SEBI seeks firms make additional disclosures to fast track public offers, document shows

Mumbai: Market regulator Securities and Exchange Board of India (SEBI) wants companies looking to go public to share more information as it seeks to fast track public offers, according to a letter sent to merchant bankers last week.

The regulator has sought 31 additional disclosures, the most significant of which are information about conflict of interest with management, directors, large shareholders, subsidiaries and third-party service providers.

Reuters has reviewed a copy of the letter.

The SEBI has in the recent past observed gaps in the information shared by companies in their public offer documents, leading to delays in clearance, a regulatory source, who declining to be identified as they are not authorised to speak to the media, said.

"If a draft offer document contains these (additional) disclosures it will be cleared faster," this person said.

An email sent to a SEBI spokesperson did not receive an immediate response.

The regulator is asking for more information ahead of a likely increase in public offerings by private equity-backed firms this year, a senior investment banker, who has received the SEBI communication, said.

The banker declined to be identified as he is not authorised to speak to the media.

The average time taken by SEBI to clear public issues has narrowed but the regulator wants to shorten it further.

This year, the SEBI on average took fewer than 90 days to clear public issues, against an average of 108 days in 2023 and 126 days in 2022.

In the financial year ending March, 107 companies raised 864.92 billion rupees ($10.41 billion) through public offers, according to Prime Database. Since then, nine companies have raised 325.45 billion rupees by listing.

SEBI has now asked firms to state that employee stock options have been allotted only to employees and that pre-public offer proceeds will be used only towards general commercial purposes.

All material pre-existing agreements and arrangements between shareholders will also need to be disclosed.

The lead merchant bankers to the public issues will have to ensure that the additional disclosures are made, the regulator has said.

($1 = 83.0840 Indian rupees)