The SEBI (Issuing Observations on Draft Offer Documents Pending Regulatory Actions) Order, 2020 issued on February 5, 2020, set out guidelines in respect of issuance of observations by SEBI on draft offer documents (applicable with immediate effect), which include:

i.     Where there is a probable cause for investigation, examination or enquiry against the issuer or its promoter / director / group companies (collectively, ‘entities’), SEBI’s observations will be kept in abeyance for a period of 30 days (which can be extended for a further period of 30 days);

ii.     Where a show-cause notice has been issued in an adjudication proceeding, SEBI will direct the entities to make necessary disclosures in the offer documents. Where the notice has been issued under Section 11(4) or Section 11B(1) of the SEBI Act, 1992, the observations by SEBI will be kept in abeyance for a period of 90 days (which can be extended for a further period of 45 days);

iii.   Where recovery proceedings have been initiated or there is non-compliance with an order for disgorgement or monetary penalty or any directions issued by SEBI, the observations will be kept in abeyance till conclusion of such proceedings, or compliance of such directions;

iv.   Where an issuer has been restrained by a Court or Tribunal from making a public issue, SEBI will issue its observations subject to a qualification that the same is subject to orders of such Court or Tribunal; and

v.     SEBI has clarified that issuance of observations during the pendency of proceedings or regulatory action does not amount to exoneration of any entity from such proceedings or action.