SEBI set to simplify IPO documentation process


Last updated on January 10, 2023

Offering more relief to common investors, Securities and Exchange Board of India (SEBI) has indicated it will further simplify rules for an abridged initial public offering (IPO) prospectus. This abridged prospectus will be actually comprehensible by retail and small investors. The prospectus is expected to be of around 10 pages as compared with the current bulky version that extends for several hundreds of pages. To put this in perspective, Coffee Day’s IPO prospectus is over 900 pages.

SEBI Bhavan

The abridged version will include all essential information that is to be taken into consideration before investing in a company. This step will ensure that prospective investors understand the company in a better way without taking pains to go through the reams of pages. Doing so will also reduce burden on companies that are currently required to get the entire document printed and distributed.

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The full version of offer document is supposed to be made available as soft copy on SEBI website, company and respective bankers of the offer. Since a considerable number of investors don’t go through the large prospectus, they tend to miss out on vital data. The condensed document shall include info about the company’s promoters, pertinent litigation and materially important subsidiaries. For any detailed information, the investor can refer to the detailed one at any point of time.

SEBI nurtures public issue dreams

SEBI is taking steps to offer startups a favourable environment with regards to capital markets in a bid to stop them from migrating to other countries like the US and Singapore. In the past, several startups have voiced concerns regarding the elaborate documentation and disclosures required. Recently, SEBI has approved ‘electronic IPOs’ with listing time of seven days only, although the development is likely to further restrict small investors’ participation which is already limited. SEBI has also restructured its corporate finance division to ensure elucidation of the process.

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The regulator is working on a ‘system-driven disclosure regime’ for listed entities which would help enhance insider trading monitoring and check lapses in corporate governance. Technology is to be used for automatic gathering and assimilation of information. Further, quickened clearance process has enabled more companies to tap the fast-track course for going public.

Lately, Vaastav ALR International and Bharat KrishiSamridhi Industries were barred by SEBI from securities markets after being observed that they issued non-convertible debentures (NCDs) and redeemable preference shares to over 50 persons each. This required compulsory listing on recognized stock exchange as per the rules.


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