Bank of Russia recommends disclosing more information when conducting IPOs
The Bank of Russia recommends that, in the event of a public offering, issuers disclose information about the principles and approaches to the distribution of the securities among investors before the applications are collected and about the actual receipt of the asset after the sales.
Currently, only individual companies report about how shares will be distributed at an IPO. Therefore, most investors cannot assess the potential amount of securities that they expect to receive. As a result, additional monetary funds are frozen when IPO applications are submitted, among other things. This also decreases liquidity in the stock market.
The regulator believes that the disclosure will enhance the transparency of IPOs and increase investors’ confidence in the Russian stock market. Brokers in turn should inform their retail clients that an order may not be performed at all or in full.
Also, issuers should disclose information about shareholders undertaking not to sell their shares for some time. The validity period of this restriction and possible exceptions should be specified. Such data are to be disclosed in the form of statements of material facts.