SEBI 10 not so perfect! Ten-page limit for new IPO forms goes for toss

Even as market regulator SEBI was being questioned over the introduction of new IPO application norms, the abridged form norm has turned out to be a damp squib as the ten-page form has become a 16-page set -- apart from leading to further complications rather than solving any.

The Securities and Exchange Board of India (SEBI) has issued a notification introducing a ten-page format -- five sheets, printed on both sides -- replacing the 48-page version of the prospectus, to be issued with IPO application forms. The new format came into effect on December 1.

A look at the application forms of recent IPOs by Narayana Hrudayalaya, Alkem Laboratories and Path Labs shows that the companies have actually come out with 16-page forms instead of 10.

The main application set has 12 pages, with two pages "intentionally left blank". The blanks do not carry page numbers, while other pages are numbered one to ten. "Funny though it may sound, but to this extent, the promoters do meet the 10-page norm," says noted stock adviser and writer Arun Kejriwal, founder and director of the Mumbai-based KRIS Securities (Kejriwal Research & Investment Services Pvt Ltd).

This is obvious because one cannot centrally pin a ten-page set. It is an established practice globally that printing for booklets is done in multiples of four pages. Thus, it is a matter of convenience that printing is done with page numbers in even order. This becomes even more pertinent when the set of pages is to be pinned centrally. Else, one has to staple the pages on the top left corner, he said.

Be that as it may, the 10-page format does not provide for the list of bidding centres which is a vital information for investors. Companies in IPO mode have thus begun to attach four additional sheets, stapled to the 12-page application, to facilitate submission of the forms in the right place.

So, in effect the new application form becomes 10+2+416.

The new forms also do not provide designated bank branch details for ASBA (Applications Supported by Blocked Amount) though SEBI mentions in FAQs on its site that these will be provided in the application.

"The 10-page norm demonstrates non-application of mind by SEBI officials responsible for the new norms for IPO application form," Kejriwal said.