The Securities and Exchange Board of India (“SEBI”) notified the SEBI (Issue of Capital and Disclosure Requirements) (Seventh Amendment) Regulations, 2015 (“ICDR Amendment”) on October 27, 2015, issuing general instructions and disclosures to simplify the process for issuing an abridged prospectus for the public issue of shares, amending the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 (“ICDR Regulations”). The ICDR Amendment will come to effect on December 1, 2015. Pursuant to the ICDR Amendment, SEBI issued the revised format for an abridged prospectus by a circular on October 30, 2015 (“Circular”). Disclosures regarding abridged prospectus will only be made as per the ICDR Amendment, in line with the Companies Act, 2013 and disclosures under the erstwhile Companies Act, 1956 will no longer be required. The list of disclosures to be made as per the ICDR Amendment have been simplified to shorten the length of an abridged prospectus.
Salient features of the ICDR Amendment are as follows:
- Only information that is material and appropriate to enable the investors to make an informed decision are to be disclosed in the abridged prospectus;
- An issuer desirous of making a public issue of shares will have make disclosures as per the prescribed format issued by SEBI from time to time, currently provided for in the Circular;
- A copy of the abridged prospectus is to be submitted to SEBI. General instructions for the preparation of the abridged prospectus provides for the manner of printing, including usage of the preferred font and its size;
- Information that is to be submitted in a tabular format should not appear in a running text format;
- Generic information, not specific to the issuer is to be mentioned in the General Information Document specified by SEBI form time to time.
The ICDR Amendment looks to aid the investor, by curbing the practice of submitting voluminous versions of the abridged prospectus, which defeated the purpose of the same altogether. The ICDR Amendment along with the Circular will direct issuers to only disclose information that is relevant for the investor to make an informed decision. Moreover, it was a welcomed move from SEBI to promptly issue the format for the abridged prospectus.