Disclosures and filing of Offer Documents

PART VI: DISCLOSURES IN AND FILING OF OFFER DOCUMENTS

Regulation 122. Disclosures in the draft offer document and the offer document

122(1).

• Material Disclosures in Offer Documents

  1. The Draft Offer Document and the Offer Document must contain all material disclosures.

  2. The disclosures must be true and accurate.

  3. The information provided must be adequate for applicants to understand the investment being offered.

  4. The purpose is to enable applicants to make an informed investment decision.

122(2).

• Disclosures in Red-Herring Prospectus, Shelf Prospectus and Prospectus

  1. The red-herring prospectus, shelf prospectus and prospectus must contain the disclosures prescribed under the applicable requirements.

  2. These disclosures include:

     1. (i). Disclosures required under the Companies Act, 2013.

     2. (ii). Disclosures specified in Part A of Schedule VI of the ICDR Regulations.

  3. The disclosures under Part A of Schedule VI are subject to the provisions contained in Parts C and D of Schedule VI.

  4. Therefore, Part A provides the prescribed disclosure requirements, while Parts C and D may modify or qualify how those requirements are to be applied.

122(3).

• Due Diligence by Lead Manager(s)

  1. The lead manager(s) must exercise due diligence in relation to the entire issue.

  2. They must satisfy themselves about all aspects of the issue.

     1. This includes checking the veracity of disclosures, meaning that the information provided is true and reliable.

     2. They must also satisfy themselves about the adequacy of disclosures, meaning that the information provided is sufficient for investors to make an informed decision.

     3. The due diligence covers both the draft offer document and the offer document.

122(4).

• Fulfilment of Disclosed Obligations

  1. The lead manager(s) shall call upon the issuer, its promoters and its directors to fulfil the obligations disclosed by them in the draft offer document and offer document.

  2. In an offer for sale, the lead manager(s) shall instead call upon the selling shareholders to fulfil their disclosed obligations.

  3. These parties must also fulfil all obligations required under the ICDR Regulations.

122(5).

• Age of Information in the Offer Document

  1. The lead manager(s) shall ensure that the information contained in the offer document is not more than six months old from the issue opening date.

  2. The particulars relating to the audited financial statements in the offer document must also not be more than six months old.

  3. Therefore, the relevant information and audited financial statement particulars must be sufficiently recent as of the issue opening date.

Regulation 123. Filing of the draft offer document and offer documents

123(1).

• Filing of Draft Offer Document for Further Public Offer

  • Before making a further public offer, the issuer shall file three copies of the draft offer document with the Board.

  • The draft offer document must be prepared in accordance with Schedule IV.

  • The issuer must pay the fees specified in Schedule III.

  • The filing and payment are made through the lead manager(s).

123(2).

• Documents Submitted Along with the Draft Offer Document

  • The lead manager(s) shall submit the following documents to the Board along with the draft offer document:

    • (a) A certificate confirming that an agreement has been entered into between the issuer and the lead manager(s).

    • (b) A due diligence certificate in the format prescribed under Form A of Schedule V.

    • (c) In case of an issue of convertible debt instruments, a due diligence certificate from the debenture trustee in the format prescribed under Form B of Schedule V.

    • (d) A certificate confirming compliance with the conditions specified in Part C of Schedule VI.

    • (e) A draft abridged prospectus prepared in accordance with Part E of Schedule VI.

123(3).

• Filing of Draft Offer Document with Stock Exchange(s)

  • The issuer shall also file the draft offer document with the stock exchange(s) where the specified securities are proposed to be listed.

  • The issuer must also submit the following details of its promoters to the stock exchange(s):

    • Where the promoter is an individual:

      • Permanent Account Number (PAN).

      • Bank account number.

      • Passport number.

    • Where the promoter is a body corporate:

      • Permanent Account Number (PAN).

      • Bank account number.

      • Company registration number or equivalent.

      • Address of the Registrar of Companies with which the promoter is registered.

123(4).

• Board’s Observations on the Draft Offer Document

  • The Board may specify changes or issue observations on the draft offer document.

  • The Board has a period of 30 days to do so.

  • The 30-day period starts from the later of the following dates:

    • (a) The date on which the Board receives the draft offer document under sub-regulation (1).

    • (b) The date on which the Board receives a satisfactory reply from the lead manager(s), where the Board has sought clarification or additional information from them.

    • (c) The date on which the Board receives clarification or information from a regulator or agency, where the Board has sought such information.

    • (d) The date on which the Board receives a copy of the in-principle approval letter issued by the stock exchange(s).

123(5).

• Incorporation of Board’s Observations

  • If the Board specifies changes or issues observations on the draft offer document, the issuer and lead manager(s) shall incorporate those changes.

  • They must prepare and submit an updated draft offer document to the Board.

  • The updated draft must comply with all observations issued by the Board.

  • The updated draft must clearly highlight all changes made to the original draft offer document.

  • This updated draft must be submitted before filing the offer documents with the Registrar of Companies or the appropriate authority, as applicable.

123(6).

• Changes Relating to Schedule XVI

  • If there are any changes in the draft offer document relating to matters specified in Schedule XVI, the issuer must file an updated offer document or a fresh draft offer document with the Board.

  • The appropriate document depends on the nature of the changes:

    • Updated offer document, where applicable.

    • Fresh draft offer document, where required.

  • The prescribed fees under Schedule III must also be paid while making the filing.

123(7).

• Simultaneous Filing of Offer Documents

  • A copy of the offer documents, along with the abridged prospectus, shall also be filed with the Board and the stock exchange(s).

  • The filing is made through the lead manager(s).

  • This filing must take place simultaneously with the filing of the offer documents with the Registrar of Companies.

  • Therefore, the offer documents are filed with the Registrar of Companies and, at the same time, copies are submitted to the Board and the stock exchange(s).

123(8).

• Soft Copy Submission to the Board

  • The following documents shall also be furnished to the Board in soft copy:

    • Draft offer document.

    • Offer document.

    • Draft abridged prospectus.

    • Abridged prospectus.

  • These documents must be submitted in the manner specified by the Board.

123(9).

• The lead manager(s) shall submit the following documents to the Board:

• The submission shall be made after the Board issues its observations; or

• If the Board does not issue observations, the submission shall be made after expiry of the period stipulated under Regulation 123(4).

(a).

• Certification of Incorporation of Board’s Observations

  • A statement shall be provided certifying that all changes, suggestions and observations made by the Board have been incorporated in the offer document.

  • This confirms that the offer document has been updated in accordance with the Board’s requirements.

(b).

• Due Diligence Certificate at Filing

  • A due diligence certificate in the format prescribed under Form C of Schedule V shall be submitted.

  • The certificate must be submitted at the time of filing the offer document.

  • Form C of Schedule V therefore provides the prescribed format for this due diligence certification.

(c).

• Board Resolution for Promoters’ Contribution

  • A copy of the resolution passed by the issuer’s Board of Directors shall be provided.

  • The resolution must approve the allotment of specified securities to the promoters.

  • The allotment is made against the amount received from the promoters towards their promoters’ contribution.

  • This resolution must be passed before the issue is opened.

(d).

• Chartered Accountant Certificate for Promoters’ Contribution

  • Before opening the issue, a Chartered Accountant shall certify that the promoters’ contribution has been received in accordance with the ICDR Regulations.

  • The certificate must be accompanied by the names and addresses of the promoters who have contributed towards the promoters’ contribution.

  • It must also specify the amount paid and credited to the issuer’s bank account by each promoter.

  • The certificate confirms both the receipt of promoters’ contribution and the details of the promoters who provided it.

(e).

• Due Diligence Certificate for Material Development

  • If the issuer has disclosed any material development through a public notice, a due diligence certificate must be submitted.

  • The certificate must be in the format prescribed under Form D of Schedule V.

  • The certificate is required in addition to the other documents submitted during the issue process.

Redulation 124. Draft offer document and offer document to be available to the public

124(1).

• Public Availability of Draft Offer Document

  • The draft offer document filed with the Board shall be made available for public comments.

  • The public comment period must be at least 21 days from the date of publication of the public announcement under sub-regulation (2).

  • The draft offer document shall be hosted along with the draft abridged prospectus.

  • These documents shall be hosted on the websites of:

    • The issuer.

    • The Board.

    • The stock exchange(s) where the specified securities are proposed to be listed.

    • The lead manager(s) associated with the issue.

  • The purpose is to allow the public to review the draft offer document and submit comments, if any.

124(2).

• Public Announcement of Draft Offer Document Filing

  • The issuer shall make a public announcement within two working days of filing the draft offer document with the Board.

  • The announcement must be published in:

    • One English national daily newspaper with wide circulation.

    • One Hindi national daily newspaper with wide circulation.

    • One regional language newspaper with wide circulation at the place where the issuer’s registered office is situated.

  • The announcement must disclose to the public that the draft offer document has been filed with the Board.

  • It must invite the public to provide comments on the disclosures made in the draft offer document.

  • Comments may be submitted to the Board, the issuer or the lead manager(s).

124(3).

• Filing of Public Comments and Consequential Changes

  • After expiry of the 21-day period under sub-regulation (1), the lead manager(s) shall file details with the Board.

  • These details must include the comments received from the public on the draft offer document during that period.

  • The comments received by either the lead manager(s) or the issuer must be included.

  • The lead manager(s) must also indicate the consequential changes, if any, required to be made in the draft offer document as a result of those comments.

124(4).

• Consistency of Hosted Offer Documents

  • The issuer and lead manager(s) shall ensure that the offer documents and abridged prospectus are hosted on the websites required under the ICDR Regulations.

  • The versions hosted on these websites must contain the same contents as the versions filed with:

    • Registrar of Companies.

    • Board.

    • Stock exchange(s), as applicable.

124(5).

• Providing Copies of Offer Documents

  • The lead manager(s) and the stock exchange(s) shall provide copies of the offer documents to the public when requested.

  • They may charge a reasonable amount for providing a copy of the offer document.