IPO Rules: SEBI Mandates Draft Abridged Prospectus With QR Code At DRHP Stage

The Securities and Exchange Board of India on Wednesday approved norms to simplify IPO offer document summary to encourage informed investor feedback and retail participation. The decision was taken at the regulator's board meeting.

As per the existing provisions, all material aspects of the public issue are required to be disclosed in the draft offer document (DRHP) and offer document (RHP). The key disclosures relating to the public issue are dispersed across multiple sections. This makes the DRHP voluminous, often running into hundreds of pages.

In order to increase the engagement and participation of retail investors in the IPO process, the SEBI said that a focused, concise and standardised summary of offer documents in the form of draft abridged prospectus shall be available at the DRHP stage as well, in addition to the document presently providing the abridged prospectus at the RHP stage.

The board has also approved the proposal to rationalise the disclosures in the abridged prospectus.

These measures are expected to enhance investor comprehension, improve information accessibility and thereby increasing the engagement and participation of retail investors in the IPO process, the regulator said.

Chairman Tuhin Kanta Pandey said one of the suggestion received from the public was to have a QR code for the draft abridged prospectus for easier and quick access.

"People will get all the public announcements related to the IPO through the QR code. It can be easily accessed through the abridged prospectus and have all the information that your eyeballs need. The idea is for people to be able to read through it for research and assess relevant information instead of the voluminous offer documents," he said.