SEBI may allow confidential pre-filing of IPO documents

29 Sep 2022 , 09:03 AM

 Securities and Exchange Board of India (SEBI) is planning to relax open offer pricing rules for the disinvestment of public sector undertakings (PSUs); allow companies holding initial public offerings (IPOs) to submit confidential pre-filing of offer documents; and request enhanced disclosures from start-ups in offer documents on the IPO issue price.

The regulator’s board will vote on a proposal to include buying and selling by mutual funds under insider trading regulations at its meeting on September 30. Currently, they are not included. The action follows the Franklin Templeton incident, in which a few executives were charged with insider trading.

Having pre-filed offer documents with SEBI and exchanges simply requires companies to publicly declare it. Additionally, the issuing business will need to clarify that pre-filing does not guarantee an IPO.

The UK and Canada are two other countries that allow the pre-filing of offer documents for regulator assessment in addition to the US.

In contrast to more established businesses with stable sales and profits, high-growth businesses will benefit significantly from a few months of data secrecy.

The regulator’s board may also accept a request to relax several takeover code requirements for PSU disinvestment. In order to calculate the open offer price for the disinvestment of PSUs and for the indirect acquisition of any other company in which the PSU has a share, it will no longer be necessary to take into consideration the 60-day, volume-weighted average market price.

The regulator had stated that after receiving cabinet clearance, information on strategic disinvestment becomes public and further announcements are made at various times, impacting the market price of the PSU in question.

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