A listed company is legally bound to abide by commitments made in its public offer documents, even if they do not fall under mandatory requirements and post-IPO are claimed to have been made inadvertently, Sebi has said.
Noting that disclosures made in the IPO prospectus are significant from the point of view of investor protection, Sebi has said “a company would be legally bound to comply with the matters stated in the prospectus, based on which it has raised money from the public”.
It added: “A prospectus is a document with legal validity and the company is legally bound to abide by the disclosures made therein.”
The views have been expressed by Sebi in an “interpretive letter” sought by a company, which had demanded exemption from certain disclosure made in its IPO document and had said the same was made “inadvertently” and was not a mandatory requirement under the Sebi regulations.
The company, Rushil Decor, had sought the interpretive letter under Sebi's informal guidance scheme with regard to a disclosure made in its IPO document about lock-in of shares.