SEBI is the regulatory body that keeps a check on the stock market activities. One of these important activities is filling Initial Public Offering (IPO). The Securities and Exchange Board of India (SEBI) has introduced new guidelines for companies filling IPOs. According to the updates, every company filling Draft Red Herring Prospectus (DRHP) or Red Herring Prospectus (RHP) must share a 10-minute audio-video disclosure where they will mention the IPO details.
SEBI Mandates 10-Minute Audio-Video Disclosure for Companies Before Launching IPO
SEBI has released new guidelines under which it will become compulsory for any company to share their audio video for filing for an IPO. It will act as the only guide for investors seeking details about the company before investing. Thus, all the investors will look at the video that will be available in the DRHP as a QR Code. After scanning the code, the video will be accessible on their devices. SEBI took the step to prevent the spreading of false information on the internet.
Also, several investors don’t get their roles and responsibilities properly communicated through the written form. It will be helpful for all making it more convenient. SEBI mentions that the video content should properly define every segment of the prospectus. It should include the following details:
- Promoter
- Management
- Financial information
- Pending legal matters
- Risks, etc.
Thus, SEBI has also asked the companies to mention properly in the AV to rely on this information only and not seek external accounts of social media, websites etc where information might not be correct.
SEBI says that the 10-minute video should not have any repetitive statements or misguided information. They are working strongly to provide strong regulation over the mishappenings in the market. SEBI’s current target seems to be influencers. There are a lot of website blogs and influencer videos sharing information about the share market. SEBI seem to regulate them as well. Nowadays a lot of people make their trading decisions after watching the videos. Thus, it’s important to have guidelines for them as well.
SEBI will implement these regulations soon. Those willing to share the AV prior can start filling DRHP with AV from 1 July 2024. It is voluntary from the date mentioned. However, SEBI will make it compulsory after 1 June 2024. SEBI released the circular recently. The total duration is recommended to be 10 minutes. However, it can be long or short depending on the needs of the business.