Answer By law4u team
If you apply for an IPO and later decide to withdraw your application, the consequences and process depend on the timing and the specific procedures of the IPO. Here’s what you need to know:
1. Withdrawal Before the Issue Closes:
Pre-closure Withdrawal: If you change your mind and want to cancel or withdraw your application before the IPO issue closes, you may be able to do so, but this depends on the platform or broker through which you applied. Some brokers or platforms allow you to withdraw your application online, while others may require you to contact them directly. Generally, the withdrawal process should be done before the IPO subscription window closes, which is typically a few days before the final allotment date.
2. Impact of Withdrawal:
Refund Process: If you withdraw your application successfully before the issue closes, you will receive a refund of the application amount, as long as no allotment has been made yet. The refund will be processed after the IPO closes and allotment happens, typically within 7-10 days. If you do not withdraw the application in time and the allotment is processed, you may still be liable for the payment of the shares allotted to you.
3. Withdrawal After the Issue Closes:
No Withdrawal Post-Closure: Once the IPO subscription period ends and the allotment process begins, you cannot withdraw your application. If you do not wish to accept the allotment, you will be forced to forfeit your application and the shares will be credited to your Demat account, for which you will need to pay the full amount.
Refunds Post-Allotment: If you do not get an allotment, the funds will be refunded to you, typically within a few days after the allotment process concludes. But if shares are allotted to you, and you choose not to pay for them, you may be in violation of the IPO terms, and your shares may be canceled, along with penalties.
4. Refund and Timing:
If you decide to withdraw before the issue closes, you should receive a refund of the application amount as per the refund policy mentioned in the IPO prospectus. The process is usually completed within 4-5 working days after the IPO closes. The funds are refunded to the bank account or payment method used during the application process.
5. Method of Withdrawal:
The exact method of withdrawal varies based on the platform you used for the application. If you applied online through a broker or a trading platform, you can usually cancel your application through their website or app by selecting the option to withdraw or cancel the IPO application before the end of the subscription period.
Offline Applications: For offline applications (physical forms), you may need to contact the relevant broker or registrar to cancel the application.
Example:
If you applied for 100 shares of an IPO at ₹100 each, and later decide to withdraw before the IPO closes, you can request the withdrawal of your application through your broker or platform. If successful, you will not be allotted any shares, and your ₹10,000 (100 x ₹100) will be refunded.
Conclusion:
If you change your mind after applying for an IPO, you can generally withdraw your application before the IPO closes, provided your broker or platform supports this option. If you withdraw before the issue closes, you will receive a refund. However, if you wait until after the subscription period ends or if the IPO has already been allotted, you cannot cancel your application, and you will be expected to pay for the allotted shares if you receive any.
