IPOs (Initial Public Offering) are critical junctures when companies shift from private to public ownership through the initial sale of shares to investors. Through this SEBI-mandated process, investors can get in on the action early, thereby reaping significant benefits.
However, most retail investors have one important question: Is a PAN card necessary for IPO participation? In this article, we will explore the importance of PAN card and IPO accessibilities and how this “must-have” document is connected to IPOs.
About IPO
An initial public offering (IPO) is when a company offers its shares to the public for the first time. This move helps a company raise money from public investors. The process involves several steps, including deciding the share price and the number of shares to be sold.
Participating in an IPO allows individuals and institutional investors to buy shares directly from the company. Once the company lists its shares on a stock exchange, these shares can be traded openly in the market.
IPOs are significant as they indicate a company's growth and openness to public investment.
What is a PAN card
A Permanent Account Number (PAN) card is a special 10-character alphanumeric identity given by the Indian Income Tax Department to individuals, firms, and other organisations.
It is a universal financial transaction tracking key and compulsory for various financial activities, including filing Income tax returns, opening bank accounts, investing in mutual funds, purchasing properties, and high-value transactions.
The PAN card carries essential information like the holder’s name, birth date, or incorporation details and a distinct PAN number, which enables efficient taxation administration and prevents tax evasion
Now, coming back to the question, is it mandatory to have a PAN to apply for an IPO? Let us find out.
Is it mandatory to have a PAN card for IPO investment
It is compulsory to have a PAN (Permanent Account Number) card to apply for an IPO in India. This is because you would need your PAN to either open a Demat account or apply for an IPO through ASBA. Earlier, you could have applied for an IPO without a PAN, but today, your PAN is one of the most essential documents for an IPO application—or for investing in general.
Faulty applications are those where the applicant does not submit their forms without—or with the wrong PAN number, and these are rejected for IPO allotment. Therefore, it is crucial to confirm your PAN prior to submitting your IPO application.
Having your PAN offers several benefits, such as facilitating faster application and approval processes. It also makes tracking of investments and monitoring of portfolios easier.
Why is it necessary to have a PAN card to apply for an IPO
Why is it necessary to have a PAN card to apply for an IPO? Your PAN is essential for IPO applications since it serves as an identification document to verify the applicant's identity. It is used to trail financial transactions, prevent fraud, and ensure legal compliance.
SEBI has made it mandatory for retail investors to have PAN cards while filling out public offer forms. This will help make the IPO application process faster and enable accuracy when filling out income tax returns.
Similarly, a PAN card is significant for SME IPOs, where small and medium-sized businesses raise capital by trading their shares with the general public. This allows people to monitor high-value transactions and confirm whether the investor is eligible.
Thus, having a PAN card is beneficial—and crucial—for participating in IPOs, including those of SMEs.
What is the process to apply for an IPO using your PAN card
To apply for an IPO, you must first go to the company’s website (where you wish to invest) and fill out an application form. You should also provide a copy of your PAN card.
After paying for the application, you will receive a confirmation email or SMS from the organisation. Print out this confirmation and head to any of the designated collection centres, where you will need to submit it along with your KYC documents.
Once everything is verified, the company will send a copy of your application to NSDL. You will receive another SMS or email from NSDL, confirming your application submission, followed by verification.
How to check IPO allotment status online by PAN number
To check the IPO allotment status online using your PAN number, follow these steps:
- Head to SEBI’s official website.
- Select the ‘IPO Allotment Status’ option under the ‘Investor Services’ tab.
- Type your PAN number and click ‘Submit’.
- You will see the allotment status on the screen.
The IPO allotment process is usually finalised within twenty-four hours of the IPO's close. Once shares are allotted, the IPO listing time becomes significant. The IPO is listed at 9 a.m. on the listing day. Ordinary trading in allocated shares begins at 10 A.M., i.e., investors can begin to buy and sell their apportioned shares at this juncture.
Conclusion
To participate in an initial public offering (IPO) in India, one must have a PAN card. It is an important form of identification for financial transactions and regulatory compliance purposes. Investors are required to provide their PAN details while applying for an IPO. For this reason, investors need to double-check that their PAN cards are still valid before submitting IPO applications. This highlights the importance of PAN cards and their role in India’s financial landscape.
Check related articles:
What is IPO Allotment Process?
What is Cut Off Price in IPO?
How Lock in Period Works in IPO?
Eligibility Criteria to Apply for an IPO
