In this fast-paced world, understanding the investment market thoroughly can feel like a challenging task. For many, the task to read the lengthy documents can be both daunting and time-consuming. But what if, there is a solution addressing both challenges, while also helping you to invest your money smartly? To solve this concern, Securities and Exchange Board of India (“SEBI”) has sought public comments on a proposal to introduce Audiovisual (AV) representation of disclosures to be made in the Public Issue Offer Document. Consider a short video capturing all the essential information about a public issue which is precisely what SEBI’s AV disclosure requirement has attempted to introduce with this proposal. These videos will be bilingual, making them accessible to a wider audience and easier for public to understand.
SEBI rolled out the final version of the circular recently, making these AV disclosures mandatory. Check it our from the link below:
When companies intend to raise capital through public offerings, they are required to file Draft Red Herring Prospectuses (DRHPs) with SEBI and Stock Exchanges. These documents contain detailed information about the Company including its finances, risks, operations etc. Following this, the DRHP undergoes changes based on observations from SEBI and Stock Exchanges before being finalized as Red Herring Prospectuses (RHPs) for submission to SEBI and the Registrar of Companies (ROC).
To create awareness and prevent the investors from relying on unauthorized/unsolicited information about the public issues, SEBI has proposed this regulatory compliance for AV Disclosure to disclose the information made in DRHP and RHP in Audiovisual (AV) format by the issuer companies desiring to list on the main board, for ease of understanding. Further, the AV must be in bilingual version i.e. English and Hindi and made available in public domain, catering to the diverse investor base across India. The Hindi version must contain the text in Devanagari script.
SEBI’s Circular outlines several key provisions to ensure the effectiveness of AV disclosures. To begin with, compliance with SEBI’s advertisement code, as provided in Schedule IX of the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018, is mandatory.
Further, each AV must have a following disclaimer cautioning 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”
To maintain engagement by the investors, the duration of each bilingual AV presentation is limited at a maximum of 8 minutes. Within this duration, the content must be balanced, covering material disclosures across various sections of the public issue offer document like risk factors and capital structure, objects of the offer, business of the issuer, financial information, litigations and material developments etc.
Moreover, SEBI mandates that the content of the AV must be factual, non-repetitive, and non-promotional in nature. The AV presentations must be revised with updated information at the stage of Red Herring Prospectus (RHP).
The Issuer being the person making the open offer to public or Lead Manager, who is appointed by the Issuer to carry out the offer process is responsible for publishing AV presentations within five working days of DRHP submission or resubmission. These presentations must be made accessible through digital and social media platforms of the Issuer and the Association of Investment Bankers of India (AIBI), enhancing the accessibility.
Additionally, to facilitate easy access, the web link of the AV presentations must be prominently featured on the websites of Stock Exchanges and relevant Lead Managers. Furthermore, investors can also access the AV presentations through QR codes associated with the public issue.
Moreover, Lead Managers to the public issue must be jointly responsible for the content and information presented in the AV providing transparency and investor protection.
The last date to submit observations was till 9th April, 2024. To conclude, SEBI’s attempt to introduce AV disclosures will bring more transparency and accessibility in the Indian capital markets. One of the essential benefits of AV disclosures will be the depiction of the complicated information through visual manner. By engaging with the multimedia platform, companies can convey the relevant information to the investors in a concise timeframe and then again, public would be able to act on it confidently and make informed decisions.
Written by: Sanchita Agarwal
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