Summary of this article
Sebi Chairman Tuhin Kanta Pandey urged merchant bankers to fix recurring disclosure gaps in IPO papers to improve market transparency.
He emphasized that sharper details on risk factors, valuation, and capital history are vital to reduce regulatory approval timelines for companies.
The regulator is reviewing listing norms and has implemented T plus 3 cycles to boost ease of doing business.
After a stellar run in 2025, the Indian primary market is seeing significant action in 2026, as well. In the first fortnight of the new calendar year, as many as two mainboard initial public offerings (IPOs) and 10 small and medium enterprise (SME) issues have opened for subscription.
As the primary market continues to see strong participation, Securities and Exchange Board of India chairman Tuhin Kanta Pandey has urged merchant bankers to make sharper disclosures in the draft papers for IPO-bound companies.
At an event organised by the Association of Investment Bankers of India, Pandey mentioned that Sebi has observed recurring disclosure gaps in the draft papers filed by merchant bankers. Pandey added that these gaps reduce transparency and investor understanding. Additionally, these gaps also increase the time taken by Sebi to approve IPOs.
“Sebi continues to observe recurring disclosure gaps that reduce transparency and investor understanding. These gaps also lengthen the fund-raising timeline through repeated regulatory queries,” he said.
He said the gaps exist in the disclosures made for risk factors, valuation rationale, objects of the issue, and use of proceeds. He urged merchant bankers to make these disclosures sharper to enhance trust and transparency in the primary market.
Pandey said that to bridge the gaps, draft papers for IPOs need to mention the past capital raises of the company, preferential allotments, and changes in control. Draft papers should also explain the business model of the company in greater depth, while the management discussion and analysis should explain the drivers of performance for the listing-bound company, he said.
“Disclosures on capital structure must clearly explain past capital raisings, preferential allotments, and changes in control – especially close to the IPO. We also expect business model clarity, with transparent revenue and cost drivers. The management discussion and analysis should move beyond narration and explain the internal and external drivers of performance,” Pandey said.
Pandey also advised merchant bankers to independently verify the projections made in the draft red herring prospectus (DRHP).
“Projections – especially for working capital and capex – must be independently verified, and back-up papers must be maintained for all material statements. Basic checks, such as site visits, must be evidenced with complete reports and photographs with geo-tagging and time-stamps,” Pandey said.
Pandey said Sebi is also undertaking a comprehensive review of the Listing Obligations and Disclosure Requirements (LODR).
Measures Already Taken by Sebi
He also highlighted the measures already undertaken by Sebi to increase the ease of doing business and raising funds through the capital market.
Pandey highlighted measures such as reduction in the days taken to raise capital through IPOs with the switch from the T+6 cycle to the T+3 cycle, and the revision of timeline for Rights Issues to 23 working days after the board approval.
Pandey added that listing norms have been amended to reduce the minimum public offer threshold and the period to achieve minimum public subscription to enable large issuers to list. Notably, this is likely to help companies, such as Flipkart and Jio launch their public issues and make their D-Street debut.
Other changes introduced by Sebi include the revision of the framework for anchor investors to ease participation in IPOs. These include, introduction of an abridged prospectus and greater transparency in IPO advertisements to show a split between fresh issue of capital and offer-for-sale (OFS). For SME IPOs, Sebi has introduced new eligibility criteria regarding profitability to protect primary market investors.
