PAN compulsion in IPOs good for genuine retail investors
2007-07-19 18:00:27 Source : Moneycontrol.com
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Market regulator SEBI has made PAN card mandatory for retail investors while filling public offer forms. Earlier retail investors were allowed to submit PAN card copy and number if they applied for Rs 50,000 or above worth of shares but now it is mandatory that every application by retail investors have to submit PAN card zerox copy, number or Form 60 or Form 61.
Himanshu Kapadia of Adfactors says, "Sebi made PAN mandatory, is a good thing and going towards more regularised approach because earlier one person with multiple demat accounts used to apply for multiple IPO forms of single issue. But with this implementation, Sebi would come to know actual size of investors."
"All in all, it is beneficial for actual investors and market also through this regularised framework of Sebi. The case of Yes Bank, where Sebi found so many duplicate entries in the issue. So to avoid such things, Sebi made PAN mandatory and with that Sebi come to know real investors in the market".
"In the earlier process, search for allotment process had been doing through demant accounts but now they will search all PAN numbers and put allotment process forward", he said.
Sebi's New rules and regulations on Permanent Account Number
The Bidders, or in the case of a Bid in joint names, each of the Bidders, should mention his/ her Permanent Account Number (PAN) allotted under the I.T. Act. SEBI has issued a circular no. MRD/DoP/Cir-05/2007 dated April 27, 2007 requiring that with effect from July 2, 2007, the PAN would be the sole identification number for participants transacting in the securities market, irrespective of the amount of transaction. In case the PAN has not been allotted, mention “Applied for” or “Not Applicable” in the appropriate places and submit Form 60 or Form 61 as the case may be together with permissible documents as proof of address. Applications without this information and documents will be considered incomplete and are liable to be rejected.
RS Iyer of KR Choksey Securities says, "It is good for genuine retail investors as well as for all. It will also increase the participation of retail investors and avoid duplication of application through duplicate investors."
Sebi's old rules and regulations on Permanent Account Number
Where Bid(s) is/are for Rs 50,000 or more, the Bidder or in the case of a Bid in joint names, each of the Bidders, should mention his/her PAN allotted under the I.T. Act. The copy of the PAN card(s) or PAN allotment letter(s) is required to be submitted with the Bid cum Application Form. Applications without this information and documents will be considered incomplete and are liable to be rejected.
In the event that the sole Bidder and/or the joint Bidder(s) have applied for PAN which has not yet been allotted each of the Bidder(s) should mention “Applied for” in the Bid cum Application Form. Further, where the Bidder(s) has mentioned “Applied for” or “Not Applicable”, the sole/First Bidder and each of the joint Bidder(s), as the case may be, would be required to submit Form 60 (form of declaration to be filed by a person who does not have a permanent account number and who enters into any transaction specified in Rule 114B of the Income Tax Rules, 1962), or, Form 61 (form of declaration to be filed by a person who has agricultural income and is not in receipt of any other income chargeable to income-tax in respect of transactions specified in Rule 114B of the Income Tax Rules, 1962), as may be applicable, duly filled along with a copy of any one of the following documents in support of the address: (a) ration card (b) passport (c) driving licence (d) identity card issued by any institution (e) copy of the electricity bill or telephone bill showing residential address (f) any document or communication issued by any authority of the Central Government, state government or local bodies showing residential address (g) any other documentary evidence in support of address given in the declaration. It may be noted that Form 60 and Form 61 have been amended by a notification issued on December 1, 2004 by the Central Board of Direct Taxes, Department of Revenue, Ministry of Finance. All Bidders are requested to furnish, where applicable, the revised Form 60 or Form 61 as the case may be.