Disclose regulatory actions in abridged prospectus:Sebi to cos

Companies will have to disclose all major regulatory actions and penalties along with details of price information of past issues handled by their merchant bankers along in the shortened five-sheet abridged prospectus for public issues, Sebi said today.
They will also have to make all the important disclosures about its promoters and directors and objectives of the issue.
Sebi said that details of top five material outstanding litigations against the firm and amount involved, regulatory action taken by it or stock exchanges against the promoters and group firms in last five financial years need to be mentioned in the abridged prospectus.

Under the new norms that come into effect from December 1, the abridged prospectus including the application form can not exceed five sheets that would be printed on both sides, a maximum of 10 pages.
Currently, the full prospectus that companies file for their public offers including IPOs runs into 400-500 pages and it has often been felt that the investors find it difficult to get the key information from such bulky documents. It would also help in reducing the cost for firms.
Issuing the disclosure format for the abridged prospectus, Securities and Exchange Board of India (Sebi) said that the companies will have to make disclosure about the price Information of past issues handled by merchant bankers.

"Disclosures subject to recent seven issues (initial public offerings) in current financial year and two preceding financial years managed by each merchant banker with common issues disclosed once" need to be made, the regulator said in a circular.

In addition, the company needs to disclose details and reasons for non-deployment or delay in deployment of proceeds or changes in utilisation of issue proceeds of past public issues or rights issue of the firm in the preceding 10 years, internal risk factors and business mode of the issuer.
Further, Sebi has asked firms to inform about the consolidated and standalone financial earnings, shareholding pattern and number or amount of equity shares proposed to be sold by selling shareholders in the public issue among others.

Sebi, yesterday, notified a five-sheet abridged prospectus that companies need to file for public offers -- a step aimed at making it easier for investors to understand key points.
The Abridged Prospectus would need to be printed in a booklet form of A4 size paper, while the font size can not be "visually smaller than Times New Roman size 11 (or equivalent)" with single-line spacing.