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regular-article-logo Tuesday, 05 November 2024

Confidential pre-filing of IPO papers likely

Initial offer document will only need to be filed with the Securities and Exchange Board of India and stock exchanges

PTI Mumbai Published 12.05.22, 02:27 AM
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Representational Image File Photo

Sebi on Wednesday proposed allowing companies targeting stock market initial public offerings (IPOs) to submit a confidential “pre-filing" document, in an effort aimed at safeguarding their sensitive business information.

The initial offer document will only need to be filed with the Securities and Exchange Board of India (Sebi) and the stock exchanges, and the company can decide whether to go public or not after the regulator issues its observations, Sebi said in its proposal.

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In India, companies first file a draft prospectus with Sebi that contains regulatory disclosures, which is also released publicly for comments for at least 21 days.

Later, after incorporating any regulatory and other feedback, a final prospectus is filed for approval again.

Sebi said one of the concerns for companies is the disclosure of such sensitive information in their draft offer documents, “which may be beneficial to its competitors, without the certainty that the initial public issuance would be executed”.

Globally, countries including the US and Canada allow a confidential “pre-filing” with regulators before a company decides to proceed with an IPO, Sebi said.

Sebi is seeking comments from the public on its new proposal by June 6. Such proposals are commonly floated by Sebi, and there is no certainty that it would be enforced as a policy.

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