Introduction

With an Initial Public Offering (IPO), a company aims to take its growth to the next stage and you as an investor can immensely benefit from this. Acquiring shares of a company before it goes public gives you an edge over regular investors. However, there might be instances where you need to withdraw your IPO application due to changes in your financial circumstances, market conditions, or errors in your application. In such cases, this comprehensive guide on how to cancel an IPO application will help you.

Withdrawal of an IPO application

Withdrawing an IPO application means cancelling your bid for shares in an IPO after submission but before share allotment. The application amount blocked in your bank account during the IPO application is withdrawable through your broker, bank, or registrar when you change your mind about the application. The success of withdrawal depends on the timing and application method. It also depends on the category of investor you come under. Through withdrawal, you can receive your blocked funds. They are no longer considered for share allotment in the IPO.

How to cancel an IPO application before allotment?

The procedure to cancel an IPO application depends on the IPO application process. Here is how the steps that vary based on your application process:

A.     Through ASBA

If you are cancelling during the bidding period. You can:

1.   Log into your bank's net banking portal.

2.   Find the IPO section where you can locate the 'Order Book' or an equivalent option.

3.   Select your IPO application and select the option to 'Withdraw' or 'Cancel'.

4.   Review the details and confirm your withdrawal request.

5. If all goes well and you are well within time, IPO cancellation should work through this method.

B.     Through UPI

1. Long on to the app or portal of our stockbroker.

2. Navigate to the IPO section and find your application.

3. Choose the option to 'Cancel' or 'Withdraw' and confirm your selection.

4. You will have to revoke the UPI mandate linked to your IPO application to unblock the funds and successfully cancel your IPO application.

Placing a cancellation request before the shares are allotted leads to a smooth cancellation in most cases.

How to cancel an IPO application after the closing date?

You cannot cancel your IPO application after the closing date of the issuance. It is generally not permitted. But you can give it a try by submitting a written request to the registrar about your issue and reasoning. You will have to provide the necessary details such as your application number, name, and signature. Upon receiving this request, the registrar may process your request through the bank to release your blocked funds. Note that this is merely an attempt and does not guarantee cancellation. If you wish to try, you must submit the request without much delay after the closing date.

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IPO cancellation rules

Your request to cancel your IPO application is accepted based on the investor category you belong to. Rules for different investor categories are as follows:

• Qualified Institutional Buyers (QIB): You can command high levels of capital if you come under this category. Hence, you cannot cancel your IPO application.

• Non-institutional Investors (NII): You will mostly have a high net worth as part of this category. Thus, you too, cannot cancel your application. However, you can modify it, given you don't lower it.

• Retail Investors: In this category, you will invest less than Rs. 2 lakhs. You can cancel or modify your IPO application at any time before the subscription period ends.

• Employees: if you invest in the IPO of the company you work for, you can cancel or modify the application at any time before the IPO closes. The investment value must be below Rs. 1 lakh.

• Shareholders: As a stakeholder in the company just as employees, the same rule of cancelling or modification applies to you.

Key considerations for cancelling your IPO application

Now that you know how to cancel your IPO application, you can start the process when required. However, don't miss out on these factors to get the process right:

• Timing: Initiate the withdrawal requests as early as possible. With delays, you may face difficulties, and your cancellation request may get rejected.

• Investor category restrictions: As noted earlier, cancellation can look different for each investor category. Look into the rules for your segment to make the right decision.

• Broker or bank policies: Procedures may vary across brokers or banks. It helps to consult with your broker or bank for specific requirements.

Conclusion

Understanding how to cancel an IPO application is crucial. There are times when you might find out some critical information that might make you rethink your decision. In such instances, you want to be prepared for the withdrawal. Follow the procedures as discussed below. While doing so, pay attention to the timing, restrictions, and policies. These measures will ensure a smooth cancellation process.

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