SEBI introduces new disclosure format for brief brochure

A brief prospectus is a memorandum containing the salient features of a prospectus as may be specified by SEBI by making rules in this regard. The Companies Act stipulates that every application for the purchase of any securities of the company must be accompanied by a brief prospectus.

SEBI, in a circular issued on Friday, said that after reviewing the disclosure requirement, it was felt that due to the need to disclose a large number of information, the look and text on the front page appears to be congested.

The circular will be applicable on all issues with immediate effect.

SEBI said that a copy of the brief brochure should be made available on the website of the issuing company, lead manager, registrar and a link to download the brief brochure should be provided in the price band advertisement.

In addition, the issuing company or merchant bankers (MBs) should ensure that the disclosures in the summary are adequate, accurate and do not contain any misleading or incorrect statements.

In addition, the issuing firm should ensure that the qualitative details in the brief are certified along with Key Performance Indicators (KPIs) and other quantitative factors. Also, no qualitative details should be given which cannot be substantiated from the KPI.

Under the revised format, a company will have to disclose the name of the promoter, details of the offer to the public – type of issue, fresh issue and offer for sale (OFS) component, total issue size – and share reservation details. Will have to do The first page of the short brochure (DRHP or RHP).

Also, the company is required to disclose the details of OFS by the promoter, promoter group and other shareholders.

In the brief brochure containing the salient features of the Red Herring Prospectus (RHP), the company has to disclose the price band and minimum bid lots under the revised format.

Also, the issuing company will have to disclose the indicative timelines for opening and closing of the issue, initiation of refund, credit of equity shares in the demat accounts of the allottees and commencement of trading of equity shares.

In addition, the issuing company will have to put a Quick Response (QR) code on the front page of the documents such as front outer cover page, brief brochure, price band advertisement, etc. as deemed fit by them.

Scanning of QR code will download the prospectus, brief brochure and price band advertisement, as applicable.

The new framework will be applicable to all issues opened after February 4.