SEBI proposes audio-visual disclosures for public issue documents


In an innovative step towards making the public issue disclosure process more accessible and understandable, the Securities and Exchange Board of India (SEBI) has proposed that companies seeking listing on the main board should adopt an Audio-Visual (AV) format for presenting information from their Draft Red Herring Prospectus (DRHP) and Red Herring Prospectus (RHP).

Objectives and Formats:

  • Enhanced accessibility and understanding: The primary objective behind introducing AV presentations is to simplify the complexities involved in public issues for the average investor, ensuring that the significant features and disclosures of the proposed public issue are easily understandable.
  • Bilingual Representation: To cater to a diverse investor base, the AV presentations will be bilingual, delivered in both English and Hindi.

Content Guidelines:

  • Duration: Each bilingual AV presentation is suggested to have a maximum length of 8 minutes.
  • Disclosure: Company is required to make certain key disclosures including risk factors, capital structure, offer objectives, issuer’s business overview, financial summaries, pending litigations, and any material developments.
  • Quality of content: The proposed guidelines emphasize that the AV content should be clear, factual, and strictly non-promotional. It should avoid redundancy and focus on presenting material information concisely. Furthermore, the content is required to be updated with the most recent information at the RHP stage to ensure that investors have access to the latest details.

Distribution and Accessibility:

  • Timely publication: Issuers or their lead managers are mandated to release the AV presentations within five working days during the DRHP submission and resubmission stages, ensuring timely access to information.
  • Wide Accessibility: To maximize reach, the AV presentations will be made available on multiple platforms, including the digital and social media channels of the Issuer, the Association of Investment Bankers of India (AIBI), the websites of stock exchanges, and lead managers. Additionally, QR codes linked to the public issue will provide another layer of accessibility, making it easier for potential investors to find and view the presentations. 

Regulatory compliance and Frameworks:

Mandatory Filings: The initiative is part of the regulatory framework that requires companies intending to go public to file a DRHP with SEBI and stock exchanges. This document undergoes revisions based on feedback from regulators and exchanges, culminating in the filing of an RHP with SEBI and the Registrar of Companies (RoC), which contains the finalized disclosures for the public issue.

SEBI has sought stakeholders’ comments on the proposal till April 9.

SW Point of View:  Through this proposal, SEBI aims to ease the process of investing in public issues, making it more transparent and accessible to the general public. By leveraging AV technology, the regulator seeks to empower investors with a better understanding of their potential investments, thereby creating a more accessible investment environment.

Deepak Pandey, Audit Associate, SW India