Stricter disclosure norms may trigger DRHP filing rush in next two months

Issuers and investment bankers could speed up the draft red herring prospectus (DRHP) filing process to avoid stricter disclosure requirements. Industry players expect to see higher-than-usual filings of offer documents over the next two months before the new framework kicks in.

On Friday, the Securities and Exchange Board of India (Sebi) announced tightening of disclosure requirements for all initial public offerings (IPOs) amid criticism over pricing of share sales by loss-making companies. Going ahead, besides the traditional metrics, companies will now have to disclose key performance indicators (KPIs) that are normally not covered in the financial statements. Also, issuers will have to disclose details of pricing of shares for transactions carried out ahead of the IPOs. What's more, they will