Primary markets

69 terms · each links to a full explanation with a worked example and the exam traps

Anchor investorA qualified institutional buyer allotted shares a day before a book-built issue opens — at least Rs 10 crore on the main board or Rs 2 crore on the SME exchange — under a discretionary, locked-in allocation.
ASBAThe mandatory payment mechanism for public and rights issues, in which your bank blocks the application money in your own account and debits it only if you actually get an allotment.
Banker to an issueA scheduled bank or other SEBI-specified banking company that accepts application and allotment monies, refunds application money and pays dividend or interest warrants for an issue.
Basis of allotmentThe process of deciding how many shares each applicant in a public issue gets — all they applied for if the issue is not oversubscribed, otherwise a proportion worked out separately for each investor category.
Bid-cum-Application formThe completed form an investor submits to a Depository Participant to subscribe to a public issue, which the DP acknowledges and then uploads into the stock exchanges' electronic bidding system.
Bidding at the cut-offIn a book-built public issue, choosing to bid at whatever price the book-building process finally settles on, rather than naming a specific price, which guarantees the bid is never rejected for being priced too low.
Book built issueA public issue in which the price is discovered from investor bids inside a price band, rather than fixed by the issuer in advance, with allotment made at the cut-off price.
Brokers to the issueStock exchange members appointed in a public issue to collect application forms and bids from investors, and paid a commission based on what they collect.
Confirmation Allocation NoteThe intimation an anchor investor or a fixed-price applicant receives confirming the shares allotted to them in a public issue — the allotment counterpart to a refund order.
Cut-off priceIn a book-built issue, the price at which the issue is fully subscribed. Everyone who bid at or above it succeeds and is allotted at that price.
Designated Stock ExchangeThe one exchange, among those where an issuer seeks listing, that the issuer chooses to anchor the issue — holding the 1% security deposit and overseeing the basis of allotment with the lead manager and registrar.
DevolvementThe part of an under-subscribed issue that falls on an underwriter to take up — its underwriting commitment less the applications it procured — notified by the lead manager within ten days of closure.
Differential pricingPricing an issue differently for different investor categories — in particular, allotting to retail investors at a discount of not more than 10 percent to the price at which other categories are allotted.
DisinvestmentThe direct or indirect sale by the Central Government, a State Government or a government company of shares, voting rights or control in a public sector undertaking.
Due diligence certificateThe formal certificate a lead manager signs and files with SEBI at prescribed stages of an issue, confirming that it has verified the issuer's disclosures and that the offer document is compliant.
Eligible securitiesThe class of securities a listed company may offer in a Qualified Institutions Placement — equity shares, non-convertible debt instruments, and warrants or other convertible securities other than warrants themselves.
Employee Stock OptionThe right, not the obligation, given to an employee to buy company shares at a fixed price after a minimum one-year vesting period — the RTA administers the grant; tax treatment is a separate topic.
Extinguishment certificateThe certificate confirming that shares bought back by a company have been destroyed and capital reduced — signed by the registrar, secretarial auditor and directors for a tender offer, filed with SEBI.
Fast track rights issuesA quicker rights issue route for listed InvITs and REITs that meet SEBI's parameters — offer document filed with the stock exchanges, with only a copy to SEBI.
Fixed price issueA public issue in which the company, with its lead manager, sets the issue price in advance and discloses it, so investors know exactly what they will pay when they apply — the alternative to a book built issue.
Fresh issue of sharesNew shares issued by a company to public investors in an IPO or further offer, increasing its issued share capital — as against an offer for sale, where existing shareholders merely sell what they already hold.
Further Public OfferA fresh public offer of securities by a company that has already made an IPO — used to raise more capital or, as an offer for sale, to widen public shareholding.
Green Shoe OptionAn option in a public issue to allot up to 15 per cent extra shares, parking the money to buy shares in the market for 30 days after listing if the price falls below the issue price.
Hard underwritingAn underwriter's commitment to buy an IPO's unsold shares, given at the initial filing stage before the issue price is even fixed — the firmer and earlier of the primary market's two underwriting commitments.
ICDR RegulationsSEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 — the rulebook for raising capital, whose Chapter X-A governs the Social Stock Exchange, NPO registration and ZCZP issuance.
Identified PersonsThe select group a company names to receive a private placement under Section 42 — capped at 50 allottees a year excluding QIBs and ESOP employees, with allotment within 60 days or a mandatory refund.
Initial Public OfferThe first offer of a company's shares to the public — by fresh issue, by existing shareholders selling through an offer for sale, or both — after which the shares must be listed.
Innovators Growth PlatformOne of three boards a For Profit Social Enterprise may list equity securities on — alongside the main board and the SME platform — as part of its Social Stock Exchange financing route.
Investment bankingThe wider term for all capital market activity, fund-based and non-fund-based — merchant banking plus stock trading, market making, underwriting, broking, asset management and corporate advisory.
IPO gradingThe requirement that an unlisted company's IPO be graded by an approved credit rating agency before the issue — a pre-issue checklist item the workbook states without specifying a grading scale.
Matchmaking platformThe first of the two international Social Stock Exchange models: a dedicated platform built apart from existing exchanges, purely to bring investors and investees together.
Merchant bankerA SEBI-registered body corporate engaged in the business of issue management — arranging the selling, buying or subscribing of securities, or acting as manager, consultant or adviser in relation to an issue.
Minimum fund flowsThe size test inside the mandatory criteria for NPO registration on an SSE: past-year spending of at least ₹50 lakh and past-year funding of at least ₹10 lakh, taken from audited accounts.
Minimum subscriptionThe least an issue must raise to go ahead — at least 90% of the fresh issue offered through the offer document; if it is not received, all application money is refunded within four days of closure.
Net offer to publicThe offer of specified securities to the public excluding reserved portions (such as for employees) and any securities subscribed by the promoter group — the pool that is split among QIBs, NIIs and retail.
Non-Institutional InvestorThe residual public-issue category for applicants who are neither retail individual investors nor qualified institutional buyers — in practice anyone bidding for more than Rs 2 lakh without being a QIB.
Offer documentThe document inviting subscription to an issue — a red herring prospectus, prospectus, shelf prospectus or information memorandum in a public issue, and a letter of offer in a rights issue.
Offer for SaleAn offer of securities by existing shareholders — promoters, institutions, the government — to the public through an offer document. The sellers get the money; the company issues no new shares.
Performance based philanthropyA benefit the workbook credits to Social Stock Exchange registration: because a listed enterprise's performance is monitored, donors' giving starts to track verified social return rather than reputation alone.
Preferential allotment lock-inThe mandatory holding period on shares from a preferential allotment by a listed company — 18 months for promoters and the promoter group, 6 months for everyone else, both from the date of trading approval.
Preferential issueAn issue of specified securities by a listed issuer to a select person or group on a private placement basis — excluding public, rights, bonus and ESOP issues, QIPs, sweat equity and overseas depository receipts.
Primary marketThe market where an issuer sells securities to investors for the first time and receives the money itself — the "new issue market", as against the secondary market where investors trade among themselves.
Private placementAn issue of securities to a select group of identified investors — institutions, banks, mutual funds — rather than to the public, with fewer formalities and no advertising.
Program-specific listingAn SSE listing tied to one specific project or programme rather than an NPO's whole activity, requiring more detail on that programme's own track record and impact in the target segment.
PromoterUnder the ICDR Regulations, a person named as promoter in the offer document or annual return, or who controls the issuer's affairs, or on whose advice the board is accustomed to act.
Promoter groupThe promoter plus immediate relatives and the connected companies, HUFs and firms defined by 20% shareholding links — the circle whose holdings the ICDR Regulations treat together with the promoter's.
Promoter lock-inThe rule that promoters' shares cannot be sold for a set time after an IPO — 18 months for the minimum 20 percent contribution, or 3 years if most proceeds fund capital expenditure; 6 months or 1 year for the excess.
Promoters' contributionThe minimum stake promoters must hold and lock in at a public issue — in an IPO not less than 20% of post-issue capital, locked in for 18 months (three years if most proceeds fund capital expenditure).
ProspectusThe offer document a company issues when it raises money from the public. It sets out the company, its promoters, finances, risks, purpose of the issue and terms, so investors can decide.
Qualified Institutional BuyersThe closed list of institutional investors in the ICDR Regulations — SEBI-registered funds, non-individual FPIs, banks, insurers, large provident and pension funds — with special rights and limits in issues.
Qualified Institutions PlacementA fast route by which an already-listed company places eligible securities privately with Qualified Institutional Buyers, without the prospectus and timetable of a public issue.
Red Herring ProspectusThe offer document used in a book-built public issue, containing every disclosure a prospectus carries except the final price or number of shares, filed with the Registrar before the issue opens.
Reputation valueThe credibility an NPO gains from meeting an SSE's mandatory registration criteria — usable to raise funds and build trust even if the NPO never actually lists a security.
Rights issueAn offer of new shares at a set price to existing shareholders in a fixed ratio to what they already hold, so that their proportionate stake is not diluted when the company raises fresh capital.
Self Certified Syndicate BankA banker to an issue, registered with SEBI, that offers ASBA — blocking an applicant's application money in their own bank account until allotment, then debiting or releasing it.
Share Escrow AccountThe account a registrar opens for selling shareholders in an offer for sale, holding the shares to be sold before the issue opens — distinct from the cash escrow account for the public offer.
Shelf prospectusA prospectus under Section 31 of the Companies Act, 2013 that covers securities issued in one or more offers over a validity period of up to one year, without a fresh prospectus for each offer.
SME ExchangeA trading platform of a recognised stock exchange with nationwide terminals, permitted by SEBI to list securities of small and medium enterprises — distinct from the Main Board.
Social impact statementA document an NPO must submit as part of SSE pre-listing, disclosing its past social impact: key metrics, number of beneficiaries, cost per beneficiary and administrative overheads.
Social Stock ExchangeA separate segment of a recognised stock exchange on which Not for Profit Organisations and For Profit Social Enterprises register and list securities to raise money for social impact, under SEBI rules.
Sponsor BankA SEBI-registered Banker to the Issue appointed by the issuer as the conduit between the stock exchanges and NPCI, pushing retail investors’ UPI mandate requests and payment instructions into UPI.
SR equity sharesSuperior voting right equity shares issued to promoter-founders of a technology-intensive company — same face value and economics as ordinary shares, but 2 to 10 votes per share.
Stabilizing AgentUnder a green shoe option, the merchant banker who uses over-allotment money to buy the newly listed shares when they fall below the issue price — buying only, for 30 days, up to the over-allotment.
Standardised UPI IDsSEBI's framework requiring a verified, validated UPI ID linked to a registered bank account, so an investor paying by UPI for a public issue knows the money is going to a genuine intermediary.
Syndicate memberA SEBI-registered intermediary permitted to accept bids and applications in a public issue and to act as an underwriter for it — the regulatory role behind the general term "broker to the issue".
T+3 listingThe requirement that shares from an IPO or FPO be listed and start trading within 3 working days of the issue closing (T+3) — reduced from an earlier T+6 by a SEBI circular of August 2023.
UnderwriterAn institution that agrees, under an underwriting agreement, to subscribe to the part of a public issue that investors do not take up — and is paid a commission for standing behind the issue.
UPI mandateThe block-fund authorisation a retail investor confirms in a UPI app to apply for a public issue, for values up to Rs 5 lakh — accepted by 5 p.m. on issue-closing day, unblocked within T+2 days if not allotted.
Zero Coupon Zero Principal (ZCZP) instrumentA listed security issued only by an NPO registered on an SSE for a specific project; it pays no interest and returns no principal, promising the funder a social return instead.