
application through the mode
(post/courier/hand delivery/
ordinary post etc.) specified in
the letter of offer. |
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Contact
Merchant Banker if no response
is received from the
company regarding consideration
for tendered shares within the
stipulated time. |
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Contact
Compliance Officer mentioned in
the letter of offer in
case of any grievance against
the company. |
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Contact the
Registrar of Companies in case
you feel that
provisions of the Companies Act
have been violated. |
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Contact the
Merchant Banker in case of any
grievance against
the procedure followed in the
buyback. |
DON’Ts |
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Don’t submit
multiple applications. |
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Don’t forget
to fill up the application
legibly. |
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Don’t
mutilate the application form. |
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Don’t cross/
cut in the application form. |
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Don’t send
the application form to a wrong
address. |
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Don’t send
the application form after the
close of offer. |
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Don’t forget
to give complete information in
the application
form. |
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Don’t forget
to sign the application form. |
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Don’t give
wrong/ contradictory information
on the application
form. |
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^ TOP |
Open Offers (under Takeover
Regulations)
DOs |
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Ensure that
you are aware of all competitive
offers and
revision of offer before
deciding on accepting the offer |
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Refer to
national dailies/ SEBI website for details of
competitive offers or revisions
of offers. |
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Note that the
offer is subject to statutory
approvals, if any,
mentioned in the letter of offer |
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Check whether
the offer will result in
delisting of the
company. |
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In case of demateralised
equity shares, ensure credit is
received to the Special
Depository Account before the
closure of the
Offer. |
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Carefully
note the timings/days for hand
delivery of the
documents mentioned in the
letter of offer. |
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Wait till the
last date for Offer Revision
(i.e. 7 working days
prior to date of closing of
offer) before tendering your
acceptance. |
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Submit the
Form of Withdrawal accompanying
the letter of offer
at any specified collection
center up to 3 working days
before date of
closing of the offer in case you
want to withdraw the shares
tendered. |
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Ensure that
signatures on the Form of
Acceptance, Transfer
Deed, Depository Instruction and
Form of Withdrawal are same and
in the
same order as those lodged with
the company. |
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In case of
non receipt of the Offer
Document, you can tender or
withdraw from the Offer by
making an application on a plain
paper
giving the necessary details |
DON’Ts |
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Don’t wait for the last date for
the closure of the offer for
tendering your acceptance. |
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Don’t fill in the details of the
buyer/transferee in the
transfer deed to be sent. |
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Don’t file an incomplete
application form/invalid
documents. |
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^ TOP |
Collective Investment Schemes
DOs |
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Ensure that the entity is
registered with SEBI. |
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Read the offer document of the
scheme carefully. |
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Check the viability of the
project. |
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Check and verify the
background/expertise of the
promoters. |
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Ensure clear and marketable
title of the property/assets of
the
entity. |
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Ensure that
the Collective Investment
Management Company (CIMC)
has the necessary infrastructure
to carry out the activities of
the
scheme. |
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Check the credit rating of the
scheme and tenure of the rating. |
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Check for the appraisal of the
scheme and read the brief
appraisal report. |
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Read carefully the objects of
the scheme. |
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Check for the promise vis-a-vis performance of the
earlier
schemes, if any, in the offer
document. |
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Ensure that the CIMC furnishes
you with a copy of the Annual
Report within two months from
the closure of each financial
year. |
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Note that SEBI cannot
guarantee or undertake the
repayment of
money to the investors. |
DON’Ts |
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Don’t invest in any CIS entity
not having SEBI registration. |
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Don’t get carried away by
indicative returns. |
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Don’t invest based on market rumours or advertisements. |
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