TaxTMI 
TaxTMI 
SEBI (Framework For Rejection Of Draft Offer Documents) Order, 2012
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....ve, for the protection of interest of investors, that the adequacy and quality of disclosures in such offer documents are not satisfactory, or where an investor may not be able to assess the risks associated with the issue. Whereas the Board does not regulate on merits or approve, document of offer / issue of securities, but only mandates true, fair and adequate disclosures including the possibility of a sanction where entities are put on notice for applying due diligence and caution while taking a decision to subscribe to the issue. The Board issues a letter of observation(s) specifying changes about disclosures and accordingly, the offer document is required to be modified. Whereas, in case of rejection of draft offer document, the comm....
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....ommencement of the activity and because of such non-receipt of clearances / licenses / permissions / approvals, the issue proceeds might not be utilized towards the stated objects of the issue. (v) Is such where the time gap between raising the funds and proposed utilization of the same is unreasonably long. 1.3 Where business model of an issuer is; Exaggerated, complex or misleading and the investors may not be able to assess the risks associated with such business models. 1.4 Where scrutiny of Financial Statements shows; (i) Sudden spurt in the business just before filing the draft offer document and reply to clarifications sought is not satisfactory. This will include spurt in line items such as Income, Debtors/Creditors, intangible....
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....nterest may not always be possible but it would largely depend upon the Board's assessment on whether such conflict of interest may affect the judgment and ability of the Merchant Banker in conducting due diligence activity of issuer. 2. Applicability of the General Order (i) The General Order issued herein shall be applicable to all the draft offer documents filed for issue of securities, with the Board. (ii) The criteria specified for rejection in this General Order is illustrative / indicative and prescribes only general standards. (iii) Whereupon the Board after scrutinizing the draft offer document is of the opinion that the criteria mentioned in this General Order are not adhered to by the issuer/Merchant Banker, it may reject....