The Securities and Exchange Board of India (Sebi) is planning to step up disclosure requirements for initial public offerings (IPOs) of new-age companies, the Business Standard reported on September 23 citing people aware of the matter.
The SEBI may also bring transactions in mutual fund (MF) units under the purview of insider trading regulations, the report noted, adding that the decisions could be taken at Sebi’s board meeting scheduled for September 30.
Sebi is likely to mandate companies to provide a relatively detailed explanation of how they price their IPOs, compare pricing to pre-IPO share sales, and disclose all the presentations made to pre-IPO investors, it said.
The regulator may also ask companies to provide key performance indicators (KPIs) in their offer documents.
Speaking at a FICCI event recently, SEBI chairman Madhabi Puri Buch said the regulator doesn’t believe in restricting retail entry into the F&O segment, but wants to reinforce disclosures around dealing in the F&O segment.
“At the price you choose to list is your business. We have no business suggesting otherwise. The Parliament has mandated we have no view on the pricing of issues. You are free to price the issue at whatever price you deem appropriate,” she said.
“Six months prior to the IPO, if a company has placed its equity with a private party at Rs 100 and comes to the market at Rs 450, we have nothing to add. We expect you to disclose to the investor what accounts for the difference and what has changed.”
SEBI is also proposing approval of including mutual fund units in the definition of ‘securities’ to cover them under the Prohibition of Insider Trading (PIT) Regulations. SEBI is cracking the whip on mutual fund houses after several cases of front running were highlighted in recent times.