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. Differential pricing is permitted, subject to the following:

(a)	retail individual investors or retail individual shareholders may be offered specified securities at a price lower than the price at which net offer is made to other categories of applicants; provided that such difference is not more than 10% of the price at which specified securities are offered to other categories of applicants;
(b)	in case of a book built issue, the price of the specified securities offered to an anchor investor cannot be lower than the price offered to other applicants;
(c)	in case of a composite issue, the price of the specified securities offered in the public issue can be different from the price offered in rights issue and justification for such price difference needs to be given in the offer document.
(d)	In case the issuer opts for the alternate method of book building in terms of Part D of Schedule XI of the SEBI ICDR Regulations 2009, the issuer can offer specified securities to its employees at a price lower than the floor price provided that the difference between the floor price and the price at which specified securities are offered to employees is not more than 10% of the floor price.