New Delhi:
With the aim of providing greater clarity and transparency, the market regulator Securities and Exchange Board of India (SEBI) has released a new disclosure format under an abridged prospectus, in which critical information will be featured on the front page of the offer memorandum.
By law, any application form for the purchase of securities of a company must be accompanied by an abridged prospectus.
After considering the disclosure requirement, it was felt that due to the multitude of information to be disclosed, the front page appearance and text appear busy, the market regulator said in a circular.
Under the revised format, a company must share the promoter’s name, details of its offering to the public – types of issuance, new issue and offering for sale (OFS) component, total issue size – and reservation details on the front cover of the condensed prospectus ( DRHP or RHP).
The company is also required to disclose details of OFS by promoter, promoter group and other shareholders.
In the condensed prospectus with the salient features of the Red Herring Prospectus (RHP), the company will be required to disclose the price range and minimum bid in the revised format.
Also, the issuer must provide information on indicative timelines for the opening and closing of the issuance, initiating redemptions, crediting shares to the demat accounts of the allotments, among others, and the start of stock trading.
The initiative aims to provide greater clarity and consistency in disclosures across various documents and to provide additional, but critical, information in the Simplified Prospectus.
SEBI said the condensed prospectus will be made available on the website of the issuing company, lead managers, registrar of an issuer and a link to download the prospectus will have to be provided in price range advertisements.
The issuer and commercial bankers shall ensure that the information contained in the condensed prospectus is adequate and accurate and does not contain any misleading or inaccurate statements.