Sebi issues warning on IPO info leaks

The practice of companies planting reports in the media ahead of initial public offers (IPOs) has come under the scanner of the Securities and Exchange Board of India (Sebi). It has asked investment bankers to stop issuers from leaking information that is not included in the draft prospectus.

Sebi Executive Director Usha Narayanan warned investment bankers of stringent guidelines if the industry did not stop this practice.

“We look at these IPO advertisements. A lot of information is planted and is not in the DRHP (draft red herring prospectus). At present, Sebi takes the cuttings and sends it to investment bankers,” said Narayanan, who handles the corporate finance portfolio. “We will not tolerate this forever. We are looking into it and preparing a paper,” she added.

She said Sebi was working on ways to popularise the Asba (application supported by blocked amount) procedure in applying for IPOs. “One suggestion is a common Asba/non-Asba form. We will shortly come out with what needs to be done,” she said. On Indian depository receipts (IDRs), Sebi was working on guidelines to enable rights issues by entities that had issued IDRs, she said.

Sebi will also come out with disclosure norms for sectors that are yet to have any listed company. “Sebi’s disclosure norms are sector-neutral. Certain disclosures required are unique to the sector. We will shortly come out with these norms,” said Narayanan, giving the example of the insurance sector, that might see some entities getting listed in the future.

Meanwhile, Sebi plans to take up the new Takeover Code at its next board meeting. The regulator had set a deadline of August 31 for market participants to submit their feedback on the proposals put forth by a committee led by C Achuthan, a former presiding officer of the Securities Appellate Tribunal. “It is our intention to take it to the next board meeting,” said Sebi Chairman C B Bhave.