In order to regulate pre – issue publicity by companies proposing to make a public or rights issue and with a view to making the Indian primary market more efficient and transparent, the Securities and Exchange Board of India, ("SEBI"), has vide its circular dated 18th October 2006, operationalised a new norm whereby publicity made during the period commencing from the date of approval of the issue by the Board of Directors of the issuer company till the allotment of shares in the issue, is consistent with the past practices and does not contain projections, estimates or any information irrelevant to the offer document.
As per the SEBI (Disclosure and Investor Protection) Guidelines 2000 where such public communication is inconsistent with the past practices of the issuer company, it shall be prominently displayed or announced in the public communication that the issuer company is proposing to make in the near future.
All such public communications issued or published in any media during the period commencing from the date of filing the draft offer document with SEBI till the date of allotment of securities offered in the issue shall comply with the following:
- It shall be prominently displayed or announced in the public communication or publicity material that the issuer company is proposing to make a public or rights issue of securities and has filed a draft offer document with SEBI;
- The public communication or publicity material shall contain only factual information and not include any estimates or suppositions.
The issuer company shall make a prompt, true and fair disclosure of all material developments taking place during the period commencing from the date of approval of the issue by the Board of Directors of the issuer company till the allotment of shares in the issue mentioned, relating to its business and securities and also relating to the business and securities of its subsidiaries, group companies etc., which may have a material effect on the issuer company, by issuing public notices in all the newspapers in which the issuer company had issued pre issue advertisements.
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