Disclosure norms for IPOs eased

Mumbai: The Securities and Exchange Board of India (SEBI) on Tuesday said the mandatory pre-issue advertisements needed to contain only the bare minimum details.

The market regulator has also come up with an amended format for listing disclosures in the prospectus. The amendments take effect from February 25, 2005.

Tuesday's amendments to the disclosure guidelines mean that issuers will have lower pre-IPO costs to bear. Besides, the effectiveness of their issue-related messages is expected to improve.

Investors, too, will benefit from the standard format of disclosures, which will increase predictability and access to information.

SEBI said issuers were free to make additional disclosures in the media, but it would not be mandatory as "the bulk of the disclosures are carried in the application forms". This will bring down issue-related costs.

SEBI has listed the minimum level of disclosures in each advertising material and has also mandated that items be listed in a particular order.

Explaining the rationale, SEBI said: "The standard order of presentation is not intended to reduce the flexibility for the issuer to include other disclosures not mentioned in the guidelines. Issuers are free to make additional disclosures, as long as they are not inconsistent with the guidelines."