SEBI Says Merchant Bankers Can’t Share Bid Details With Investors During Bidding Period
The clarifications have been given as part of an informal guidance sought by Citigroup Global Markets India.
Merchant bankers will not share bidding details of initial share sales and rights issues with investors during the bidding period as it may create information asymmetry, the Securities and Exchange Board of India said.
The clarifications have been given as part of an informal guidance sought by Citigroup Global Markets India Pvt. Co. regarding provisions of Issue of Capital and Disclosure Requirements Regulations, among others.
Citigroup had sought informal guidance on whether a book running lead manager can share standalone or aggregate bidding data available on the websites of stock exchanges for initial public offer, follow-on public offer and rights issue of specified securities and units with investors during the bidding process.
Responding to this, SEBI said standalone and aggregate bidding data is displayed on the websites of stock exchanges in the standard form specified by the regulator and is publicly available information.
This data being extraneous to the information disclosed in the draft offer documents is explicitly permitted to be shared for the interest of investors by the stock exchanges.
"While publicly available information may not create information asymmetry among investors, any effort to selectively present the standalone and aggregate bidding data details (on their own by BRLM or on request by investors) may create information asymmetry and may cause prejudice to the minds of some investors which is not warranted and not the intent of SEBI regulations," the regulator said.
"Hence, the BRLM shall not share the bidding data (standalone and aggregate) with the investors or on request of investors during the bidding period," it added.
Further, SEBI norms prohibit entities associated with the public issue of units from issuing advertisements which give any impression of status of subscription or over-subscription of the issue during the issue period.
SEBI further said BRLMs will not share information (other than bidding data) available in the public domain, including information on the websites of stock exchanges and the issuers in an IPO, rights issue, FPO, qualified institutional placement and offer-for-sale of specified securities and units as and when requested by investors.
The regulator said that nothing in the rules prohibits the BRLM from directing the investors regarding the channels where from publicly available information can be accessed.
"In order to avoid any kind of mis-information/ lag between sending the information by broker/merchant banker and receipt of information by investors, the seller/ broker may direct the investors/clients to the publicly available sources," SEBI said.
Noting this position is based on the information furnished, SEBI said "different facts or conditions might lead to a different result".
"This letter does not express a decision of the board on the question referred," the regulator added.