The Securities and Exchange Board of India vide its order dated 5th February 2020 has published the Securities and Exchange Board of India (Issuing Observations on Draft Offer Documents Pending Regulatory Actions) Order, 2020 to formalize the issuance of observations on draft offer documents filed with the Board, where an investigation, enquiry, adjudication, prosecution, disgorgement, recovery or other regulatory action is pending against the issuer or its promoter(s)/directors or group companies.
Key highlights from the order:
- The observations on the draft offer document filed by the issuer with the Board shall be kept in abeyance for a period of 30 days. If the board is unable to conclude such investigations against the entities due to the reasons beyond its control, the observations on the draft offer document shall be kept in abeyance for a further period of 30 days. Where the Board is unable to conclude such enquiry against the entities due to the conduct of the entities, the observations on the draft offer document shall be kept in abeyance till the time such enquiry is concluded.
- With respect to cases where show cause notices have been issued to entities in an adjudication proceeding, the board can process the draft offer paper and issue observations. This would be done on the condition that the entities concerned make necessary disclosures and statements in respect of such proceedings and the possible adverse impact of an order on the entities, in the offer document.
- Where recovery proceedings have been initiated or an order for disgorgement or monetary penalty has not been complied with or in case of non-compliance with any direction issued by the Board, the observations on the draft offer shall be kept in abeyance till such proceedings are concluded or until the directions are complied with.
- Where the issuer has been restrained by a court or tribunal from making an issue of securities or from issuing offer document to the public, the Board may examine the offer document and orders of such court or tribunal or authority and finally issue its observations.
- Issuance of observations on draft offer document when an investigation or enquiry is pending or when any regulatory action is pending, does not indicate that the party has been exonerated in such proceedings or that action may not ultimately result from such proceedings.
Click here to read the Notification.
