IPO's new disclosure norms

Allotment period of fixed public issue has been reduced to 15 days

The Issue of Capital and Disclosure Requirement (ICDR) norms will replace the Disclosure and Investor Protection (DIP) guidelines which were formulated in 1992.
Under the new norms, allotment period of fixed price public issue has been reduced to 15 days from 30 days earlier.

Under the ICDR guidelines, book building by a company going for IPO has to be done only through an issue size of 100 per cent. Earlier as per the DIP guidelines, book building process could be done through an issue size of 75 per cent or 100 per cent of issue size.
“75 per cent book building route omitted,” the ICDR guidelines on the Sebi website said.

Also, a company does not require to disclose the price band in its draft prospectus while earlier it had to disclose it in the draft prospectus in case of fixed price issues. Welcoming the new norms, SMC Capitals Equity Head Jagannadham Thunuguntla said, “It is an effort by Sebi to bring the norms in line with current day practices.” Sebi has also made issue period for infrastructure companies uniform at 10 days for all types of issues. Earlier, it was 21 days for some issues and 10 days for others issues. The market regulator has said that minimum promoters’ contribution should be brought in only by promoters whose identity is disclosed in the offer document.

IPO restriction
It added that companies cannot make public or rights issue of the specified securities if any of its promoters, promoter group or directors or person in control of the issue are debarred from accessing the capital market by board.
Earlier, only if a company was itself barred from accessing the capital markets could not make an issue of securities.
The regulator also added that pre-issue advertisements, according to the new ICDR guidelines should be made after the registration of prospectus or the red herring prospectus with the Registrar of Companies before opening of the issue.

Disclose complaints
To bring in more transparency in grievance redressal mechanism, Sebi has asked stock exchanges to disclose details of complaints lodged by clients and investors against trading members and listed companies.
“Stock Exchanges shall henceforth disclose the details of complaints lodged by clients / investors against trading members and companies listed in the exchange, in their website,” Sebi said in a statement. It added that the disclosure should also include details pertaining to arbitration and penal action against the trading members. Sebi has received feedback from investors and their associations to bring in more transparency in the grievance redressal available in the Stock Exchanges.
“Based on the feedback and inputs received from the concerned entities, transparency in grievance redressal is identified as a key area to augment investor protection,” Sebi said.
It is envisaged that transparency will also improve the general functioning of the market, it added.