SEBI Compliance Checklist for DRHP Filing (2026)

Filing a Draft Red Herring Prospectus (DRHP) is one of the most critical milestones on the road to a public listing in India. Every company planning an IPO on the BSE or NSE must file a DRHP under the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 — commonly known as the ICDR Regulations. With SEBI having rolled out several amendments between 2025 and mid-2026, companies preparing to go public need an updated, practical checklist to avoid delays, refiling costs, and regulatory observations.

This guide breaks down the SEBI compliance checklist for DRHP filing in 2026, covering eligibility, disclosures, timelines, and the latest regulatory changes.

What Is a DRHP?

A draft red herring prospectus is the offer document a company submits to SEBI before opening its IPO to the public. It is India's equivalent of the S-1 filing companies in the United States submit to the SEC, built on the same principle of full public disclosure before taking money from ordinary investors. SEBI does not simply approve or reject a DRHP — it issues "observations," which act as clearance to proceed, sometimes with conditions or requests for additional disclosure.

SEBI DRHP Filing Checklist 2026

1. Confirm Eligibility Under Regulation 6

Before drafting begins, confirm mainboard eligibility. This includes meeting the average operating profit threshold of at least INR 15 crore over the last three years, among other net worth and track-record conditions under Regulation 6. Companies that don't meet these criteria may need to explore the alternate route via the QIB (Qualified Institutional Buyer) allotment mechanism.

2. Map Promoter and Pre-IPO Shareholding Against OFS Caps

Under the SEBI ICDR Amendments 2025, shareholders holding more than 20% pre-IPO shareholding on a fully diluted basis cannot offer more than 50% of their stake through the IPO, while shareholders below the 20% threshold are capped at offering 10%. Run this mapping exercise on the cap table before the DRHP drafting stage to avoid structural rework later.

3. Verify Statutory Auditor Credentials

The statutory auditor must hold a valid Peer Review Board certificate from ICAI for the most recent audited financial year. For companies with group structures involving acquired or divested subsidiaries, the 2025 amendments permit voluntary inclusion of certified subsidiary financials.

4. Prepare a Complete Litigation and Contingent Liability Register

This should capture active and threatened litigation, regulatory inquiries, SEBI orders, and contingent liabilities — each quantified with the board's assessment of the likely outcome.

5. Catalogue Material Contracts

Index all customer, supplier, financing, licence, and IP contracts that cross the materiality threshold, flagging change-of-control triggers, termination rights, and exclusivity clauses, and identify any contracts that require third-party consent upon listing.

6. Disclose Promoter and Director Regulatory History

Full disclosure is required for any promoter who has faced SEBI disciplinary action or stock exchange penalties in the last five financial years. If a promoter or director has been declared a wilful defaulter or fraudulent borrower, this must appear on the DRHP cover page.

7. Quantify and Certify Use of IPO Proceeds

Every stated use of proceeds must be quantified and certified—vague language such as "working capital requirements" without a number is not acceptable, and "general corporate purposes" is capped at the lower of 15% of fresh issue proceeds or Rs 10 crore for SME IPOs, with anything beyond requiring specific certified justification. A 2025 ICDR amendment clarified that if a loan being repaid was taken by a subsidiary or during an unaudited period, certification from any ICAI-registered CA — not just the statutory auditor — is now acceptable.

8. Disclose All Related Party Transactions

All related party transactions, including those with promoters, directors, and key managerial personnel and their relatives, must be disclosed under the ICDR framework.

9. Ensure Data Protection Compliance

Map personal data handling practices against the Digital Personal Data Protection Act, 2023, particularly for consumer-facing or data-heavy businesses—this is increasingly scrutinized alongside BRSR (Business Responsibility and Sustainability Reporting) disclosures.

10. Decide Between Confidential Pre-Filing and Standard Filing

SEBI's confidential pre-filing route, introduced in 2022, lets a company submit the DRHP privately, receive initial feedback, make revisions, and only then release the document publicly.

11. Build in the SEBI Observation Timeline

SEBI must issue observations within 30 days of receiving a complete filing, and once observations are issued, the company has a 12-month window to open its IPO—if it misses that window, it must refile and restart the 30-day clock. SEBI commonly asks companies to expand risk factor disclosures, clarify inter-company fund movements, or update financials if the DRHP is older than six months, which can add several weeks to the process.

12. Track the Revised Issue-Size Flexibility Rule

Before April 2026, any change of more than 20% in fresh issue size from what was stated in the DRHP required a full refile, costing 30–75 days and significant legal expense. SEBI changed this on April 15, 2026, allowing companies to revise the fresh issue size by up to 50% — upward or downward — without a refile, subject to prior SEBI approval and specified conditions.

13. File the Schedule VI Due Diligence Certificate

The due diligence certificate under Schedule VI of the ICDR Regulations must be signed by the Compliance Officer of the Lead Manager and filed with SEBI alongside the DRHP. Maintaining a data room with proper version control and access logs for all document verification is recommended practice.

14. Confirm Minimum Public Shareholding and Issue Size Norms

The minimum issue size for a mainboard listing is Rs. 10 crore, and minimum public shareholding post-issue is 25%, reduced to 10% for large-cap companies exceeding Rs. 4,000 crore.

15. Build in Realistic Timeline Buffers

The full IPO process, from DRHP preparation to listing, typically takes 7 to 12 months and can stretch to 18 months for large or complex companies—building in this buffer early is more practical than rushing toward a fixed listing date.

Quick-Reference Checklist Table

Frequently Asked Questions

Q1. What is a DRHP in SEBI IPO filing? 

A DRHP (Draft Red Herring Prospectus) is the offer document a company files with SEBI before an IPO. It contains detailed disclosures on financials, risks, promoters, and the proposed issue, and must be cleared with SEBI observations before the IPO can open.

Q2. How long does SEBI take to clear a DRHP in 2026? 

SEBI is required to issue observations within 30 days of receiving a complete DRHP filing. Once observations are issued, the company has a 12-month window to launch the IPO before it must refile.

Q3. What is the minimum issue size for an IPO under SEBI ICDR Regulations? 

The minimum issue size for a mainboard IPO is Rs. 10 crore, with minimum post-issue public shareholding set at 25% (10% for companies valued above Rs. 4,000 crore).

Q4. Can a company change its IPO issue size after filing the DRHP? 

Yes. As of the April 15, 2026 amendment, companies can revise the fresh issue size by up to 50%, upward or downward, without a full refile — subject to prior SEBI approval and specified conditions. Previously, any change beyond 20% triggered a mandatory refile.

Q5. What is the confidential pre-filing route for a DRHP? 

Introduced by SEBI in 2022, this route lets companies submit the DRHP privately, receive SEBI's initial feedback, revise the document, and only then make it public — reducing the risk of public scrutiny during early-stage revisions.

Q6. What happens if a promoter has faced SEBI action before filing a DRHP? 

Any SEBI disciplinary action or stock exchange penalty against a promoter in the last five financial years must be disclosed. If a promoter or director has been declared a wilful defaulter or fraudulent borrower, it must be stated on the DRHP's cover page.

Q7. How long does the full IPO process take from DRHP to listing? 

Typically 7 to 12 months, though large or complex companies can take up to 18 months. Building in buffer time is generally more effective than targeting a fixed listing date.

Q8. Are SME IPOs required to file a DRHP with SEBI directly? 

No — SME IPOs are filed with the stock exchanges (BSE SME or NSE Emerge) rather than directly with SEBI, though they still follow the SEBI ICDR Regulations.

Preparing for a DRHP Filing? Get Your IPO Compliance Strategy Right

A successful IPO begins long before the DRHP reaches SEBI. From reviewing financial records and promoter disclosures to managing related party transactions, due diligence, and ICDR compliance, every detail can influence the speed and smoothness of the listing process.

If your company is planning an IPO, don't wait until the DRHP is ready to identify compliance gaps. A structured SEBI compliance audit and IPO readiness assessment can help uncover potential issues early, reduce avoidable delays, and create a more efficient path toward listing.

Need expert guidance for your IPO journey? Connect with Finaccle Advisory Pvt. Ltd. for professional support with SEBI compliance, DRHP filing preparation, IPO advisory, SME IPO consultancy, financial due diligence, and regulatory readiness.

Also need help with ongoing regulatory filings? Check our Compliance & Tax services, or browse all Finaccle services. 

Speak with our IPO advisory team today and take the next step toward a compliant, well-prepared public listing — book a free discovery call