Skip to content

Capital Market and Securities Laws · Issue of Capital and Disclosure Requirements

Issue Process: Allotment, Listing and Intermediaries

Updated 11 October 2026 · Fact-checked

The issue process is the series of steps from opening a public offer to listing. Intermediaries such as the merchant banker, registrar and bankers run it. Investors apply through ASBA, the registrar finalises the basis of allotment, excess money is unblocked or refunded, and shares are credited and listed within SEBI's timeline.

Understand Issue Process: Allotment, Listing and Intermediaries

A public issue is not just a company inviting money. Many agencies work together so that the issue is fair, timely and transparent. SEBI sets the rules, and the intermediaries carry them out.

The merchant banker (book running lead manager in a book-built issue) leads the process. It does due diligence on the company, helps prepare the offer document, files it with SEBI, coordinates other intermediaries, manages marketing and pricing, and oversees allotment and listing. The registrar to an issue collects applications, validates them, prepares the basis of allotment, processes refunds and credits shares to demat accounts. Bankers to an issue collect and hold the application money. Others include syndicate members, self-certified syndicate banks (SCSBs), underwriters, depositories and the stock exchanges.

ASBA (Application Supported by Blocked Amount) lets an investor apply without paying away the money. The amount stays in the investor's own bank account and is only blocked. It is debited only for the shares actually allotted. The rest is unblocked. This removes the need for refund cheques and keeps the investor's money earning interest until allotment.

When an issue is oversubscribed, the company cannot give every applicant what they asked for. The basis of allotment is the method of allotting fairly. It is finalised by the company and the merchant banker in consultation with the designated stock exchange and the registrar. Allotment is made category-wise (for example retail, non-institutional, qualified institutional buyers), with proportionate allotment or a lottery where the minimum lot cannot be given to everyone.

After allotment, shares are credited to demat accounts and listed so they can trade. SEBI has shortened the time from issue closure to listing to T+3 working days, where T is the issue closing date. Treat this as the current norm, but check the latest SEBI circular before the exam.

Key rules to remember

Listing timeline
Listing = T + 3 working days (T = issue closing date)
Current SEBI timeline for public issues of equity shares. Confirm against the latest circular.
Proportionate allotment
Shares allotted to an applicant = Shares applied for × (Shares available in category ÷ Shares applied for in category)
Used when a category is oversubscribed. Allotment is then rounded to the minimum lot, and the remaining shares are settled by draw of lots.
Subscription ratio
Times subscribed = Total shares applied for ÷ Shares offered
A value above 1 means oversubscription, so a basis of allotment is needed.
ASBA amount unblocked
Amount unblocked = Amount blocked − (Shares allotted × Issue price)
Money is debited only for allotted shares. No refund cheque is needed.
Private placement allotment timing (Companies Act, s. 42(6))
Allot within 60 days of receiving application money; if not, repay within 15 days after those 60 days
If repayment is delayed, interest at 12% per annum runs from the expiry of the sixtieth day. Money is kept in a separate bank account.

How to solve Issue Process: Allotment, Listing and Intermediaries questions

Use this method for a descriptive question on the issue process, such as roles of intermediaries, ASBA, allotment, refund or listing.

  1. 1Identify what is asked: a role, a process, a timeline or an allotment calculation.
  2. 2State the provision or the regulatory source in one line: SEBI (ICDR) Regulations and the relevant SEBI circulars for public issues, or section 42 of the Companies Act, 2013 for private placement.
  3. 3Define the key term (merchant banker, ASBA, basis of allotment) in one or two sentences.
  4. 4Explain the process in sequence: application, blocking of funds, validation by registrar, finalising the basis of allotment, unblocking or refund, credit to demat, listing.
  5. 5For numerical questions, work category by category. Find the subscription ratio, apply the proportion, round to the minimum lot, and settle the rest by draw of lots.
  6. 6Apply the facts given, such as the dates, the category or the delay, to the rule.
  7. 7End with a clear conclusion in one sentence that answers the exact question.

Quickest way: Roles and timeline checklist

When to use it: When time is short and the question asks you to list roles or describe the sequence of the issue process.

  1. Write the chain in order: Merchant banker → Registrar → Bankers/SCSBs → Stock exchange → Depository.
  2. Give one action per intermediary in a single line each.
  3. Add ASBA in one line: money blocked, not paid; debited only for allotted shares.
  4. Add the basis of allotment: category-wise, proportionate, finalised with the designated stock exchange.
  5. Close with the listing timeline of T+3 working days.

Common mistakes in Issue Process: Allotment, Listing and Intermediaries

  • Saying ASBA means the investor pays the full amount to the company at the time of applying.

    Students link applying with paying and forget the money is only blocked.

    Fix: Write that the amount stays in the investor's account, is blocked, and is debited only for allotted shares. The balance is unblocked.

  • Mixing up the merchant banker and the registrar.

    Both work on the issue and the roles overlap in students' notes.

    Fix: Link the merchant banker to due diligence, the offer document and overall management. Link the registrar to applications, the allotment record, refunds and demat credit.

  • Applying proportionate allotment across all applicants together instead of category-wise.

    Students ignore that retail, non-institutional and institutional portions are separate.

    Fix: Compute the subscription of each category separately, then allot within that category.

  • Quoting an old listing timeline such as T+6 or T+12.

    Older books and videos still show earlier timelines.

    Fix: Write T+3 working days as the current norm, with T as the issue closing date, and mention that SEBI circulars set it.

  • Confusing public issue rules with private placement rules under section 42.

    Both deal with allotment and return filing, so details get swapped.

    Fix: For private placement, state that allotment must be within 60 days of receiving money and the return of allotment within 15 days of allotment. Keep ASBA and T+3 for public issues.

  • Rounding off in proportionate allotment and giving fractional shares.

    Students stop at the ratio and skip the minimum lot rule.

    Fix: Round to the minimum lot and settle the remaining shares by draw of lots.

Worked examples

Example 1

In the retail category of a public issue, 10,00,000 shares are reserved and applications are received for 40,00,000 shares. Aman applied for 200 shares. The minimum lot is 100 shares. Using proportionate allotment, how many shares would Aman get before any draw of lots? What happens to his ASBA amount?

Show the solution
  1. Subscription = 40,00,000 ÷ 10,00,000 = 4 times.
  2. Proportion allotted = 10,00,000 ÷ 40,00,000 = 1 ÷ 4.
  3. Aman's proportionate shares = 200 × 1 ÷ 4 = 50 shares.
  4. 50 shares is less than the minimum lot of 100, so proportionate allotment cannot give him a lot.
  5. The registrar therefore makes allotment of minimum lots by draw of lots among eligible applicants. Aman gets 100 shares if he wins and nothing if he does not.
  6. If allotted, only 100 × issue price is debited. The rest of the blocked amount is unblocked. If not allotted, the whole amount is unblocked.

Answer: Proportionate allotment gives Aman 50 shares, below the minimum lot of 100. So his allotment depends on the draw of lots: either 100 shares or none. His ASBA amount is debited only for shares allotted, and the balance is unblocked.

Example 2

Explain the role of the merchant banker and the registrar to an issue in a public issue, and state how investors' money is dealt with under ASBA. Mention the listing timeline.

Show the solution
  1. Provision: the process is governed by the SEBI (ICDR) Regulations and SEBI circulars.
  2. Merchant banker: it carries out due diligence, helps prepare and file the offer document with SEBI, coordinates the other intermediaries, manages marketing and pricing, and oversees allotment and listing.
  3. Registrar: it collects and validates applications, prepares the basis of allotment with the company and the designated stock exchange, processes unblocking or refunds and credits shares to demat accounts.
  4. ASBA: the investor's money stays in their bank account and is blocked by the SCSB. It is debited only for the shares allotted, and the balance is unblocked.
  5. Listing: shares are listed within T+3 working days from the issue closing date, as per the current SEBI timeline.

Answer: The merchant banker manages the issue end to end, and the registrar handles applications, allotment records, unblocking or refunds and demat credit. Under ASBA, money is only blocked and is debited for allotted shares alone. Listing follows within T+3 working days from the issue closing date.

Exam tips

  • Write the roles of intermediaries as one-line actions. Examiners look for the correct function against each name.
  • For ASBA, always use the three words: blocked, not debited, unblocked.
  • In allotment problems, show the subscription ratio, the proportion, the minimum lot rounding and the draw of lots. Marks go to each step.
  • If the question is about private placement, cite section 42 and give the 60-day allotment limit, the 15-day repayment period and the 15-day return filing period.
  • Check the latest SEBI circular for the listing timeline before the exam and write it with T defined.

Practice questions from Issue of Capital and Disclosure Requirements

Issue Process: Allotment, Listing and Intermediaries in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Issue Process: Allotment, Listing and Intermediaries: frequently asked questions

What is the role of a merchant banker in a public issue?

The merchant banker, called the book running lead manager in book-built issues, does due diligence, helps prepare the offer document, files it with SEBI and coordinates all intermediaries. It also manages marketing and pricing and oversees allotment and listing.

How does the ASBA process work in an IPO?

The investor applies through a bank account or a broker and their bank blocks the application amount. The money remains in the account. After allotment, only the amount for allotted shares is debited and the balance is unblocked.

What is the basis of allotment in an oversubscribed issue?

It is the method used to allot shares fairly when applications exceed the shares offered. Allotment is made category-wise on a proportionate basis, rounded to the minimum lot, with draw of lots for the remainder.

What is the IPO listing timeline under SEBI?

The current timeline is T+3 working days, where T is the issue closing date. SEBI sets it by circular, so check the latest circular before the exam.

How should I prepare the issue of capital chapter?

First learn the intermediaries and their roles. Then practise the ASBA flow and the allotment calculation. Finally, revise timelines and write answers in the provision, analysis and conclusion format.