Consequent disclosure of review should be construed as adequate diligence, says Association of Investment Bankers of India
The Association of Investment Bankers of India (AIBI) has said that lead managers should independently review and examine issuer’s documents.
Consequent disclosure of the review by lead managers should be construed as adequate diligence, said AIBI.
In its due diligence manual released on Tuesday, the AIBI advised lead managers to independently verify the information provided by issuers.
This could be done by speaking to employees, customers, suppliers, site visits, independent background checks, verification of defaulter lists on regulator Web sites, said AIBI.
Lead managers should solicit the assistance of the issuer’s legal advisers to facilitate the due diligence process.
They should also talk to the statutory auditors of the issuer to get an insight into the business, and associated risks.
Lead Manager’s are expected to ensure disclosures in the offer document which materially affect investment decisions, are backed by appropriate documentation. This includes corporate and secretarial records or certificates of the issuer or third parties and independent third party reports, said AIBI.
These documents should be made available for review by SEBI and other regulators post issue completion.
Whenever expert opinion is sought by the lead manager on issues beyond their domain knowledge, the advice sought and the opinion received should be properly documented.
The AIBI stressed the importance of allotting sufficient time for due diligence and continuous monitoring.