Chapter 9 - GUIDELINES ON ADVERTISEMENT - SEBI (Disclosure and Investor Protection Guidelines) 2000

CHAPTER IX GUIDELINES ON ADVERTISEMENT 9.0 The Lead Merchant Banker shall ensure compliance with the guidelines on Advertisement by the issuer company. 9.1 Guidelines on Advertisements 9.1.0 An issue advertisement shall be truthful, fair and clear and shall not contain any statement which is untrue or misleading. 9.1.1 Any advertisement reproducing or purporting to reproduce any information contained in a offer document shall reproduce such information in full and disclose all relevant facts and not be restricted to select extracts relating to that item. 9.1.2 An issue advertisement shall be considered to be misleading, if it contains - a) Statements made about the performance or activities of the company in the absence of necessary explanatory or qualifying statements, which may give an exaggerated picture of the performance or activities, than what it really is. b) An inaccurate portrayal of past performance or its portrayal in a manner which implies that past gains or income will be repeated in the future. 9.1.3 a) An advertisement shall be set forth in a clear, concise and understandable language. b) Extensive use of technical, legal terminology or complex language and the inclusion of excessive details which may distract the investor, shall be avoided. 9.1.4 An issue advertisement shall not contain statements which promise or guarantee rapid increase in profits. 9.1.5 An issue advertisement shall not contain any information that is not contained in the offer document. 9.1.6 No models, celebrities, fictional characters, landmarks or caricatures or the likes shall be displayed on or form part of the offer documents or issue advertisements. 1 (9.1.8) Issue advertisements shall not appear in the form of crawlers (the advertisements which run simultaneously with the programme in a narrow strip at the bottom of the television screen) on television. 2 (9.1.8A In case of issue advertisement on television screen: (a) the risk factors shall not be scrolled on the screen; and (b) the advertisement shall advise the viewers to refer to the red herring prospectus or other offer document for details.) 9.1.9 No advertisement shall include any issue slogans or brand names for the issue except the normal commercial name of the company or commercial brand names of its products already in use. 9.1.10 No slogans, expletives or non-factual and unsubstantiated titles shall appear in the issue advertisements or offer documents. 9.1.11 If any advertisement carries any financial data, it shall also contain data for the past three years and shall include particulars relating to sales, gross profit, net profit, share capital, reserves, earnings per share, dividends and the book values. 9.1.12 (a) All issue advertisements in newspapers, Magazines, brochures, pamphlets containing highlights relating to any issue shall also contain risk factors given equal importance in all respects including the print size. (b) The print size of highlights and risk factors in issue advertisements shall not be less than point 3 (7) size. (c) 4 (Subject to section 66 of the Companies Act, 1956, any advertisement made by an issuer namely Pre Issue advertisement, advertisement for opening or closure of the issue, shall be in the format and contain the minimum disclosures as given in the relevant part of Schedule XX A. (d) Any pre issue advertisement made under clause 5.6A or advertisement made in connection with opening or closing of any issue by the issuer, which is displayed in a billboard shall not contain any information apart from that mentioned in the relevant part of Schedule XX A.) 9.1.13 No issue advertisement shall be released without giving Risk Factors in respect of the concerned issue. Provided that an issue opening / closing advertisement which does not contain the highlights need not contain risk factors. 9.1.14 5 (All public communications and publicity material, including corporate and product advertisements of the issuer company, interviews by its promoters, directors, duly authorized employees or representatives of the issuer company, documentaries about the issuer company or its promoters, periodical reports and press releases, issued or published in any media during the period commencing from the date of the meeting of the Board of Directors of the issuer company in which the public or rights issue, as the case may be, is approved till the date of filing draft offer document with SEBI, shall be consistent with its past practices. Provided that where such public communication or publicity material is not consistent with the past practices of the issuer company, it shall be prominently displayed or announced in such public communication or publicity material that the issuer company is proposing to make a public or rights issue of securities, as the case may be, in the near future and is in the process of filing a draft offer document with SEBI.) 6 (9.1.14A All public communications and publicity material, including corporate and product advertisements of the issuer company, interviews by its promoters, directors, duly authorized employees or representatives of the issuer company, documentaries about the issuer company or its promoters, periodical reports and press releases, issued or published in any media during the period commencing from the date of filing draft offer document with SEBI till the date of allotment of securities offered in the issue, shall comply with the following: (a) It shall be prominently displayed or announced in such public communication or publicity material that the issuer company is proposing to make a public or rights issue of securities, as the case may be and has filed a draft offer document with SEBI or has filed the Red Herring Prospectus / Prospectus with the Registrar of Companies or the Letter of Offer with the Designated Stock Exchange, as the case may be. (b) It shall further be stated in such public communication or publicity material that the draft offer document, Red Herring Prospectus or final offer document, as the case may be, is available on SEBI website at www.sebi.gov.in as well as on the Lead Managers websites urls to be given . (c) Such public communication or publicity material shall contain only factual information and shall not contain projections, estimates, conjectures, etc. (d) Such public communication or publicity material shall also not contain any information which is extraneous to the draft offer document filed with SEBI or the Red Herring Prospectus / Prospectus filed with the Registrar of Companies or the Letter of Offer filed with Designated Stock Exchange, as the case may be.) 7 (9.1.14B The issuer company shall make prompt, true and fair disclosure of all material developments taking place during the period mentioned hereunder, relating to its business and securities and also relating to the business and securities of its subsidiaries, group companies, etc., which may have a material effect on the issuer company, by issuing public notices in all the newspapers in which the issuer company had issued pre-issue advertisement under clause 5.6.A: (a) In case of a fixed price public issues, between the date of filing final prospectus with the Registrar of Companies and the date of allotment of securities offered in the public issue. (b) In case of a book built issue, between the date of filing the Red Herring Prospectus with the Registrar of Companies and the date of allotment of the securities offered in the issue. (c) In case of a rights issue, between the date of filing the Letter of Offer with the Designated Stock Exchange and the date of allotment of the securities offered in the rights issue.) 9.1.15 8 (No product advertisement of an issuer company shall contain any reference, directly or indirectly, to the performance of the issuer company during the periods mentioned in clause 9.1.14 and clause 9.1.14A.) 9.1.16 (a) No advertisement shall be issued stating that the issue has been fully subscribed or oversubscribed during the period the issue is open for subscription, except to the effect that the issue is open or closed. (b) No announcement regarding closure of the issue shall be made except on the last closing date. (c) If the issue is fully subscribed before the last closing date as stated in the offer document, the announcement should be made only after the issue is fully subscribed and such announcement is made on the date on which the issued is to be closed. 9.1.17 Announcement regarding closure of issue shall be made only after the Lead Merchant Banker is satisfied that at least 90% of the issue has been subscribed and a certificate has been obtained to that effect from the Registrar to the Issue. 9.1.18 No incentives, apart from the permissible underwriting commission and brokerage, shall be offered through any advertisements to anyone associated with marketing the issue. 9.1.19 In case there is a reservation for the NRIs, the issue advertisement shall specify the same and indicate the place in India from where the individual NRI applicant can procure application forms. 9.2 The Lead Merchant Banker shall also comply with the following: a) to obtain undertaking from the issuer as part of Memorandum of Understanding to be entered into by the Lead Merchant Banker with the issuer company to the effect that the issuer company shall not directly or indirectly release, during any conference or at any other time, any material or information which is not contained in the offer documents. b) to ensure that the issuer company obtains approval in respect of all issue advertisements and publicity materials from the Lead Merchant Banker responsible for marketing the issue and also ensure availability of copies of all issue related materials with the Lead Merchant banker at least till the allotment is completed. 9 (9.2A Applicability to fast track issues) 10 (9.2A.1 In case of a fast track issue, all references made in clauses 9.1 and 9.2 to draft offer document filed with SEBI shall be construed as having been made to red herring prospectus (in case of a book built issue) or prospectus (in case of a fixed price issue) filed with ROC or letter of offer filed with Designated Stock Exchange , unless the context otherwise requires.) 11 (9.3 Research reports 9.3.1 The lead merchant banker shall ensure that the following are complied with in respect of research reports: i. the research report is prepared only on the basis of published information as contained in the offer document. ii. 12 (no selective or additional information or information extraneous to the offer document shall be made available by the issuer or any member of the issue management team/ syndicate to any particular section of the investors or to any research analyst in any manner whatsoever including at road shows, presentations, in research or sales reports or at bidding centres etc.) iii. 13 (no report or information, other than the contents of the draft offer document shall be circulated by the issuer or any member of the issue management team/ syndicate or their associates, after the date of receipt of observations from SEBI.) iv. The advertisement code is observed while circulating the research reports, and that the risk factors are reproduced wherever highlights are given, as in case of an advertisement.) ******** 1 Numbered the clause as 9.1.8 , vide SEBI Circular No. SEBI/CFD/DIL/DIP/14/2005/25/1 dated January 25, 2005. 2 Inserted clause 9.1.8A, vide SEBI Circular No. SEBI/CFD/DIL/DIP/12/2004/8/4 dated April 8, 2004. 3 Substituted vide SEBI Circular No. DIP (Compendium) Circular No. 3 dated August 04, 2000 for 9 . 4 Substituted vide SEBI Circular No. SEBI/CFD/DIL/DIP/14/2005/25/1 dated January 25, 2005 for the following: (c) It shall contain the names of Issuer company, address of its Registered Office, names of the main Lead Merchant Bankers and Registrars to the Issue. (d) It shall contain the disclosure about the face value of shares (including the statement about the issue price being X times of the face value) vide circular no SEBI/CFD/DIL/DIP/13/2004/28/5 dated May 28, 2004 Prior to the above, the above sub-clause (d) of clause 9.1.12 was inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/13/2004/28/5 dated May 28, 2004. 5 Substituted clause 9.1.14, vide SEBI Circular No. SEBI/CFD/DIL/DIP/24/2006/18/10 dated October 18, 2006 for the following: 9.1.14 No corporate advertisement of issuer company shall be issued after 21 days of the filing of the offer document with the Board till the closure of the issue unless the risk factors as are required to be mentioned in the offer document, are mentioned in such advertisement. 6 Inserted clause, vide SEBI Circular No. SEBI/CFD/DIL/DIP/24/2006/18/10 dated October 18, 2006. 7 Inserted the clause, vide SEBI Circular No. SEBI/CFD/DIL/DIP/24/2006/18/10 dated October 18, 2006. 8 Substituted clause 9.1.15, vide SEBI Circular No. SEBI/CFD/DIL/DIP/24/2006/18/10 dated October 18, 2006 for the following: 9.1.15 No product advertisement of such company shall contain any reference directly or indirectly to the performance of the company during the period mentioned in clause 9.1.14. 9 Inserted clause, vide SEBI Circular No. SEBI/CFD/DIL/DIP/28/2007/29/11 dated November 29, 2007. 10 Inserted clause, vide SEBI Circular No. SEBI/CFD/DIL/DIP/28/2007/29/11 dated November 29, 2007. 11 Inserted clauses 9.3 and 9.3.1 vide SEBI Circular No. RMB (Compendium) Series Circular No. 1 (2001-2002) dated July 17, 2001. 12 Substituted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 for the following: no selective or additional information or information extraneous to the offer document shall be made available by the issuer or any member of the issue management team/ syndicate to only one section of the investors in any manner whatsoever including at road shows, presentations, in research or sales reports or at bidding centres etc. 13 Inserted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 the following clause and the aforesaid inserted clause was deferred vide press release no. PR No.246/2003 dated October 13, 2003: no research report shall be circulated by the issuer or any member of the issue management team/ syndicate or their associates, commencing from a date 45 days immediately preceding the filing of draft offer document with SEBI and till 45 days after commencement of trading in the relevant securities)