[Analysis] SEBI Mandates Audio-Visual Disclosures for Public Issues – Enhancing Investor Transparency

SEBI mandates Audio-Visual Presentations for Public Issue Disclosures to present key information about public issues in an accessible format. These 10-minute presentations, available in both English and Hindi, cover essential details from the Draft Red Herring Prospectus (DRHP), Red Herring Prospectus (RHP), and Price Band Advertisements. They aim to enhance investor understanding by providing factual, non-promotional, and up-to-date information on the company, risks, finances, and offer terms.

Table of Contents

1. Introduction
2. Background and Rationale
3. Applicability of the Guidelines
4. Key Points of the Guidelines
5. Conclusion

1. Introduction

On March 19, 2024, the Securities Exchange Board of India (SEBI) posted a draft circular on the ‘Audio-visual (AV) presentation of disclosures made in Public Issue Offer Documents’ for public comments. This initiative aims to raise investor awareness and prevent disseminating unauthorized or unsolicited information about public issues. SEBI now mandates that key features of disclosures in the Draft Red Herring Prospectus (DRHP), Red Herring Prospectus (RHP), and Price Band Advertisement for main board public issues be presented in Audio-Visual (AV) format in both English and Hindi (Devanagari script).

2. Background and Rationale

All public communication, including advertisements, publicity materials, and research reports issued by the company making a public offer, must contain only the information provided in the draft offer document, as specified in the regulations¹. Based on feedback from various stakeholders, SEBI has introduced new guidelines requiring issuers to use audio-visual presentations to communicate public issue disclosures to investors. This approach aims to provide essential information in an easily understandable and accessible format, empowering investors with the knowledge needed to assess the risks and opportunities of public issues.

3. Applicability of the Guidelines

SEBI Circular No SEBI/HO/CFD/CFD-TPD-1/P/CIR/2024/55, dated May 24, 2024, outlines new guidelines mandating Audio-Visual Presentations for Public Issue Disclosures. These guidelines voluntarily apply from July 1, 2024, and mandatorily apply from October 1, 2024.

4. Key Points of the Guidelines

4.1 Disclosure in Audio-Visual Format Compliance

Disclosure in Audio-Visual format must comply with the provisions regarding “Public communications and publicity materials” prescribed under Schedule IX of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018. Public communications, including advertisements, publicity materials, and research reports related to public issues by issuers, their associates, lead managers, or intermediaries, must only contain information from the draft or offer documents. They should be truthful, fair, clear, and free from manipulative, deceptive, or misleading statements. These communications must not include slogans, brand names (except existing commercial ones), or unsubstantiated claims.

4.2 Mandatory Advice for Investors

The contents of the Audio-visual (AV) presentation must mandatorily include the following disclosure for investors:

“Investors are advised not to rely on any other document, content or information provided in respect to the public issue on the internet/online websites/social media platforms/micro-blogging platforms by influencers. Investors are advised to rely only on the Offer document and Price Band Advertisement information for making investment decisions.”

4.3 Duration of the Audio-Visual Presentation

Each bilingual version of the AV presentation should be approximately 10 minutes long.

4.4 Equitable Coverage of DRHP/RHP Sections

The total duration of the AV presentation should be equitably distributed to cover material disclosures under various sections of the DRHP and RHP, including information about the company, risk factors, capital structure, objects of the offer, business of the issuer, promoters, management, summary of financial information, litigations, material developments, and terms of the offer.

4.5 Content Requirements

The AV content must be factual, non-repetitive, non-promotional, and must not be misleading in any manner.

4.6 Timely Availability

The audio-visual information should be uploaded to the website of the Issuer and the Association of Investment Bankers of India (AIBI) within five working days of filing the DRHP with SEBI. In the pre-filing of a draft offer document, the AV should be made available within five working days of filing the Updated Draft Red Herring Prospectus – I.

4.7 Digital and Social Media Accessibility

The AV presentation should be available on the digital and social media platforms of the Issuer and AIBI. It should be accessible via a QR code included in offer-related documents pertaining to the public issue. The web link of the AV should also be available on the stock exchange websites and the lead managers responsible for the issue.

4.8 Reflecting Latest Information

The AV should be updated with information disclosed in the RHP/Prospectus and price band advertisement, including details of the issue opening/closing date, price/price band, etc. It should be uploaded on the date of publication of the price band advertisement or the date of filing the prospectus (in case of fixed price issues).

4.9 Responsibility for Content

The Issuer and all Lead Managers to the public issue are responsible for the content and information made available in the AV presentation.

5. Conclusion

SEBI’s introduction of Audio-Visual Presentations for Public Issue Disclosures represents a significant step towards enhancing investor transparency and protection from unauthorized or unsolicited information about public issues. By aligning disclosure practices with evolving investor expectations and technological advancements, these guidelines are expected to positively impact investor confidence and create an investor-friendly capital market. This initiative aims to save investors’ time while ensuring they receive the critical information necessary for informed decision-making.

1. Regulation 42 read with Schedule IX of SEBI (Issue of Capital and Disclosure requirements) Regulations, 2018