Finfluencers likely to take a hit over Sebi's proposal to include AV presentation in IPO documents

The draft circular issued by Securities and Exchange Board of India, on March 19, said that the AV presentation should start with a disclaimer.

Finfluencers might take a hit due to market regulator's latest proposal to ask companies that are coming out with a public issue to include audiovisual (AV) presentation of disclosures made in their offer documents.

Many of the influencers earn a hefty packet, even a few lakh rupees, by making video content on initial public offers. There have been concerns that this finfluencers usually promote the IPO instead of objectively informing the investors of its merits and risks.

In the draft circular dated March 19, the regulator has suggested that the IPO's AV presentation should tart with a disclaimer that investors are not to rely on any other content, such as those made by finfluencers, and that the lead manager (s) of the issue be responsible for the content and information made available on the AV.

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The draft circular issued by Securities and Exchange Board of India (Sebi) on March 19 said that the AV presentation should start with a disclaimer.

The disclaimer text stated, “Investors are advised not to rely on any other document, content or information provided on the offer on the internet/online websites/social media platforms/micro-blogging platforms and by the finfluencers since the same is not approved/commissioned/paid by the company or its promoter(s)/directors/KMPs in any manner”.

The regulator has suggested that the AV presentation be made in Hindi and English, that it be in compliance with the advertisement code prescribed under SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018, and that the duration of the presentation be a maximum of 8 minutes.

The draft circular said, "The total duration of the AV shall be equitably distributed among the material disclosures made under various sections of the public issue offer document viz. risk factors, capital structure, objects of the offer, business of the issuer, financial information, litigations and material developments etc."

The draft suggested that the content should be factual, non-repetitive and non-promotional and the AV should be revised with updated information at the stage of Red Herring Prospectus (RHP).

It also said that the lead manager(s) of the public issue be jointly responsible for the content and information made available in the AV.

Mahavir Lunawat, Chairman of Association of Investment Bankers of India (AIBI) said: “AIBI has developed, in consultation with SEBI, a sample of IPO video based on which issuer companies can release formal video on their respective public offerings for investors at large. The beta version of a sample video was launched by Hon. SEBI Chairperson at the recently organized AIBI Annual Convention 2023-24, which is available on the AIBI website for general awareness. AIBI is prepared to host a repository of IPO videos online on its website. This initiative, if implemented, shall enable investors to have access to a formal version of the video released by the issuer company in a standard template and eliminate investors’ dependence on unauthorised audiovisual information."