The Securities and Exchange Board of India (SEBI) has proposed to offer companies floating shares to confidentially “pre-file” the offer document with them. The regulator has invited comments on the matter to be sent in by June 6.
The market regulator observed that companies raised concerns over the disclosure of sensitive information in the draft red herring prospectus (DRHP), which benefitted their competitors.
The initial offer document will be filed with the capital markets regulator and the stock exchanges, and the company can then decide whether to go public or not after the regulator issues its observations, the SEBI’s consultation paper stated.
After receipt of observations from the SEBI, if the issuer decides to pursue an IPO then it would be required to file an updated DRHP (UDRHP-I), which shall be made available to the public.
Many jurisdictions including the UK, Canada and the US permit pre-filing of the offer document for review by regulatory authorities. Subsequently, if the issuers decide to proceed with the offer, the document incorporating changes mandated by the regulator is made available to the public.