SEBI targets finfluencers in latest circular mandating AV company disclosure

Delhi: Securities and Exchange Board of India cracked the whip on finfluencers by issuing a circular mandating all companies to include audiovisual (AV) presentation of disclosures made in their offer documents when doing public issues. 

Certain finfluencers promote some companies during IPOs, without objectively informing the investors of the public issues' risks. Disclosures made in the draft red herring prospectus (DRHP), red herring prospectus (RHP) and price band advertisement for all main board public issues should be made available in audio-visual (AV) format for ease of understanding, Sebi's circular said.

Impact of AV disclosure

Sebi feels that the audio-visual will help investors discern the risks of investing in particular public issues without getting affected by finfluencers. Finfluencers reportedly earning a handsome salary from making videos on initial public offers and posting them on social media platforms, may see a crunch in their viewership.

Format of AV disclosure

• The AV content must be available in Hindi and English. 
• The duration of each bilingual version of the AV shall be approximately 10 minutes. 
• It must contain the disclosure that advises investors “not to rely on any other document, content or information provided in respect to the public issue on the internet/online websites or social media platforms by influencers. Investors are advised to rely only on the information contained in the Offer document and Price Band Advertisement for making investment decisions.”

Sebi revealed that the total duration of the AV shall be equitably distributed to cover material disclosures made under various sections of the DRHP and RHP about the company, risk factors, capital structure, objects of the offer, business of the issuer, promoters, management, summary of financial information, litigations, material developments and terms of the offer, etc.

Content and uploading

• The content of the AV must be factual, non-repetitive, non-promotional and must not be misleading in any manner. 
• Further, the AV content must be uploaded on the website and digital media platform of the issuer and the Association of Investment Bankers of India (AIBI) within five working days of filing the DRHP with the regulator. 
• The web link of the said AV shall be made available on the websites of the Stock Exchanges and the Lead Managers to the issue. The AV shall be made accessible through a QR code (as made available in offer-related documents) pertaining to the public issue.

Deadline

All DHRPs filed with Sebi should contain AV content on or after July 1, 2024, on a voluntary basis. From October 1, 2024, onwards these directions are applicable on a mandatory basis.