Dear All,
Escrow means depositing of funds with a third party to be used later on compliance of a condition.
Escrow with respect to Issue of Shares
Share Money is put in a special escrow bank account which is dedicated for getting IPO money.
Escrow account means an account opened with the Escrow Collection Banks for the issue and in whose favour the applicants will issue cheques or drafts in respect of the application amount while submitting an application. Escrow agreement means the agreement entered into by the Issuer company , the Registrar to the issue, and the Escrow Collection Banks for collection of the application amounts and where applicable , refunds of the amounts collected , to the applicants on the terms and conditions thereof.
Escrow Mechanism:
1. Open Bank A/cs: Issuing Company opens an Escrow account with one or more Escrow collection banks to collect cheques in respect of applications from the applicants . A Public Issue Account and a Refund Account are also opened with the bankers to the issue to receive monies from the Escrow Account an the allotement date towards allotment and refunds
2. Hold Money in Trust: Escrow collection banks shall hold the application monies in the escrow account in trust on behalf of the applicants until the allotment date.
3.Transfer to public issue a/c : On the allotement date , the Escrow Collection banks shall tranfer the funds equivalent to the size of the issue from the Escrow Account, as per the terms of the Escrow agreement , into public issue account with the bankers to the issue.
4. Refunds : The balance amount after transfer to the Public Issue account shall be transfered to the Refund Account specially opened with Escrow Collection bankers . On the allotment date and not later than 15 days from the issue closing date , the escrow collection bank shall also refund all amounts payable to unsuccessful applicants and also the excess amount paud on applications , if any, after adjusting for Application / Allotment to the applicants , failing which issuing company shall pay interest at 15% per annum for any delay beyond the periods mentioned above.
Regards,
Radhika Karadkar
Escrow means depositing of funds with a third party to be used later on compliance of a condition.
Escrow with respect to Issue of Shares
Share Money is put in a special escrow bank account which is dedicated for getting IPO money.
Escrow account means an account opened with the Escrow Collection Banks for the issue and in whose favour the applicants will issue cheques or drafts in respect of the application amount while submitting an application. Escrow agreement means the agreement entered into by the Issuer company , the Registrar to the issue, and the Escrow Collection Banks for collection of the application amounts and where applicable , refunds of the amounts collected , to the applicants on the terms and conditions thereof.
Escrow Mechanism:
1. Open Bank A/cs: Issuing Company opens an Escrow account with one or more Escrow collection banks to collect cheques in respect of applications from the applicants . A Public Issue Account and a Refund Account are also opened with the bankers to the issue to receive monies from the Escrow Account an the allotement date towards allotment and refunds
2. Hold Money in Trust: Escrow collection banks shall hold the application monies in the escrow account in trust on behalf of the applicants until the allotment date.
3.Transfer to public issue a/c : On the allotement date , the Escrow Collection banks shall tranfer the funds equivalent to the size of the issue from the Escrow Account, as per the terms of the Escrow agreement , into public issue account with the bankers to the issue.
4. Refunds : The balance amount after transfer to the Public Issue account shall be transfered to the Refund Account specially opened with Escrow Collection bankers . On the allotment date and not later than 15 days from the issue closing date , the escrow collection bank shall also refund all amounts payable to unsuccessful applicants and also the excess amount paud on applications , if any, after adjusting for Application / Allotment to the applicants , failing which issuing company shall pay interest at 15% per annum for any delay beyond the periods mentioned above.
Regards,
Radhika Karadkar
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