SEBI on June 20, 2024 has announced the introduction of a special call auction mechanism for price discovery of scrips of listed Investment Companies (ICs)and listed Investment Holding Companies (IHCs). It is observed that scrips of a few listed ICs and IHCs are being traded infrequently and at a price which is significantly lower than the book value disclosed by these companies in their latest audited financial statements. Moreover, these companies generally have no day-to-day operations and hold investments in different asset classes including in scrips of other listed companies. The variance in the market price and book value of such ICs and IHCs is adversely affecting liquidity, fair price discovery and the overall interest of investors in scrips of suchcompanies.
In order to address the above concern, based on the deliberations with various stakeholders including stock exchanges, public comments and recommendations of Secondary Market Advisory Committee of SEBI, it has been decided to put in place a framework for “special call auction with no price bands”for effective price discovery of scrips of such ICs and IHCs.
Criteria for identification of ICs or IHCs eligible for special call-auction:
- The ICs or IHCs shall be identified based on the uniform industry classifications provided by stock exchanges.
- The scrip of ICs or IHCs should have been listed and available for trading for a period of at least 1 year and the said scrips are not suspended for trading.
- Total assets of the company invested in scrips of other listed companies shall be at least 50%.
- The 6-month Volume Weighted Average Price (VWAP) of the scrip shall be less than 50% of the book value per share of such company based on present value of their investments in shares of other listed companies. In case the scrips of such ICs or IHCs are not traded during the previous 6-months, the 6-months VWAP of the scrip shall be taken as zero.
