𝐒𝐩𝐞𝐜𝐢𝐚𝐥 𝐂𝐚𝐥𝐥 𝐀𝐮𝐜𝐭𝐢𝐨𝐧𝐬 𝐟𝐨𝐫 𝐋𝐢𝐬𝐭𝐞𝐝 𝐈𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 𝐂𝐨𝐦𝐩𝐚𝐧𝐢𝐞𝐬 𝐚𝐧𝐝 𝐈𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 𝐇𝐨𝐥𝐝𝐢𝐧𝐠 𝐂𝐨𝐦𝐩𝐚𝐧𝐢𝐞𝐬

SEBI has recently introduced a new framework for “𝘴𝘱𝘦𝘤𝘪𝘢𝘭 𝘤𝘢𝘭𝘭 𝘢𝘶𝘤𝘵𝘪𝘰𝘯 𝘸𝘪𝘵𝘩 𝘯𝘰 𝘱𝘳𝘪𝘤𝘦 𝘣𝘢𝘯𝘥𝘴” for effective price discovery of scrips of investment companies (ICs) and investment holding companies (IHCs). Vide Master Circular dated October 16, 2023 for “𝘚𝘵𝘰𝘤𝘬 𝘌𝘹𝘤𝘩𝘢𝘯𝘨𝘦𝘴 𝘢𝘯𝘥 𝘊𝘭𝘦𝘢𝘳𝘪𝘯𝘨 𝘊𝘰𝘳𝘱𝘰𝘳𝘢𝘵𝘪𝘰𝘯𝘴”, SEBI had prescribed framework for call auction session  for pre-open sessions; pre-open sessions for IPO & relisted and illiquid scrips.

SEBI has observed that the securities of certain listed ICs and IHCs are traded infrequently and at prices significantly lower than the book value reported in their most recent audited financial statements. These companies typically have minimal day-to-day operations and invest in a variety of asset classes, including the securities of other listed entities. The disparity between the market price and the book value of these ICs and IHCs is negatively impacting liquidity, fair price discovery, and the overall interests of investors in these securities.

Therefore, in order to address the aforesaid concern, SEBI has established strong guidelines for identifying ICs or IHCs eligible for the special call auction as below:

1.    𝐈𝐝𝐞𝐧𝐭𝐢𝐟𝐢𝐜𝐚𝐭𝐢𝐨𝐧 𝐂𝐫𝐢𝐭𝐞𝐫𝐢𝐚: These companies must be identified based on uniform industry classifications provided by stock exchanges.
2.    𝐓𝐫𝐚𝐝𝐢𝐧𝐠 𝐑𝐞𝐪𝐮𝐢𝐫𝐞𝐦𝐞𝐧𝐭𝐬: The scrips must have been listed and available for trading for at least one year and should not be suspended from trading.
3.    𝐀𝐬𝐬𝐞𝐭 𝐂𝐨𝐦𝐩𝐨𝐬𝐢𝐭𝐢𝐨𝐧: The total assets of the company invested in the scrips of other listed companies must constitute at least 50% of its total assets.
4.    𝐅𝐫𝐞𝐪𝐮𝐞𝐧𝐜𝐲 𝐨𝐟 𝐀𝐮𝐜𝐭𝐢𝐨𝐧: The special call auction mechanism shall be offered only once a year.
5.    𝐌𝐮𝐥𝐭𝐢-𝐄𝐱𝐜𝐡𝐚𝐧𝐠𝐞 𝐋𝐢𝐬𝐭𝐢𝐧𝐠: If the scrip is listed on multiple stock exchanges and the call auction is successful on any one of them, the price discovered at that stock exchange will serve as the base for trading on the other stock .exchanges.
6. 𝐍𝐨𝐭𝐢𝐜𝐞 𝐭𝐨 𝐦𝐚𝐫𝐤𝐞𝐭: Stock exchanges will announce a special call auction for eligible ICs or IHCs with a 14-day notice to the market which will be published on their websites, detailing last traded price, current overall book value, book value from investments in other listed companies, asset proportion in such investments, and any recent buy-back or delisting offers.

First of such special call auction would be conducted in the month of October 2024 by stock exchanges.

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