THE SECURITIES AND Exchange Board of India (Sebi) is nudging investment bankers to exclude names of legal counsel who are not directly advising a company in an initial public offering (IPO) from the offer documents.
The regulator recently communicated this to bankers through observation letters and informal advisories, said three people familiar with the matter.
Investment bankers are supposed to file a certificate with Sebi that they have done their due diligence on the company. Since bankers are not legal experts, they appoint lawyers on their behalf to do the legal diligence.
Apart from counsel advising the company, large offerings also have a domestic and an international legal counsel (ILC) advising the banker, as well as counsel advising the selling shareholders.
Currently, Issue of Capital and Disclosure Requirements (ICDR) rules say offer documents have to include names of legal counsel to the issuer, but are silent on naming other counsel.Sebi, which otherwise has no direct oversight on lawyers and cannot take action against them for erring on due diligence on the issuer or on drafting documents, now seems to have taken a more rigid view.
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