Sebi norms on IPO silent period shortly

The Securities and Exchange Board of India (Sebi) will come out with regulations for the silent period of companies' initial public offers soon according to M Damodaran, chairman, Sebi.

The move aims at curbing the hype being created about the companies during the period. On the sidelines of a conference on 'Market Oriented Reforms and Corporate Governance Imperatives towards a Global Economy,' organised by Federation of Indian Chambers of Commerce and Industry (FICCI), he said some hype was being generated about the companies during the period from filing the draft prospectus with Sebi to announcement date to push up the prices.

He said Sebi's norms would direct companies and market forces to talk only about the information provided in the propsectus during the silent period. It is expected to announce the norms in a couple of weeks.

Earlier, Damodaran said Sebi would look into the composition of board of companies to assess the quality and independence of the independent directors. Corporate governance is not just about numbers, but about the quality of the people on board, he added.

He stressed that good corporate governnance was at least a necessary condition if not sufficient condition for the long time sustainable delivery of values to the shareholders.

Without going through the experience of Enron or Worldcom, we can put regulations in place, he said adding that many other markets were receiving the guidance from India on corporate governance.

He also urged that no rating of companies should be done before having the climate of corporate governnance in the country.

Till large number of companies practice corporate governnance, let us not get into the practice of rating companies and giving away awards, he added.