Personal Website of R.Kannan
Learning Circle - Primary Market
Public Issues -SEBI (Disclosure and Investor
Protection) Guidelines, 2000

Home Table of Contents Feedback



Project Map

[Source: Website of SEBI]

SEBI (Disclosure and Investor Protection) Guidelines, 2000 - Chapter IX
Guidelines on Advertisement

The Lead Merchant Banker shall ensure compliance with the guidelines on Advertisement by the issuer company. An issue advertisement shall be truthful, fair and clear and shall not contain any statement which is untrue or misleading. Any advertisement reproducing or purporting to reproduce any information contained in a offer document shall reproduce such information in full and disclose all relevant facts and not be restricted to select extracts relating to that item.( Clauses: 9.1.1 & 9.1.2)

When an Advertisement is deemed to Convey Misleading Informtion - (Clause 9.1.3)

An issue advertisement shall be considered to be misleading, if it contains

  1. Statements made about the performance or activities of the company in the absence of necessary explanatory or qualifying statements, which may give an exaggerated picture of the performance or activities, than what it really is.

  2. An inaccurate portrayal of past performance or its portrayal in a manner which implies that past gains or income will be repeated in the future.

Standards for Text, Language of the Advertisement

  1. An advertisement shall be set forth in a clear, concise and understandable language

  2. Extensive use of technical, legal terminology or complex language and the inclusion of excessive details which may distract the investor, shall be avoided.

Statements that are to be Avoided

  1. An issue advertisement shall not contain statements which promise or guarantee rapid increase in profits.

  2. An issue advertisement shall not contain any information that is not contained in the offer document.

  3. No models, celebrities, fictional characters, landmarks or caricatures or the likes shall be displayed on or form part of the offer documents or issue advertisements.

  4. Issue advertisements shall not appear in the form of crawlers (the advertisements which run simultaneously with the programme in a narrow strip at the bottom of the television screen) on television.

  5. In case of issue advertisement on television screen:

    1. the risk factors shall not be scrolled on the screen; and

    2. the advertisement shall advise the viewers to refer to the red herring prospectus or other offer document for details.

  6. No advertisement shall include any issue slogans or brand names for the issue except the normal commercial name of the company or commercial brand names of its products already in use.

  7. No slogans, expletives or non-factual and unsubstantiated titles shall appear in the issue advertisements or offer documents

Financial Data in Advertisements (Clause 9.1.11)

If any advertisement carries any financial data, it shall also contain data for the past three years and shall include particulars relating to sales, gross profit, net profit, share capital, reserves, earnings per share, dividends and the book values

Include Risk Factors About the Issue in Advertisements

  1.  

    1. All issue advertisements in newspapers, Magazines, brochures, pamphlets containing highlights relating to any issue shall also contain risk factors given equal importance in all respects including the print size.

    2. The print size of highlights and risk factors in issue advertisements shall not be less than point (7) size.

    3. It shall contain the names of Issuer company, address of its Registered Office, names of the main Lead Merchant Bankers and Registrars to the Issue.

  2. No issue advertisement shall be released without giving "Risk Factors" in respect of the concerned issue. Provided that an issue opening / closing advertisement which does not contain the highlights need not contain risk factors.

  3. No corporate advertisement of issuer company shall be issued after 21 days of the filing of the offer document with the Board till the closure of the issue unless the risk factors as are required to be mentioned in the offer document, are mentioned in such advertisement.

  4. No product advertisement of such company shall contain any reference directly or indirectly to the performance of the company during this period

Advertisement Advising Over-subscription, Closure of the Issue

  1. No advertisement shall be issued stating that the issue has been fully subscribed or oversubscribed during the period the issue is open for subscription, except to the effect that the issue is open or closed

  2. No announcement regarding closure of the issue shall be made except on the last closing date

  3. If the issue is fully subscribed before the last closing date as stated in the offer document, the announcement should be made only after the issue is fully subscribed and such announcement is made on the date on which the issued is to be closed.

Announcement regarding closure of issue shall be made only after the Lead Merchant Banker is satisfied that at least 90% of the issue has been subscribed and a certificate has been obtained to that effect from the Registrar to the Issue.

Advertisement Promising Incentives

No incentives, apart from the permissible underwriting commission and brokerage, shall be offered through any advertisements to anyone associated with marketing the issue. (Clause 9.1.18)

Reservation for NRIs

In case there is a reservation for the NRIs, the issue advertisement shall specify the same and indicate the place in India from where the individual NRI applicant can procure application forms.(Clause 9.1.19)

Undertaking from Issuer

The Lead Merchant Banker shall also comply with the following: (Clause 9.2)

  1. to obtain undertaking from the issuer as part of Memorandum of Understanding to be entered into by the Lead Merchant Banker with the issuer company to the effect that the issuer company shall not directly or indirectly release, during any conference or at any other time, any material or information which is not contained in the offer documents.

  2. to ensure that the issuer company obtains approval in respect of all issue advertisements and publicity materials from the Lead Merchant Banker responsible for marketing the issue and also ensure availability of copies of all issue related materials with the Lead Merchant banker at least till the allotment is completed.

Research reports (Clause 9.3)

The lead merchant banker shall ensure that the following are complied with in respect of research reports -

  1. the research report is prepared only on the basis of published information as contained in the offer document

  2. no selective or additional information or information extraneous to the offer document shall be made available by the issuer or any member of the issue management team/ syndicate to only one section of the investors in any manner whatsoever including at road shows, presentations, in research or sales reports or at bidding centres etc.

  3. no report or information, other than the contents of the draft offer document shall be circulated by the issuer or any member of the issue management team/ syndicate or their associates, after the date of receipt of observations from SEBI

  4. The advertisement code is observed while circulating the research reports, and that the risk factors are reproduced wherever highlights are given, as in case of an advertisement


- - - : ( Chapter VIIIA - Green Shoe Option ) : - - -

Previous                  Next                      Top

[ last updated on 04.05.2004 ]
[ chkd-apvd-ef ]