SEBI issues a new general order for issuance of observations on draft offer documents

General Order 2006/ Amendment Order 2008

General Order 2020

Treatment where there is a probable cause for investigation or enquiry or when an investigation or enquiry is in progress against the Entities and no show cause notice (SCN) is issued

Observations on the DOD to be kept in abeyance for 45 days after probable cause of violation is found, or the date of filing of the DOD with SEBI, whichever is later.

Observations on the DOD to be kept in abeyance for 30 days after such probable cause arises, or the date of filing of the DOD with SEBI, whichever is later.

Issuance of observations on the DOD to be kept in abeyance:

(a) for additional 30 days, where SEBI is unable to conclude the investigation, examination or enquiry against the Entities due to the reasons beyond its control or due to the conduct of parties (other than the Entities); and

(b) until conclusion of the investigation, examination or enquiry by SEBI against the Entities pending due to the conduct of the Entities.

Treatment where SCN has been issued

DOD to be kept in abeyance for a period of 90 days from the date of SCN, or filing of DOD with SEBI, whichever is later. In appropriate cases, an interim order or final order after hearing the person affected may be passed provided that any time taken by the Entities shall be excluded while computing the 90 day period.

Where no interim or final order is passed within the period of 90 days, SEBI may issue observations on the DOD subject to relevant disclosures about receipt of the SCN and the possible adverse impact of the order on the Entities being included in the DOD.

In case of issuers to whom SEBI has issued an SCN (other than SCNs described below), SEBI may process the DOD and issue observations and provide advice to the Entities to make necessary disclosures and statements in respect of adjudication proceedings and the possible adverse impact of an order on the Entities, in the offer document.

Issuance of observations on the DOD shall be kept in abeyance where a SCN has been issued in respect of proceedings initiated under section 11(4) or section 11B(1) of the SEBI Act 1992 (proceedings dealing with interest of investors or securities market) for a period of:

(a) 90 days from the date of filing of the DOD in case a SCN has been issued by SEBI;

(b) additional 45 days in case SEBI is unable to conclude the proceedings in 90 days due to the reasons beyond its control or due to the conduct of the parties other than the Entities. If no order is passed within 45 days, SEBI may provide observations and advise the Entities to make necessary disclosures and statements in respect of such proceedings and the possible adverse impact of an order on the Entities, in the offer document; and

(c) Till the conclusion of the proceedings if the proceedings are not concluded in 90 days due to the conduct of the Entities.

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Where (a) SEBI has initiated proceedings for recovery against the Entities; (b) an order for disgorgement or monetary penalty has been passed against the Entities and is not complied with; or (c) in case of non-compliance with any direction issued by SEBI, the observations on the DOD shall be kept in abeyance till such proceedings are concluded or until the directions are complied with;

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Where proceedings have been sent back by the Securities Appellate Tribunal (SAT) or a court to SEBI, the same shall, in effect, be treated as proceedings covered under the General Order and SEBI may take appropriate action in respect of observations on the DOD under the provisions of the General Order. This would also be subject to any order passed by the SAT or a court, as the case may be, while sending the matter back to SEBI. The treatment regarding issuance of observations on the DOD filed in such matters shall be on a case to case basis, depending on the criteria the matter falls under i.e. whether or not an SCN was issued by SEBI or if is there a probable cause of enquiry etc; and

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Where an issuer has been restrained by a court or tribunal from making an issue of securities or from issuing an offer document to the public, SEBI may examine the offer document and issue its observations on the DOD with a qualification that such observations are subject to further orders of a court or tribunal.