A certain amount of shares (usually 5,000 or 10,000) at a pre-decided minimum price per share is set by the seller to be listed. Investors are competing to buy these shares through an auction process. The final price gets determined after taking in all bids, to arrive at the highest price at which the total listing can be completed. Each offered share grants the right to receive a corresponding percentage of the future royalty payments from the listed catalogue.
- The original rights owner (the seller) sets a minimum starting price per share before the beginning of the auction, bids cannot be lower than this minimum.
- Investors have the entire ‘Auction Period’ (from the auction starting date onwards) to place their bids.
- Allocated funds will get temporarily locked on the investor’s account for the remaining ‘Auction Period’ or until bids get cancelled.
- At the end of the ‘Auction Period’, and only if the auction reaches 100% completion, the highest bids that represent the total amount of auctioned shares are collected and adjusted to the lowest price among them.
- If this final price satisfies the seller’s initial requirements, the allocated funds will be transferred from the investor’s account and the shares will get allocated to the portfolios of the investors who submitted the successful bids. The shares become automatically tradable on the 'Marketplace' (‘Secondary market’).
- If this final price doesn’t satisfy the seller’s initial requirements, the auction is deemed unsuccessful. All standing bids automatically get cancelled and the allocated funds get unlocked. No shares get distributed in this event.