Mumbai: To help investors better understand the nuances of public offers, Sebi on Wednesday asked the companies to give them an abridged prospectus for IPOs and FPOs with key information only, while providing generic details in a separate document.
This 'General Information Document' would also need to be published on the websites of the issuer company, stock exchanges and merchant bankers, while a copy would need to be delivered to the investor as and when requested.
The move would drastically cut down the number of pages in offer documents or prospectus for IPOs and FPOs, which are currently very bulky in nature and run into hundreds of pages.
The new General Information Document (GID), which would be of about 50 pages, would be required to be published for all IPOs and FPOs for which the Red Herring Prospectus (RHP) has not been filed with the Registrar of Companies (RoC) as today.
Every IPO-bound company first files a Draft RHP with Sebi through their merchant bankers, followed by an RHP to be filed with RoC, after which it can undertake sale of shares to the public.
These documents are required to contain detailed information about the company, its proposed share sale and utilisation of funds, their promoters and other shareholders, the business environment, industry trends, the market scenario, among other details.
These disclosures are governed by Sebi's Issue of Capital and Disclosure Requirements Regulations and penal action are taken for any non-compliance.
In a circular issued today to the stock exchanges and merchant bankers, Sebi said that it has now decided that "information which is of generic nature and not specific to the issuer shall be brought out in the form of a GID."
Enumerating the generic disclosures that need to be brought out in the GID, Sebi said, "Accordingly, generic information need not be provided in the Abridged Prospectus."
Sebi also said that GID should explicitly incorporate the date of last updation, the number of GIDs printed by every issuer company need not be less than five percent of the total abridged prospectus/ application forms printed or 50,000 in number, whichever is lower.
The regulator said that copy of GID is provided to an investor as and when requested, in form and manner so requested by the investor.
"The updated GID is made available to investors as well as stock exchange where the shares pursuant to an issue are proposed to be listed and to the respective lead manager to the issue, where DRHP /RHP/ is made available," it added.
The regulator said that GID would consist of information like purpose of the GID, brief introduction to IPOs and FPOs, category of investors eligible to participate in an issue, issue procedure in Fixed Price Issue as well as book building, allotment procedure and basis of allotment, interest and refunds procedure and glossary and abbreviations.
This new document will be applicable to the public issues undertaken through the Book-Building process as well as to the Fixed Price Issues.
Sebi said that the GID would provide general guidance to potential Bidders/Applicants in IPOs and FPOs, on the processes and procedures governing IPOs and FPOs, undertaken in accordance with the provisions of relevant regulations.
