Pricing

Any restrictions on pricing by companies?
Since 1992, companies have been allowed to freely price their issues. SEBI does not play any role in deciding the price for issues. As such, the single prices in case of fixed price issue as well as the price band in the case of a bookbuilding issue are determined by the company. The companies are however required to give in the offer document a detailed justification of the price. The basis of issue price is disclosed in the offer document. The issuer is required to disclose in detail about the qualitative and quantitative factors justifying the issue price.

Differential pricing
Pricing of an issue where one category is offered shares at a price different from the other category is called differential pricing. In DIP Guidelines, differential pricing is allowed only if the securities to applicants in the firm allotment category are at a price higher than the price at which the net offer to the public is made. The net offer to the public means the offer made to the Indian public and does not include firm allotments or reservations or promoters’ contributions.