Public issues: Sebi mulls audio-visual representation of disclosures made in offer documents — Read full draft circular

In a move that will help investors have an easier understanding about the key features of an offer, markets watchdog Securities and Exchange Board of India (Sebi) on Tuesday proposed to introduce audio-visual representation of disclosures made by companies in their offer documents for public issues. Sebi has sought comments on the proposal from stakeholders till April 9.

Sebi said in a circular, "It is proposed that the disclosures made in the DRHP (Draft Red Herring Prospectus) and RHP (Red Herring Prospectus) of public issues shall also be made available in Audio Visual (AV) format by the issuer companies desiring to list on the main board. Further, the AV on the public issues will be in bilingual version i.E. English and Hindi and made available in the public domain."

As per the regulator, it is expected that the AV will provide ease in understanding the salient features and also provide reference to various disclosures of the proposed public issue.

Sebi has suggested that the duration of each bilingual version of the AV should be a maximum of 8 minutes. The total duration of the AV should be equitably distributed among the material disclosures made under various sections of the public issue offer document. These include risk factors, capital structure, objects of the offer, business of the issuer, financial information, litigations and material developments.

In the draft circular Sebi said, "The content of the AV shall be factual, non-repetitive and non-promotional in nature... The AV shall be revised with updated information at the stage of RHP."

As per the regulator, the AV should be published by the issuer/lead manager of the offer within 5 working days both at the stage of submission and resubmission of DRHP.

"It shall be made available on digital/social media platforms of the Issuer and Association of Investment Bankers of India (AIBI). The web link of the said AV shall be made available on the websites of stock exchanges and the concerned lead managers and shall also be accessible from the QR code pertaining to the public issue," Sebi said.

Companies looking to raise capital through public issues are required to file a DRHP with Sebi and stock exchanges. The disclosures in DRHP are appropriately updated in line with the observations issued by the regulator and the bourses. Later, RHP is filed with Sebi and the Registrar of Companies (RoC).

Read full draft circular — 

Audiovisual (AV) representation of disclosures made in the Public Issue Offer Documents

1) In  order  to  create  awareness  among  investors  to  not rely  on  unauthorized/unsolicited information  about  the public  issues and  based  on  inputs  received  from  stakeholders,  it  has been decided that the disclosures made in the Draft Red Herring Prospectus (DRHP) and Red Herring Prospects (RHP) of public issues shall be made available in Audio Visual (AV) format for ease in understanding of the salient features of public issues. Such AV shall be prepared and placed in public domain by Lead Manager to the public issueon main board which shall initially be in bilingual version i.e. English and Hindi. The Hindi version shall contain the text in Devanagari script.

2) The contents in the AV shall follow the following guidelines–

2.1) It shall be in compliance with the advertisement code prescribed by SEBI under Schedule IX of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018.

2.2) It shall start with the following disclaimer to investors – “Investors are advised not to rely on any other document, content or information provided on the offer on the internet/online websites/social media platforms/micro-blogging platforms and by the finfluencers since the same is not approved/commissioned/paid by the company or its promoter(s)/directors/KMPs in any manner”

2.3) The duration of each bilingual version of the AV shall be a maximum of 8 minutes.

2.4) The total duration of the AV shall be equitably distributed among the material disclosures made under various  sections of the public issue offer document viz. risk factors,  capital structure, objects of the offer, business of the issuer, financial information, litigations and material developments etc.

2.5) The content of the AV shall be factual, non-repetitive and non-promotional in nature.

2.6) The AV shall be revised with updated information at the stage of Red Herring Prospectus (RHP).

3) The AV shall be published by Issuer/Lead Manager within 5 working days both at the stage of submission and resubmission of DRHP. It shall be made available in digital/social media platforms of the Issuer and Association of Investment Bankers of India (AIBI).

4) The web link of the said AV shall be made available on the websites of Stock Exchanges and the concerned Lead Managers and shallalsobe accessible from the QR code pertaining to the public issue.

5) Lead Manager(s) to the public issue shall be jointly responsible for the content and information made available in the AV.