Ease of doing business: Sebi issues guidelines for resubmission of draft-offer documents

The circular added that the issuer and the lead manager must ensure that the draft offer document is resubmitted only after addressing insufficiencies

India's capital markets regulator on February 6 issued a set of guidelines to give more clarity to investors and for faster processing of public-offer documents.

In a circular, the Securities and Exchange Board of India (Sebi) has issued guidelines for returning of draft offer documents and its resubmission.

The circular stated, "It has been observed that at times, draft offer documents / draft letter of offer filed with the Board for public issue / rights issue of securities (hereinafter “draft offer document”) are found lacking in compliance with respect to instructions provided under Schedule VI of ICDR Regulations. Such documents require revisions/changes and thus lead to a longer processing time."

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To make this process of resubmission easier, these guidelines have been issued.

Among the guidelines are the use of simple language with visual representation of data, so as to ensure ease of understanding of its contents. This includes use of short sentences, use of active voice, avoidance of multiple negatives and use of tabular presentations wherever necessary.

The issuers have also been as to avoid technical and legal terminology; complex presentations that may make the substance of the disclosures incomprehensible; and repetition of disclosures in different sections that do not improve the quality of information, among other things.

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If issuers must use technical and complex terms, they must provide clarification to explain the business of the issuer in simple terms.

If any other regulatory authority/enforcement agencies has expressed material concern with regard to issue / draft offer document, then on the return of the document, the issuer must ensure seek/undertake remedial measures with the relevant regulator prior to resubmission of the document.

The circular added that the issuer and the lead manager must ensure that the draft offer document is resubmitted only after addressing insufficiency for which the draft offer document was returned and such draft offer document is in compliance with provisions of ICDR Regulations and other applicable laws.