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Joint Application in an IPO

Introduction:

An initial public offer(IPO) is when a private company lets the public buy shares of its company for the very first time. There is a lot of demand to apply for an IPO from investors due to the lure of profit.

You need a trading account and a dematerialization (demat) fund to invest in shares, but for applying for an IPO, a demat account is enough. It is an electronic record of your shares. Click here to read opening two demat accounts.

Through your online broker, you are allowed to open joint demat accounts with a maximum of three account holders. There should be one primary holder and two joint holders. However, you cannot open a joint account with a minor.

By opening a joint demat account, you can also file a joint application for an IPO. But you cannot apply multiple times with the same demat account for an IPO. If you want to place orders for various applications, you can apply in your family member’s name, but each should have a demat or a joint demat account.

Let us now look at ways in which you can apply for an IPO.

IPO Application:

You can apply for an IPO in two modes:

Online:

Application supported by blocked amount (ASBA)

The Securities Exchange Board of India has also made it easy for you to block the application money required for an IPO. Your bank will automatically debit money from your bank account for the shares allotted to you. You can directly apply for an IPO via the ASBA facility offered to you by your broker. You do not have to bother about other modes of payment but can block the amount in your bank account. This money will continue to earn interest in your bank. Only an amount equal to the shares allotted to you in the IPO is debited from your bank account. That happens when the shares are allocated to you.

UPI in ASBA

A unified payments interface (UPI)is an instant payment system to transfer money between any two parties’ banks. You need to create a UPI id to use it. Retail individual investors and shareholders bidding in shareholders reservation portion of up to Rs.2,00,000 can avail the application via the UPI facility of a bank. Once the investor submits the IPO application, the amount required would be blocked by the bank and debited from the account once the shares are allocated.

Offline:

You first need to create a demat account. An investor can apply offline by filling the Initial public offer form and submitting it in the bank’s branch or to the stockbroker. Your funds in the account are blocked in an equal amount to the value of the shares.

Additional read: All you need to know about the IPO application process.

Conclusion:

You can apply for an IPO either through an individual and a joint account with family/friends. You have to keep in mind that each demat account has annual maintenance costs that you have to bear.

Disclaimer

ICICI Securities Ltd.( I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Centre, H. T. Parekh Marg, Churchgate, Mumbai - 400020, India, Tel No : 022 - 2288 2460, 022 - 2288 2470.  Please note, IPO related services are not Exchange traded products and I-Sec is acting as a distributor to solicit these products. All disputes with respect to the distribution activity, would not have access to Exchange investor redressal forum or Arbitration mechanism. The contents herein above shall not be considered as an invitation or persuasion to trade or invest.  I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. Investments in securities market are subject to market risks, read all the related documents carefully before investing. The contents herein mentioned are solely for informational and educational purpose.

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