Disclosure requirements under the pre-filing mechanism are limited. It allows companies to carry out limited interactions without having to make any sensitive information public.
Further, Sebi’s initial observations on the public offer would be available to investors for 21 days, thereby assisting them better in their investment decision-making process.
However, the existing mechanism of processing offer documents will continue in addition to this alternative mechanism of pre-filing, Sebi said.
“Pre-filing of an offer document is a well-established procedure in several international jurisdictions. It is a move in the right direction by the regulator aimed at preserving the confidentiality of nuanced business and financial information from competitors,” said Arka Mookerjee, partner at JSA, a leading national law firm.
Until an issuer is certain of a launch, this will help prevent price speculation, which currently happens way before the certainty of an IPO, Mookerjee said.
Further, Sebi has also mandated companies to make disclosure of key performance indicators in the IPO offer document, along with the price per share of the issuer based on the past transactions and fundraising done by it from investors.
This move is aimed at further strengthening disclosure norms to protect minority shareholders.