SEBI cuts IPO paperwork; notifies abridged prospectus

In a game-changing move, markets regulator Sebi has notified a five-sheet abridged prospectus that companies need to file for public offers -- a step aimed at making it easier for investors to understand key points.

Under the new norms that come into effect from December 1, the abridged prospectus including the application form can't exceed five sheets that would be printed on both sides, a maximum of 10 pages.

Currently, the full prospectus that companies file for their public offers including IPOs runs into 400-500 pages and it has often been felt that the investors find it difficult to get the key information from such bulky documents.

The move would help in reducing the cost for companies.

Sebi said that the "information as is material and appropriate to enable the investors to make an informed decision shall be disclosed in the abridged prospectus".

Also, the companies would need to make these disclosures as per the format specified by Sebi from time to time.

The information which is of generic nature and not specific to the issuer would need to be brought out in the form of a General Information Document (GID) as specified by Sebi.

The Abridged Prospectus would need to be printed in a booklet form of A4 size paper, while the font size can not be "visually smaller than Times New Roman size 11 (or equivalent)" with single-line spacing.

Information required to be given in Tabular Format would not appear in running text format.

"The order in which items appear in the abridged prospectus shall be as specified by Sebi. The application form shall be so positioned that on the tearing-off of the application form, no part of the information given in the abridged prospectus is mutilated," the Securities and Exchange Board of India (Sebi) said in a notification dated October 27.

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