New Delhi, May 2 (PTI) Markets regulator Sebi on Friday proposed to rationalise the content of the placement document of Qualified Institutions Placement (QIP) by prescribing only the relevant information regarding the issue.

Presently, in QIPs the issuer is required to disclose the details in the placement document as prescribed under ICDR (Issue of Capital and Disclosure Requirements) norms.

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Such disclosures are detailed in nature and preparing a lengthy placement document is a time-consuming exercise that results in duplication of information, which is already available in the public domain.

In its consultation paper, the regulator has revised the content of placement document.

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Explaining the rationale for the proposed revision, Sebi said that QIPs are issued to Qualified Institutional Buyers (QIBs) who are sophisticated investors and possess the expertise and resources to take an informed investment decision independently.

"These investors are generally well-versed with the issuer's business operations, financials and industry positions and therefore may not require the same level of aggregation of detailed disclosures as may be necessary in a public offering to retail investor," it added.

The regulator has proposed to provide a detailed breakdown of capital -- authorised, issued, and subscribed -- considering outstanding convertible securities. It suggested that paid-up capital should be shown before the issue, after the issue and after conversion (if applicable).

With regards to financial information, Sebi has proposed to include summary extracts of audited consolidated financials -- last financial year along with comparative year. Besides, it suggested to add latest limited review statements not older than 6 months.

To avoid duplication of data already filed with stock exchanges, the regulator has proposed for reference detailed audited reports instead of repeating them.

On management discussion and analysis disclosure, the regulator has suggested to remove this section as it's not required in other capital raising modes like rights or preferential issues.

For industry and business description, Sebi has suggested to keep it brief and in summary form as QIP investors are assumed to be informed and don't require extensive details.

For board and senior management details, Sebi has suggested to align disclosures with IPO or rights issue formats to avoid ambiguity.

To streamline the document for institutional investors, Sebi has suggested for summary inclusion instead of full repetition. It has proposed allowing inclusion of key summaries and cross-referencing instead of full replication of financials and legal texts.

The markets regulator has proposed that legal proceedings disclosed in the placement document should be presented in a clear tabular format. Only material litigations should be included.

To decide what is "material", Sebi suggested using financial thresholds. A case is considered material if its impact exceeds 2 per cent of the issuer's turnover or net worth, as per the latest financial statements, or 5 per cent of the average profit or loss after tax from the past three years. Alternatively, companies should use their own materiality policy, as long as it's disclosed in the document.

Sebi has suggested no changes with regards to disclosing dividend history for the past three years, with organisational structure, shareholding pattern, taxation, auditor information and wilful defaulters/fraudulent borrowers.

The Securities and Exchange Board of India (Sebi) has sought public comments on the proposals by May 23.

Before this, rights issue process was reviewed by Sebi to rationalize the content of the letter of offer and with an objective to reduce the timelines for completion of rights issue.

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