With a view towards ensuring potential investors can make more informed decisions based on easily understandable information, the Securities and Exchange Board of India (SEBI) had released a consultation paper in March 2024. This paper sought public comments on proposals to make key disclosures in the Draft Red-Herring Prospectus (DRHP), Red Herring Prospectus (RHP), and Price Band Advertisement for public issues also available in an Audio-visual (AV) format. After considering the feedback received, SEBI rolled out the final version of the circular recently, making these AV disclosures mandatory.
Here are the key changes between the circular during the consultation stage and the final version:
Consultation Paper dated March 19, 2024 |
Final Circular dated May 24, 2024 |
Analysis |
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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” |
It shall contain the following disclosure to investors – “Investors are advised not to rely on any other document, content or information provided in respect to the public issue on the internet/online websites/social media platforms/micro-blogging platforms by finfluencers. Investors are advised to rely only on the information contained in the Offer document and Price Band Advertisement for making investment decision.” |
While cautioning investors to not rely on any other document, content or information provided in respect of public issue on internet/ online websites/social media platforms/micro-blogging platforms by finfluencers remain in the final draft as well, the final version additionally emphasizes that investors must reply only on the information contained in the Offer document and Price Band Advertisement for making investment decision.
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The duration of each bilingual version of the AV shall be a maximum of 8 minutes |
The duration of each bilingual version of the AV shall be approximately 10 minutes. |
The duration of each bilingual version of the AV has been stepped up to approximately 10 minutes in the final version as against a maximum of 8 minutes consequent to information about the company, business of the promoters, management and terms of the offer being added as part of the material disclosures to be made in the AV. |
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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. |
The total duration of the AV shall be equitably distributed to cover material disclosures made under various sections of the DRHP and RHP viz. about the company, risk factors, capital structure, objects of the offer, business of the issuer, promoters, management, summary of financial information, litigations, material developments and terms of the offer etc. |
In the consultation stage, the AV’s total duration was to be equitably distributed between material disclosures in various sections of the public issue offer document such as risk factors, capital structure, objects of the offer, business of the issuer, financial information, litigations, and material developments. In the final cut, the material disclosures in the AV must additionally contain information about the company, business of the promoters, management and terms of the offer.
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The content of the AV shall be factual, non-repetitive and non-promotional in nature. |
The content of the AV must be factual, non-repetitive, non-promotional and shall not be misleading in any manner. |
In addition to the content of the AV being factual, non-repetitive and non-promotional in nature, the final cut additionally requires the content to not be misleading in any manner.
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The AV shall be revised with updated information at the stage of Red Herring Prospectus (RHP) |
The AV shall be updated with information disclosed in RHP/ Prospectus and price band advertisement including details of the issue opening/closing date, price/ price-band etc., and uploaded on the date of publication of the price band advertisement or the date of filing of prospectus (in case of fixed price issues) |
The guidelines for updating the AV have been expanded. Basis the draft guidelines, the AV was required to be revised with updated information at the stage of the RHP. Now, according to the final Circular, the AV must be updated with information disclosed in the RHP, Prospectus, and price band advertisement, including details such as the issue opening/closing date and price/price-band. Additionally, the updated AV must be uploaded on the date of publication of the price band advertisement or the date of filing of the prospectus (for fixed price issues).
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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). |
The AV shall be uploaded on the website of the Issuer and Association of Investment Bankers of India (AIBI) within 5 working days of the filing of DRHP with SEBI. In case of pre-filing of draft offer document under CHAPTER IIA of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018, the AV shall be made available within 5 working days of filing Updated Draft Red Herring Prospectus -I, as defined under Clause 59A of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018. |
In the consultation stage, the AV was required to be published by the Issuer/Lead Manager within 5 working days at both the submission and resubmission stages of the DRHP and made available on digital/social media platforms of the Issuer and AIBI. The final cut requires the AV to be uploaded on the websites of the Issuer and AIBI within 5 working days of the DRHP filing with SEBI. Additionally, in the case of pre-filing, the AV must be made available within 5 working days of filing the Updated Draft Red Herring Prospectus-I. |
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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 |
The AV shall also be made available on digital/social media platforms of the Issuer and AIBI. The web link of the said AV shall be made available on the websites of the Stock Exchanges and the Lead Managers to the issue. The AV shall be made accessible through QR code (as made available in offer related documents) pertaining to the public issue. |
The final cut has expanded the list of platforms in which the AV must be made available ensuring it reaches a wider audience through multiple platforms. In the consultative stage it provided that the web link to the AV had to be available on the websites of Stock Exchanges and the concerned Lead Managers and be accessible via a QR code related to the public issue. Now, the AV must also be made available on the digital/social media platforms of the Issuer and AIBI. Additionally, the web link must still be available on the platform mentioned above, and the AV must be accessible through a QR code included in the offer-related documents. |
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Lead Manager(s) to the public issue shall be jointly responsible for the content and information made available in the AV |
The Issuer and all Lead Managers to the public issue shall be responsible for the content and information made available in the AV. |
Unlike the consultation stage where the responsibility for the content and information made available in the AV was vested on the Lead Manager(s), the final cut casts this obligation on the Issuer and all Lead Managers to the public issue. |
Please note that if you are planning to make public issues, you must comply with the obligations mandated by SEBI. For a detailed understanding of these requirements, please refer to the information below.
In our previous blog we have covered SEBI AV Disclosure; Regulatory Compliance for Visual Disclosures.
Written by: Sanchita Agarwal
Co-authored by: Antara Dasgupta
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