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IPO Pricing Is Company's Discretion, But Full Disclosure Mandatory: Sebi Chairman

To build investor trust, the company should disclose any changes that result in price variation in IPO and pre-IPO offerings, even if the company's matrix remains unchanged, she said

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IPO Pricing Is Company's Discretion, But Full Disclosure Mandatory: Sebi Chairman
IPO Pricing Is Company's Discretion, But Full Disclosure Mandatory: Sebi Chairman

Transparency is the utmost priority for the securities and exchange board of India (Sebi), so it will seek more data from entities, said Madhavi Puri Buch, the chairman of the regulatory body.

While speaking at the Federation of Indian Chambers of Commerce and Industry (FICCI), Buch said that transparency enables investors to develop trust, which is essential for the growth and development of a business.

In order to cope with the rapidly growing corporate world, business and markets, the Reserve Bank of India (RBI) will scale up its pace of formation and regulation of new policies, as the regulator cannot be left behind.

Although she conveyed that Sebi doesn't have a say in the business or operation of a company, it does have a little stake in how the company does it. 

However, she repeated that listed companies' disclosing everything about their business to ensure trust and transparency will be a must.

About the initial public offering (IPO) of new-age companies, Buch added that it is the companies that will decide the pricing and valuation of their stock and the Sebi cannot interfere in it. 

She further added that companies are free to price their issues at their own discretion.

Earlier, Sebi has been criticised for allowing loss-making new-age internet companies to issue their initial stake sales at ultra-rich valuations that are not trading at up to 50 per cent below the issue price. 

If a company is issuing its shares in a pre-IPO placement or even earlier at a certain price less than the proposed price of the IPO, the company must reveal the reason for the price difference, said the Sebi chairman.

According to the Sebi chairman, in order to build investor trust, the company should disclose any changes that result in price variation in IPO and pre-IPO offerings, even if the company's matrix remains unchanged.

Companies should also notify Sebi of any litigation involving key managerial positions in the documentation. SEBI regulations not only insure investors' protection but also safeguard fundraising entities.


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