Strengthening of disclosure requirements
and eligibility criteria

With the rapid expansion in the primary market, there were concerns raised about the quality of some of the issuers who were able to raise funds from the market in the period after the repeal of the Capital Issues (Control) Act, 1947. In response to these concerns, SEBI had strengthened norms for public issues, raised the standards of disclosure in public issues to enhance the level of investor protection without seeking to control the freedom of eligible issuers to enter the market and freely price their issues. This was done in 1995-96, through the implementation of the recommendations of the expert committee appointed in 1994-95 under the chairmanship of Shri Y H Malegam, to examine issues related to disclosure and eligibility norms for issuers in the primary market. As a continuation of this effort, new measures were adopted by SEBI during the past year, after a process of formal and informal consultation with the market participants, the Association of Merchant Bankers of India (AMBI) and the Advisory Committee on Primary Market which is an advisory body of investors, practitioners and experts, constituted by SEBI. The focus of these measures was to further simplify and the issue procedure to facilitate capital formation, enhance the level of investor confidence and inhibit fraud in public offerings. To give effect to these measures, the Guidelines for Disclosure and Investor Protection were amended.