SEBI has Released a New Disclosure Format for Abridged Prospectus

To make disclosures in abbreviated prospectuses even easier to understand, the markets regulator Sebi has introduced a new structure for disclosures in abridged prospectuses, in which key information will be supplied on the first page of the offer document.

Every application form for the purchase of a company’s stocks must be accompanied with an abridged prospectus, according to the requirements.

Sebi stated in a circular issued on Friday that after assessing the disclosure requirement, it was determined that the design and wording on the front page appear crowded due to the large amount of information that must be reported.

On the front page of the shortened prospectus, a company will have to disclose the name of the promoter, details of the public offering (types of issue, fresh issue and offer for sale (OFS) component, total issue size) and reservations information (DRHP or RHP).

In addition, the corporation is obligated to provide information regarding the OFS held by the promoter, promoter group, and other shareholders.

Under the amended format, the company will have to publish price band and minimum bid lot in the abbreviated prospectus incorporating key characteristics of the Red Herring Prospectus (RHP).

The issuer corporation must also publish estimated timetables for the opening and closing of the issue, the start of refunds, the credit of equity shares to allottees’ demat accounts, and the start of trading of equity shares, among other things.

The revised format is part of Sebi’s endeavour to simplify, clarify, and standardise disclosures across numerous documents, as well as to offer additional but relevant information in the shortened prospectus.

The shortened prospectus will be made available on the website of the issuing company, lead managers, and registrar to issuers, according to Sebi, and a link to download the prospectus must be included in the price band advertisement.

The issuer company and merchant bankers (MBs) must ensure that the disclosures in the shortened prospectus are adequate, correct, and free of any misleading or false information.

In addition, the issuer company/MBs must verify that the qualitative representations in the abbreviated prospectus are backed up by Key Performance Indicators (KPIs) and other quantitative variables.

Furthermore, no qualitative assertion will be made that cannot be supported by KPIs.

They will also have to include a Quick Response (QR) code on the front page of any papers they feel appropriate, such as the front outside cover page, abridged prospectus, price band advertisement, and so on.

The prospectus, abbreviated prospectus, and price band advertisement will be downloaded if the QR code is scanned.

All issues released after February 4 will be subject to the new framework.

To Read Circular Download PDF Given Below: